Hedge fund manager Larry Robbins tends to bounce back from losing periods with impressive returns. Although shares of one of his largest holds is down -12% over the last year, the stock is ready to bounce back in a big way in 2018.
Larry Robbins of Glenview Capital Management
Larry Robbins is a hedge fund manager and CEO of Glenview Capital Management. He is also well known for his quarterly letters to investors.
He began his career as an analyst at Gleacher and Company, an M&A firm. Later Robbins spent six years running long/short strategies for Leon Cooperman at Omega Advisors.
In 2001 Robbins started Glenview Capital Management. The firm runs several hedge funds and long-only funds. The Glenview Capital Partners fund invests in equities and bonds and holds both long and short positions. The Glenview Opportunity funds invest opportunistically in equities only. In 2015 the firm launched a long-only fund to invest in healthcare stocks. Despite several losing streaks, the flagship fund returned 15% annually between 2000 to 2013.
Robbins is a former ice hockey player and captained the University of Pennsylvania club team for three years. He is now the owner of the Chicago Steel of the United States Hockey League.
Robbins has built a personal fortune of $2.3 billion and often uses his vast resources to support several education-focused charities. Robbins is on the boards of the Knowledge is Power Program, The Robin Hood Foundation and Teach for America.
Thematic Investing
Robbins has been described as a ‘Growth at a Reasonable Price’ (GARP) investor and as a ‘multi-strategy investor’. He’s said that he backs companies with predictable cash flows and recurring revenue streams.
Larry Robbin backs himself and often holds positions for significant periods, even when those positions move against him. As a result, he has earned a reputation for experiencing persistent winning and losing streaks.
When one looks at the stocks he has invested in over the years, it’s clear that Robbins follows themes. Healthcare stocks have increasingly dominated his portfolio over the years. He has also invested in technology and consumer discretionary stocks, and to a lesser extent, utilities.
While Robbins is not an activist investor, he does voice his opinions when it comes to some of his largest positions. In fact, he has said he would rather be ‘suggestivist’ than activist. In this way he has been instrumental in bringing about corporate action at Tenet (NYSE: THC) and Community Health Systems (NYSE: CYH).
Robbins began building positions in healthcare stocks after President Bush signed the Medicare Modernization Act in 2004. His bets in the healthcare sector increased again with the introduction of the Affordable Care Act. Unlike many on Wall Street, Robbins was a supporter of Obamacare.
Over the years he has held large positions in Tenet Healthcare, Thermo Fisher Scientific (NYSE: TMO), Humana (NYSE: HUM), McKesson Corporation and Community Health Systems. On the whole, these stocks have generated strong returns, but have also contributed to losses and underperformance along the way.
In 2008 the long/short fund lost 50 percent, in 2011 it lost money again and in 2015 it was down more than 18%. Robbins felt so bad about the 2015 losses that he vowed not to take any fees until he had made the money back.
The fund does tend to bounce back from these losing periods with strong returns. In 2009 it was up 82%, and in 2013 it returned 84%. Robbins appeared to be back on a winning streak as his fund was up 14.8% in the first half of 2017.
Glenview Capital Management's Latest Form 13F Filing
On November 14th, 2017, Larry Robbins' firm Glenview Capital Management filed their quarterly Form 13F regulatory filing. I reviewed the 13F filing to review holdings in Glenview Capital Management's large portfolio.
The hedge fund's stock portfolio totals $15.5 billion according to the latest filing. The list value of stock holdings is up 0.7% when compared to the last quarter. As a benchmark, the S&P 500 was up 3.9% over the same period.
Quarter-over-Quarter Turnover (QoQ Turnover) measures the level of trading activity in a portfolio. Glenview Capital Management's QoQ Turnover for the latest quarter was 25.9%, so the firm appears to trade a significant percent of its portfolio each quarter.
Glenview Capital Management's Largest Holdings
The Ideas section of finbox.io tracks top investors and trending investment themes. You can get the latest data on the holdings discussed below at the Larry Robbins page. The following table summarizes his firm's largest holdings reported in the last filing:
| Ticker | Name | Holding ($mil) | % Of Portfolio |
|---|---|---|---|
| HCA | HCA HEALTHCARE INC | $1,206.3 | 7.8% |
| DWDP | DOWDUPONT INC | $1,124.2 | 7.2% |
| FMC | FMC CORP | $1,046.8 | 6.7% |
| SHPG | SHIRE PLC | $898.8 | 5.8% |
| IQV | IQVIA Holdings Inc. | $848.2 | 5.5% |
| ANTM | ANTHEM INC | $722.0 | 4.7% |
| DXC | DXC TECHNOLOGY CO | $671.6 | 4.3% |
The seven positions above represent 42.0% of the hedge fund's total portfolio. Four of the seven largest positions are also in the healthcare sector, making up 23.8% of the portfolio. The most recent filing showed a total of 49 positions.
