The stock makes up 4.7 percent of the fund, but is only the third-largest holding, behind Manor Care and Charles Schwab.

The change in the law regarding assisted-living residences has attracted considerable interest from large national companies such as Marriott and Manor Care.

"Manor Care has been operating two distinct business that didn't really have a lot of synergies," he said.

"We've been observing Manor Care as a lodging group but couldn't cover it because of its health care component," he said.

But Manor Care, a nursing-home chain that gets less than 15 percent of its revenue form Medicare, remains a favorite.

He also owns Manor Care, a nursing home operator in Toledo, Ohio.

Most rivals are for-profit businesses, ranging from large public companies like Manor Care to scattered regional chains to small operators.

By borrowing against the property to finance the buyout, Manor Care and Carlyle can carry out the deal on favorable terms.

A. Our largest holding is Manor Care, which we regard as the Cadillac in that industry.

If we get lucky in Manor Care and they separate the hotel business from the nursing home, then the stock will be $40 this year.