Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of kidney care company DaVita HealthCare Partners (NYSE:DVA) surged 10% today after the company signed a standstill agreement with Warren Buffett's Berkshire Hathaway.
So what: Berkshire agreed not to acquire more than 25% of DaVita after approaching management about increasing its stake, indicating that Buffett is possibly setting the stage to negotiate a friendly takeover. Additionally, Berkshire's interest alone suggests that DaVita is undervalued, giving bargain hounds good reason to start sniffing around the shares.
Now what: Don't let today's pop prevent you from looking into the stock.
"Berkshire recently approached us about the option of increasing their holdings," DaVita's Chief Legal Officer Kim Rivera said on a conference call with analysts. "We found them to be a supportive investor with a long-term view."
When you couple DaVita's solid fundamentals and still-reasonable P/E with the possibility of a Berkshire takeover, the stock's risk/reward profile seems rather attractive at this point.
Interested in more info DaVita? Add it to your watchlist.
Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Berkshire. The Motley Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.