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This $23 Billion Long-Term Winner Has Been Buying Health Care and Lumber

The latest 13F season is commencing, when many money managers issue required reports on their holdings. It can be worthwhile to pay attention, as you might get an investment idea or two by seeing what some major investors have been buying and selling.

For example, consider Lone Pine Capital, founded by Steve Mandel in 1997. Prior to that, Mandel was a managing director at Tiger Management. Lone Pine is one of the biggest hedge-fund companies and has reportedly outperformed the S&P 500 handily since inception. Like many value investors, Mandel is known to dig deep into companies, aiming to buy undervalued ones. Lone Pine's reportable stock portfolio totaled $23.2 billion in value as of Dec. 31, 2013.

Lone Pine Capital's latest 13F report shows that it boosted its position in DaVita HealthCare Partners Inc (NYSE: DVA  ) by 34%, while establishing new positions in Endo Health Solutions (NASDAQ: ENDP  ) and Lumber Liquidators Holdings  (NYSE: LL  ) .

Dialysis specialist DaVita Healthcare Partners is a significant holding of Warren Buffett's Berkshire Hathaway. Buffett's investment manager Ted Weschler likes the company in part because it offers services that aren't easily found elsewhere. DaVita's fourth quarter was strong, with double-digit earnings and revenue growth and dialysis treatments per day growing by 6.3% over year-ago levels. DaVita has been growing through partnerships and also has basic demographics on its side -- as our population grows and ages, demand for dialysis is likely to rise. DaVita has grown in part by acquisition, such as its major $4.4 billion purchase of HealthCare Partners in 2012.

Endo Health Solutions has had some ups and downs lately. Its fourth-quarter results topped expectations, but also featured earnings and revenue below year-ago levels. Bulls like its purchase of Canada's Paladin Labs and are hoping its low-testosterone treatment Aveed will finally earn the FDA's favor. Endo Health's Chief Scientific Officer is departing, which adds some uncertainty to the company's picture. The company also recently agreed to a nearly $200 million settlement over allegations of improper marketing of a shingles treatment.

Lumber Liquidators has been a strong grower in recent years and offers investors a lot to like, such as solid profit margin and revenue growth. Its last quarter was better than expected, with revenue up 23% and earnings surging 51%. It added 30 new stores during 2013, ending with 318, but its growth was also driven by getting more customers into each store, and a rise in purchases per customer. The rebounding housing market bodes well for the company's future, but its recent price, with a forward P/E near 25, doesn't make it a screaming bargain.

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Selena Maranjian

Selena Maranjian has been writing for the Fool since 1996 and covers basic investing and personal finance topics. She also prepares the Fool's syndicated newspaper column and has written or co-written a number of Fool books. For more financial and non-financial fare (as well as silly things), follow her on Twitter...

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Related Tickers

8/28/2015 4:07 PM
DVA $76.29 Down -0.36 -0.47%
DaVita, Inc. CAPS Rating: *****
ENDP $78.70 Down -0.30 -0.38%
Endo International CAPS Rating: ***
LL $14.93 Down -0.44 -2.86%
Lumber Liquidators CAPS Rating: ***