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Author: rationalwalk Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 211993  
Subject: More DaVita purchases Date: 11/14/2012 9:28 AM
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I'm starting to think that Berkshire may eventually move to acquire the entire company:

http://www.sec.gov/Archives/edgar/data/315090/00011814311205...
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Author: LONGREITS Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 195832 of 211993
Subject: Re: More DaVita purchases Date: 11/14/2012 10:22 AM
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" I'm starting to think that Berkshire may eventually move to acquire the entire company"

I agree and posted the same sentiment over the summer. I think the acquisition of HCP will materially increase DVA's earnings power and a pullback to $95-100 could merit a discussion of an acquisition at a 20% premium.

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Author: rationalwalk Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 195834 of 211993
Subject: Re: More DaVita purchases Date: 11/14/2012 11:19 AM
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How would you justify a $120/share takeout price for DaVita? That would appear to be a very rich valuation.

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Author: LONGREITS Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 195836 of 211993
Subject: Re: More DaVita purchases Date: 11/14/2012 12:24 PM
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The limit order for weschler's buys was 113 - read the footnotes. I bet Weschler would buy the whole company today at 120. If you look at TTM earnings, 120 would be expensive. If you look at next five year's expected FCF, it looks cheap. Investors that compound at 15 percent per tax can't usually get there by looking solely at trailing numbers. There is always a story, be the asset stocks or real estate.

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Author: rationalwalk Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 195837 of 211993
Subject: Re: More DaVita purchases Date: 11/14/2012 12:52 PM
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The limit order for weschler's buys was 113 - read the footnotes.

No indication of a "limit order" that I can see, only that $113 was the maximum price paid.

If you look at next five year's expected FCF, it looks cheap.

Maybe so. I still don't see it and have I yet to see anyone present a valuation based on projected FCF that looks cheap either.

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Author: rationalwalk Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 195838 of 211993
Subject: Re: More DaVita purchases Date: 11/14/2012 12:55 PM
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But speaking of footnotes, this one is more interesting:

5,748,045 of the total reported securities are owned by the following pension plans of Berkshire's subsidiaries: Acme Brick Company Pension Trust (175,000), The Buffalo News Office Pension Plan (65,000), The Buffalo News Mechanical Pension Plan (16,000), The Buffalo News Drivers/Distributors Pension Plan (7,000), The Buffalo News Editorial Pension Plan (105,000), Dexter Pension Plan (90,000), Flightsafety International Inc. Retirement Income Plan (300,000), Fruit of the Loom Pension Trust (670,000), GEICO Corporation Pension Plan Trust (1,303,769), Johns Manville Corporation Master Pension Trust (1,182,800), Justin Brands, Inc. Union Pension Plan & Justin Brands, Inc. Pension & Trust (96,000), Scott Fetzer Collective Investment Trust (187,000), and BNSF Master Retirement Trust (1,550,476); each of Berkshire, Mr. Buffett and these pension plans disclaims beneficial ownership in such shares.

So roughly half of the DaVita position resides within Berkshire's pension plans which are not considered assets of Berkshire...

I know that Buffett has personally managed the pension plans in the past. Could part of the funds allocated to Combs and Weschler be from the pension plans? Or is Buffett buying DaVita himself on behalf of the pension plans following Weschler's purchases on behalf of Berkshire itself?

Interesting situation...

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Author: bearmarketbully One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 195839 of 211993
Subject: Re: More DaVita purchases Date: 11/14/2012 12:59 PM
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Rational, DVA, as I think you can tell, is not a no-brainer investment, especially at the current quote. This is one of the things that bothers me regarding succession at Berkshire. You have someone else coming in to manage the investments that will be nowhere near as good as Warren Buffett. Investments such as DVA and DTV do not have the predictability that Warren Buffett needs to make an investment. He would never touch these types of businesses as they would be in his too hard pile. I have a hard time believing Ted has special insights into either of these businesses, regardless of whether he has invested 500 hours of his time.

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Author: rationalwalk Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 195840 of 211993
Subject: Re: More DaVita purchases Date: 11/14/2012 1:06 PM
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I have a hard time believing Ted has special insights into either of these businesses, regardless of whether he has invested 500 hours of his time.

I'm quite sure he has special insights based on his history with the company that stretched back more than a decade.

And my assumption is that I'm missing something important and completely wrong regarding DaVita. The purpose of my skepticism is more along the lines of wanting to know what I'm missing rather than doubting Weschler. I could be wrong regarding my fear of the government being such a large part of DaVita's revenue, or I could be missing something regarding future opportunities, or maybe something else entirely.

You have someone else coming in to manage the investments that will be nowhere near as good as Warren Buffett.

Obviously true ... but unfortunately we don't have the option of having Warren Buffett stick around for the next 30 years whereas both Combs and Weschler could very well be managing Berkshire's money into the 2040s.

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Author: LONGREITS Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 195841 of 211993
Subject: Re: More DaVita purchases Date: 11/14/2012 1:06 PM
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There's definitely no express indication if a limit order, just a very strong indication.

1.3B per tax earnings power growing in the teens - through significant operating leverage. Sustainable financial leverage juices the bottom line.

I wouldn't mind a DVA acquisition by BRK although I'd probably prefer DLTR, which is cheap.

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