No. of Recommendations: 13
A kickoff post for discussion of Berkshire's various stock holdings.
What do people think of Davita?
Just to get the juices really flowing, I hate it and almost always have. I'm embarrassed to be an indirect owner.
The main attraction is the progress in metrics per share because of the very substantial buybacks. But the operating business as a whole is (a) moribund, and (b) a bit dodgy.
A seven year old opinion of the (b) factor, definitely worth watching even if you don't agree with the slant. Also quite funny.
https://www.youtube.com/watch?v=yw_nqzVfxFQAs for (a), top line revenues are almost precisely flat compared to a decade ago, maybe 25% lower in real terms.
The improvements in metrics per share are real, and it's a perfectly reasonable capital allocation out of free cash flow and owner earnings. But if that's where a big chunk of owner earnings are going, then they aren't going to owners as coupons or expansion of the business---if they switched to paying out, then there wouldn't be the per-share growth. You can't eat the same cake twice. It isn't a growing firm that is ALSO doing a lot of buybacks, it's one or the other.
Sure, it's a necessary service. There are people alive who would not be if nobody did what they are doing. But couldn't a better company do it?
So--what do other people think.
Is it in the too hard pile? The too smelly pile? Do you think the prospects are good from here, for Berkshire to do well in it? Is there reputational risk? Better insights on their economic trajectory?
Jim
