This article discusses the top 10 healthcare stock picks of billionaire Larry Robbins’ hedge fund Glenview Capital Management. To learn about the fund’s top five stock picks from the healthcare and pharmaceutical industry, you can skip ahead and check out 5 Best Healthcare Stocks to Buy According to Billionaire Larry Robbins.
Larry Robbins is the billionaire founder and CEO of Glenview Capital Management, a hedge fund with around $6 billion in assets under management. Mr. Robbins has been a major player in the hedge fund industry for over two decades. His firm is well known for having wild fluctuations in its performance, where one year it underperforms the broader market by many basis points only to post record numbers in the very next year.
Mr. Robbins was born in 1969 and raised in Arlington Heights, Illinois. He graduated from the University of Pennsylvania’s Jerome Fisher Program in Management and Technology in 1992, earning two undergraduate degrees concurrently, one in economics and the other in systems engineering. After college, Mr. Robbins worked at a boutique merger and advisory firm in New York City – Gleacher & Company. He left Gleacher & Company after three years and spent the next six years at billionaire Leon Cooperman’s Omega Advisors, working first as an analyst and then becoming a partner. He quit his job at Omega Advisors to start Glenview Capital Management in 2000.
In an industry known for continuous portfolio churning, Mr. Robbins stands out as a money manager capable of holding high conviction positions for many years and not selling them even when they experience a significant decline. This adamant behavior has helped him post record numbers when markets have been on his side, but it has also landed him and his firm in trouble, with investors fleeing the fund in droves after it hits a rough patch. For example, in the first nine months of 2019, after the fund had been underperforming for a few years, investors withdrew close to $2 billion from Glenview Capital Management. However, 2019 turned out to be one of the best years in the fund’s history, with Glenview Capital Management returning 30% compared to a meagre 8% average return posted by hedge funds collectively that year.
Glenview Capital Management’s Portfolio
Although Glenview Capital Management can not be classified as a sector-specific fund, its 13F portfolio has had a heavy concentration of healthcare stocks over many quarters. At the end of last year, Glenview Capital Management’s healthcare stock picks in aggregate accounted for close to half of the value of its 13F portfolio. By June this year, their weightage had come down to 28.57%. The aggregate value of Glenview Capital Management’s 13F holdings across sectors has also fallen by one-third year over year and stood at approximately $4 billion at the end of Q2. Some of the fund’s top stock picks from the healthcare sector at the end of June included names like McKesson Corporation (NYSE:MCK), Centene Corporation (NYSE:CNC), and Baxter International Inc. (NYSE:BAX).
Larry Robbins of Glenview Capital
Our Methodology
Insider Monkey’s research shows that the consensus stock picks of the top hedge funds can produce returns that beat the broader market’s performance by a wide margin, which is why we actively track the portfolios of 895 hedge funds. The stocks discussed in this article were selected from Glenview Capital Management’s latest 13F filing for the quarter ending June 30.
Best Healthcare Stocks to Buy According to Billionaire Larry Robbins
10. Hologic, Inc. (NASDAQ:HOLX)
Glenview Capital Management’s Stake Value: $24,905,000
Percentage of Glenview Capital Management’s 13F Portfolio: 0.62%
Number of Hedge Fund Holders: 43
Glenview Capital Management first reported initiating a stake in Hologic, Inc. (NASDAQ:HOLX) during the second quarter of 2018 through a regulatory filing. The Marlborough, Massachusetts- based diagnostics and surgical products manufacturer has been a stable performer over the last 10 years, with its shares appreciating by over 210% during that period. However, in the previous two years, Hologic, Inc.’s (NASDAQ:HOLX) stock seems to have lost its momentum as it continues to languish in the $60 to $80 range.
This range-bound movement of the stock has made it attractive from a valuation perspective. Trading at a forward price to earnings multiple of 11.11 currently, Hologic, Inc. (NASDAQ:HOLX) was one of the stocks selected by Insider Monkey in its list of 10 Best Undervalued Large-Cap Stocks According to Hedge Funds published earlier this year. In late July, analysts at Morgan Stanley reiterated their ‘Equal Weight’ rating on the stock while reducing their price target on it to $70 from $72, which represents a potential upside of 11.3% from the stock’s last closing price.
9. Myriad Genetics, Inc. (NASDAQ:MYGN)
Glenview Capital Management’s Stake Value: $30,831,000
Percentage of Glenview Capital Management’s 13F Portfolio: 0.77%
Number of Hedge Fund Holders: 14
Myriad Genetics, Inc. (NASDAQ:MYGN) is one of those biotech stocks that one buys in the hope that a sudden breakthrough by the company is imminent and it can push the stock to the stratosphere. But sadly, that hasn’t happened with Myriad Genetics, Inc. (NASDAQ:MYGN) in a long time. For more than the past two decades, Myriad Genetics, Inc.’s (NASDAQ:MYGN) stock has broken the $40 barrier multiple times, only to come crashing down in the next few years.
