Berkshire has been selling down a top healthcare holding. Here’s why

[Pelican Press 0]

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Berkshire has been selling down a top healthcare holding. Here’s why

Berkshire Hathaway resumed selling shares of DaVita , a provider of kidney dialysis services, after the holding more than quadrupled in price. A new regulatory filing this week revealed that Berkshire sold another 200,010 shares of DaVita through multiple transactions between May 22-27. Berkshire remains DaVita’s biggest institutional investor with a 42.3% stake, according to FactSet. The stock, which Berkshire first bought in 2011, is still the conglomerate’s 10th biggest holding. This is just the latest ***** by Warren Buffett’s sprawling, Omaha-based empire has trimmed its stake in DaVita. In late February, Berkshire sold another 750,000 shares for $116 million over several days. Neither the filing for that ***** nor the latest one mentioned an agreement reached in April 2023 under which DavIta agreed to buy back shares each quarter to reduce Berkshire’s stake to 45%, and neither ***** was of that plan. Rising costs Berkshire’s latest round of selling came as DaVita suffered from rising patient care and operating costs. The Denver, Colorado-based company recently experienced disruptions from hurricanes as well as a ransomware attack, and the industry is also grappling with more onerous reimbursement and regulatory restrictions. The stock is down about 9% this year after surging 40% in each of the past two years. DaVita has quadrupled since Berkshire first bought the stock in 2011, closing Friday at $136.26 versus $34.74 at the end of 2010. DVA 5Y mountain DaVita over the past five years Berkshire’s DVA stake is believed to be the work of portfolio manager Ted Weschler since his hedge fund had invested in the stock before he joined Berkshire in 2011. In 2014 , Weschler told CNBC that he bought the stock because DaVita delivers “better quality of care,” high return on capital with predictable growth and a shareholder-friendly management. He also liked that the company’s efficiency helped it to “deliver a net savings to the health care system.” DaVita, founded in 1994, provides kidney dialysis services through at-home dialysis and a network of outpatient clinics across the United States.

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