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Does DaVita’s (DVA) Stock Buyback Strategy Make Sense in This Market?

Alex Smith

First Eagle Investment Management recently released its Q1 2020 Investor Letter, a copy of which you can download below. The First Eagle Fund of America posted a return of -23.72% for the quarter (without sales charge), underperforming its benchmark, the S&P 500 Index which returned -19.60% in the same quarter. You should check out First Eagle's top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.

In the said letter, First Eagle highlighted a few stocks and DaVita Inc. (NYSE:DVA) is one of them. DaVita provides kidney dialysis services for patients suffering from chronic kidney failure. Year-to-date, DaVita Inc. (NYSE:DVA) stock gained 5.1% and on May 28th it had a closing price of $79.47. Here is what First Eagle said:

"DaVita, which operates kidney dialysis centers with a focus on the US, reported better-than-expected fourth quarter 2019 earnings and gave solid guidance for 2020 while continuing to repurchase its own shares."

In Q4 2019, the number of bullish hedge fund positions on DaVita Inc. (NYSE:DVA) stock increased by about 3% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with DVA’s growth potential. Our calculations showed that DaVita Inc. (NYSE:DVA) isn't among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we leave no stone unturned when looking for the next great investment idea.  For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this analyst’s “corona catalyst plays“. We interview hedge fund managers and ask them about best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital's Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. You can subscribe to our free enewsletter below to receive our stories in your inbox:

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Disclosure: None. This article is originally published at Insider Monkey.