On August 25, the company issued a press release announcing that Japan’s Ministry of Health, Labour and Welfare (MHLW) has granted expanded coverage for the use of its BRACAnalysis Diagnostic System as a companion diagnostic to identify patients at an early stage who can have a high-risk recurrent breast cancer and may benefit from Lynparza(olaparib).
8. Boston Scientific Corporation (NYSE:BSX)
Glenview Capital Management’s Stake Value: $33,371,000
Percentage of Glenview Capital Management’s 13F Portfolio: 0.83%
Number of Hedge Fund Holders: 56
Among its top 10 healthcare picks, Glenview Capital Management reduced its holdings most significantly in percentage terms – by 36% to 895,396 shares – in Boston Scientific Corporation (NYSE:BSX) during the second quarter. Glenview Capital Management was not the only fund tracked by Insider Monkey that cut down its holdings substantially in the medical devices company during Q2. John Overdeck and David Siegel’s Two Sigma Advisors and Jinghua Yan’s TwinBeech Capital also slashed their holdings in Boston Scientific Corporation (NYSE:BSX) by 42% to 4.4 million shares and by 68% to 118,614 shares, respectively.
Founded in 1979, Boston Scientific Corporation (NYSE:BSX) is one of the largest medical device companies around the world. It operates its business under three segments – MedSurg, Rhythm and Neuro, and Cardiovascular. Last month, the company announced that it had acquired Obsidio, which develops Gel Embolic Material (GEM) technology for embolizing blood vessels in the peripheral vasculature. The terms of this deal were not disclosed by Boston Scientific Corporation (NYSE:BSX). The 13 analysts on Wall Street who actively track Boston Scientific Corporation (NYSE:BSX), currently have a consensus price target of $46.83 on its stock, representing a potential upside of 17.8% from the stock’s last closing price. Furthermore, 11 of those 13 analysts currently have a ‘buy’ or equivalent rating on the stock.
7. Brookdale Senior Living, Inc. (NYSE:BKD)
Glenview Capital Management’s Stake Value: $44,695,000
Percentage of Glenview Capital Management’s 13F Portfolio: 1.11%
Number of Hedge Fund Holders: 20
The popularity of Brookdale Senior Living, Inc. (NYSE:BKD) among smart money investors has followed the trajectory of its stock price movement over the last seven years. During mid-2015, when the stock traded near the $38 level, 62 hedge funds, among those tracked by Insider Monkey, disclosed having a stake in the company. That number has fallen all the way down to 20 at the end of Q2 2022, with Brookdale Senior Living, Inc.’s (NYSE:BKD) stock crashing down to below the $5 mark.
Glenview Capital Management, which became a shareholder for the first time in the second quarter of 2014, reduced its holdings in the company by 22% in the second quarter to approximately 10 million shares. Despite lowering its stake, Glenview Capital Management remained the second largest shareholder of Brookdale Senior Living, Inc. (NYSE:BKD) at the end of Q2 among funds tracked by us, following Stephen Dubois’ Camber Capital Management which held 16 million shares.
For its fiscal 2022 second quarter, Brookdale Senior Living, Inc. (NYSE:BKD) reported a GAAP earnings per share loss of $0.45 recently, missing analysts’ estimate by $0.05. However, it beat analysts’ revenue projections by $4.02 million, reporting revenues of $689.52 million for that period.
6. HCA Healthcare, Inc. (NYSE:HCA)
Glenview Capital Management’s Stake Value: $53,246,000
Percentage of Glenview Capital Management’s 13F Portfolio: 1.33%
Number of Hedge Fund Holders: 63
Glenview Capital Management shares a long history with HCA Healthcare, Inc. (NYSE:HCA), having disclosed its stake in the company as far back as the first quarter of 2011. HCA Healthcare, Inc. (NYSE:HCA) has also turned out to be one of Glenview Capital Management’s best-performing stock pick over the years, with shares of the company witnessing a six-fold increase in the last ten years.
Though HCA Healthcare, Inc.’s (NYSE:HCA) stock has gone through a 21% correction year-to-date, this decline has only made it more attractive to value-focused investors. Based on its last closing price, the stock currently trades at a trailing twelve months price-to-earnings and price-to-cash flow multiples of only 9.62 and 7.53, respectively. Jean-Marie Eveillard-led First Eagle Investments recently released a second-quarter 2022 investor letter for its “First Eagle Investments Global Fund”, in which it had this to say about HCA Healthcare, Inc. (NYSE:HCA):
“HCA Healthcare owns and operates 182 hospitals and approximately 2,300 ambulatory sites of care in the US and UK. Although admission volumes have recently increased, the company lowered its sales and earnings guidance for 2022 due to concerns about rising labor costs.
The ongoing shortage of healthcare workers in general, and nurses in particular, has forced operators like HCA to fill many roles with temporary contract employees, which is more expensive than hiring full-time workers. We believe these disruptions are temporary, and we maintain our positive opinion on the ability of HCA’s management to be effective stewards of both the balance sheet and business operations.”
Click to continue reading and see 5 Best Healthcare Stocks to Buy According to Billionaire Larry Robbins.
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Disclosure: None. 10 Best Healthcare Stocks to Buy According to Billionaire Larry Robbins is originally published on Insider Monkey.