Glenview Capital Management's 5 Largest Purchases
I also used finbox.io to find Glenview Capital Management's largest buys last quarter. Here's the list of the biggest stock purchases determined by comparing the last two filings:
| Ticker | Name | Purchased ($mil) | % Of Portfolio |
|---|---|---|---|
| SHPG | SHIRE PLC | $634.9 | 5.8% |
| ZBH | ZIMMER BIOMET HL... | $279.1 | 2.4% |
| MCK | MCKESSON CORP | $235.5 | 2.7% |
| CVS | CVS HEALTH CORP | $111.3 | 0.7% |
| DNB | DUN & BRADSTREET... | $93.7 | 1.4% |
Three of the hedge fund's 5 biggest stock buys in the quarter were in the healthcare sector.
Glenview Capital Management's Most Undervalued Holdings
To determine which stocks are trading below their intrinsic value, aka "fair value" I used the finbox.io Fair Value estimates. I also wanted to blend in some indication of which stocks might be ready to make a move up soon because they're popular with Wall Street analysts.
I calculated an average using the finbox.io fair value upside and analyst upside to create a blended upside which I then used to rank the most undervalued holdings.
Here are the top 7 stocks based on my calculations:
| Ticker | Name | Upside (finbox.io) | Upside (Analyst Target) | Blend Upside |
|---|---|---|---|---|
| BKD | BROOKDALE SR LIV... | 63.1% | 41.8% | 52.5% |
| SHPG | SHIRE PLC | 25.5% | 45.1% | 35.3% |
| VER | VEREIT INC | 33.1% | 23.3% | 28.2% |
| MTOR | MERITOR INC | 33.3% | 14.9% | 24.1% |
| RLGY | REALOGY HLDGS CORP | 21.9% | 23.8% | 22.8% |
| HCA | HCA HEALTHCARE INC | 43.5% | 1.1% | 22.3% |
| CBS | CBS CORP NEW | 25.0% | 17.3% | 21.1% |
Note that Shire plc (NasdaqGS: SHPG) is one of Larry Robbins' largest positions and one that he's most recently been adding to. This is most likely because the current share price appears to be trading a large discount to intrinsic value.
source: finbox.io
Shire is a biotechnology company focused on serving people with rare diseases and other specialized conditions worldwide. The company offers products in therapeutic areas, including hematology, genetic diseases, neuroscience, immunology, internal medicine, ophthalmology, and oncology. The company markets its products through wholesalers, distribution centers, and pharmacies. Shire was founded in 1986 and is based in Dublin, Ireland.
Shares of the company are down -7.6% over the last month implying that there may be a buying opportunity. The stock last traded at $147.78 as of Friday, January 26th and 10 separate valuation analyses imply that there is 25.5% upside relative to its current trading price. Wall Street's price target of $213.93 is even more bullish implying +40% upside.
Steven Cohen is also a notable investor in the company. His fund currently holds a position worth $32.1 million. If you haven't heard of billionaire Steven Cohen, you may already know a little about him if you've watched Showtime's hit series Billions. Investing morality aside, Cohen's real-life results are undeniable. He was the third highest-earning hedge fund manager of 2012 when he made $1.4 billion. No doubt Cohen is expecting big gains from his long position in Shire.
Illustrious money manager Leon Cooperman in another notable investor that currently owns 653,977 shares of SHPG which represents 4.0% of his fund's stock portfolio.
Managers with more than $100 million in qualifying assets under management are required to disclose their holdings to the SEC each quarter via 13F filings. Qualifying assets include long positions in U.S. equities and ADRs, call/put options, and convertible debt securities. Shorts, cash positions, foreign investments and other assets are not included. It is important to note that these filings are due 45 days after the quarter end date. Therefore, Glenview Capital Management's holdings above represent positions held as of September 30th and not necessarily reflective of the fund's current stock holdings.
However, most can agree that with thousands of stocks traded on U.S. exchanges, doing thorough research on each one is nearly impossible for smaller investors. Leveraging the resources of the largest hedge funds on Wall Street can be a powerful way to narrow down the list.
As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.
Author: Matt Hogan
Expertise: Valuation, financial statement analysis
Matt Hogan is a co-founder of finbox.io. His expertise is in investment decision making. Prior to finbox.io, Matt worked for an investment banking group providing fairness opinions in connection to stock acquisitions. He spent much of his time building valuation models to help clients determine an asset’s fair value. He believes that these same valuation models should be used by all investors before buying or selling a stock.
His work is frequently published at InvestorPlace, Benzinga, ValueWalk, AAII, Barron's, Seeking Alpha and investing.com.
Matt can be reached at [email protected].
