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

Should you follow suit? See what you think.

Mar 5, 2014 at 5:17PM

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 Maranjianwhom you can follow on Twitter, owns shares of Berkshire Hathaway. The Motley Fool recommends Berkshire Hathaway and Lumber Liquidators. The Motley Fool owns shares of Berkshire Hathaway and Lumber Liquidators. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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