CNBC is hosting their Annual Delivering Alpha Conference this week in New York City. CNBC's Delivering Alpha Investor Summit brings together some of the world's most influential money managers and political figures.
Jim Chanos is an American investment manager and currently serves as president and founder of Kynikos Associates, a New York City registered investment advisor who is focused on short selling.He began his career in the 1980s as a short seller. After working as an analyst in several firms, he founded Kynikos (Greek for "cynic") in 1985 with $16 million, as a firm specializing in short selling. A critical position taken at Kynikos was his shorting of Enron.
On Thursday, Jim announced that he has been shorting DaVita for years. DaVita Inc. provides kidney dialysis services for patients suffering from chronic kidney failure or end stage renal disease (ESRD). The company operates kidney dialysis centers and provides related lab services in outpatient dialysis centers.
“Most dialysis patients are old and less affluent and qualify for Medicare and Medicaid in the vast majority of cases,” Chanos said. “What DaVita is trying do is push those patients into, ironically, more expensive insurance contracts through the Obamacare exchanges.”
“They then turn around and charge the commercial payer three to four times what they get from Medicare and Medicaid,” Chanos said, referring to the lawsuit.
He added that while the American Kidney Foundation can agree to pay some of the higher commercial costs, DaVita is one of the two largest donors to the foundation. “So, they are donating to the charity; the charity is then paying the premium into the Obamacare exchange; then they’re charging the insurers 3x-to-4x.”
What makes this story interesting is Warren Buffett’s Berkshire Hathaway is DaVita’s largest shareholder.
Jim went on to say DaVita’s earnings per share have not grown over the past 10 years. But does the stock price share Jim’s thoughts on the company, lets go to the charts to find out?
On the monthly chart, price is making lower highs and lower lows.
On the weekly chart, price appears to be forming a base.
Based on the daily chart, DaVita is neither a short or a long as price is between a daily demand and supply zone.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.