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Most of Berkshire Hathaway's buys in the second quarter were focused on stocks that the firm already had positions in, not new names. The biggest add-on buy came from
DaVita(DVA - Get Report), a $9.2 billion company firm that runs more than 1,700 clinics and in-patient hospital dialysis units across the U.S., serving patients who suffer from chronic kidney failure.
Berkshire picked up 3.3 million shares of the firm last quarter, increasing its position by 50% and hiking its stake in the firm to 9.9% of outstanding shares.
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DaVita's clinics serve patients who suffer from long-term kidney issues. That means that the firm's customers tend to be sticky: the better care DVA can provide, the healthier its 140,000 patients are, and the longer they'll be able to remain patients. As health problems like obesity continue to spread across the U.S. and tax Americans' kidneys, the number of diseases that require treatment from DaVita clinics should also continue to increase.
The firm is in the process of taking on a huge $4.4 billion merger that would change DVA's business from being dialysis-focused only into a more diversified healthcare facility portfolio. It's a move that makes sense for DVA, and Berkshire's investment managers know it. While healthcare reform will eventually knock Medicare payouts slightly, the larger pool of insured patients should lift DaVita's business overall - especially with a broader focus.