In this article, we will discuss the 10 healthcare stocks to buy now according to billionaire Larry Robbins. If you want to skip the detailed analysis of Robbins’ investment philosophy, go directly to 5 Healthcare Stocks to Buy Now According to Billionaire Larry Robbins.
Larry Robbins is an American investor and philanthropist, born in 1969. He is the CEO and portfolio manager of Glenview Capital. According to Forbes, Larry Robbins has a current net worth of about $2 billion.
Larry Robbins’ Investment Philosophy
Unlike most investors, Larry Robbins believes in holding stocks for long periods without employing stop losses. Robbins said in an interview with Barrons that he believes stop losses might prevent a few losses, but it costs more in gains to shareholders. One of his key investment strategies is growth at a reasonable price. He prefers companies with steady revenues, which are firmly established in the market. Robbins considers himself to be a “suggestivist” investor instead of an activist investor.
Larry Robbins was one of the first investors that went big on the Affordable Care Act and started investing in the U.S healthcare sector in 2012. At the end of the same year, the Glenview Opportunity fund returned 54% to investors.
Glenview Capital
Glenview Capital was founded by Larry Robbins in 2000. It has holdings in several sectors including healthcare, industrials, consumer services, and information technology. However, the largest concentration of the fund is in the healthcare sector. In 2019, when the world was going through a recession, Glenview Capital recorded phenomenal returns of 29.91%, while an average hedge fund returned around 8%. The Glenview flagship fund had leapt by 33%, while its opportunity fund surged by 50%.
As of March 31, Glenview Capital had $4.9 billion in managed 13F securities, up from $4.69 billion in the previous quarter. In Q1 2022, Glenview Capital made 9 new purchases and exited 6 stocks. Moreover, the firm increased its holdings in 26 stocks while reducing stakes in 20 names. The top 3 stocks of Glenview Capital represented 26% of its 13F securities.
Tenet Healthcare Corporation (NYSE:THC), Cigna Corporation (NYSE:CI), and Global Payments Inc. (NYSE:GPN) are some of the most notable names in Glenview Capital’s portfolio.
Larry Robbins of Glenview Capital
Our Methodology
The stocks mentioned in the article are part of the healthcare sector and were taken from Glenview Capital’s 13F filings as of the first quarter of 2022. The companies are listed according to their concentration in Glenview Capital’s portfolio. The stocks that were being dumped significantly by Glenview Capital have not been added to the list. For further understanding of the readers, the analyst estimates, financial reports, and dividend history of these stocks have also been mentioned.
The hedge fund sentiment around each stock has been taken from Insider Monkey’s Q1 2022 database of 912 elite hedge funds.
Health Stocks to Buy Now According to Billionaire Larry Robbins
10. Boston Scientific Corporation (NYSE:BSX)
Glenview Capital’s Stake Value: $61.3 million
Percentage of Glenview Capital’s13F Portfolio: 1.24%
Number of Hedge Fund Holders: 55
Boston Scientific Corporation (NYSE:BSX) is a US-based multinational biomedical company, specializing in medical devices for interventional medical specialities. According to the Insider Monkey database, the company was part of 55 hedge fund portfolios in Q1 2022, with combined stakes valued at $4.67 billion. Among these investment portfolios, Glenview Capital owned 1.38 million shares of Boston Scientific Corporation (NYSE:BSX) worth $61.3 million, with a 1.24% concentration in the firm’s total holdings.
Truist analyst Richard Newitter lowered his price target on Boston Scientific Corporation (NYSE:BSX) to $45 from $51 and maintained a Buy rating on its shares. The analyst expects “in-linish” organic revenue growth from the whole MedTech group, while the slanting forex-related and inflationary pressures could sway the EPS estimates for FY 2022 and 2023. However, the analyst believes a miss to be “highly-unlikely” in the upcoming period due to its wider than normal organic revenue growth guide for Q2.
In the trailing twelve months as of June 30, Boston Scientific Corporation (NYSE:BSX) recorded total revenues of $12.16 billion, compared to $11.88 billion in the same period last year. However, the net income was $230 million less than the 2021 levels. During the same period, the company reduced its net debt from $7.397 billion to $7.131 billion. Furthermore, the TTM FCF was recorded at $928 million.
Tenet Healthcare Corporation (NYSE:THC), Cigna Corporation (NYSE:CI), and Global Payments Inc. (NYSE:GPN) are some of the notable stocks in Glenview Capital’s portfolio, along with Boston Scientific Corporation (NYSE:BSX).
9. HCA Healthcare, Inc. (NYSE:HCA)
Glenview Capital’s Stake Value: $79.4 million
Percentage of Glenview Capital’s13F Portfolio: 1.6%
Number of Hedge Fund Holders: 62
HCA Healthcare, Inc. (NYSE:HCA) is a US-based healthcare facilities operator. The company operates close to 190 hospitals and 2,000 care sites across the United States and the United Kingdom. At the end of the first quarter of 2022, Glenview Capital owned $79.4 million worth of company shares.
HCA Healthcare, Inc. (NYSE:HCA) outperformed its EPS estimates in the second quarter of 2022 by 13.33% after recording an EPS of $4.21. The revenue exceeded the consensus of $14.73 billion by $93.54 million. Furthermore, the company’s cash flow from operations was around $1.64 billion in Q2.
HCA Healthcare, Inc. (NYSE:HCA) has a dividend yield of around 1.25% with an annual dividend payout of $2.24. The most recent quarterly dividend of $0.56 was declared on April 22, and paid out on June 30.
Here is what First Eagle Investment Management had to say about HCA Healthcare, Inc. (NYSE:HCA) in its Q3 2021 investor letter:
“HCA Healthcare owns and operates 185 hospitals and approximately 2,000 sites of care in the US and UK. Admissions to its facilities, depressed during the worst of the Covid-19 outbreak in 2020, have begun to rebound. HCA reported a nearly 20% year-over-year increase in admissions during the second quarter and a 14% increase in revenue, and forecast that volume would continue to improve throughout the year. We maintain our positive opinion of the company’s management team, believing them to be effective stewards of both the balance sheet and HCA’s business operations.”
8. Universal Health Services, Inc. (NYSE:UHS)
Glenview Capital’s Stake Value: $89.7 million
Percentage of Glenview Capital’s 13F Portfolio: 1.81%
Number of Hedge Fund Holders: 40
Universal Health Services, Inc. (NYSE:UHS) is an American healthcare facilities company. As of the first quarter of 2022, 40 hedge funds were bullish on the company, compared to 35 in the previous quarter. First Eagle Investment Management was the most significant stakeholder of the company in Q1 2022, with total shares valued at $602.3 million.
On July 20, Universal Health Services, Inc. (NYSE:UHS) announced a quarterly cash dividend of $0.20 to be paid out on September 15, to shareholders of record as of September 1, 2022.
On July 6, Universal Health Services, Inc. (NYSE:UHS) was downgraded from Market Perform to Underperform by BMO analyst Matt Borsch. The analyst also lowered his price target on the firm from $133 to $60, owing to the warnings of a weak Q2.
At the end of Q1 2022, Glenview Capital owned 618,871 shares of Universal Health Services, Inc. (NYSE:UHS) worth $89.7 million, representing 1.81% of the fund’s portfolio.
7. Encompass Health Corporation (NYSE:EHC)
Glenview Capital’s Stake Value: $91.4 million
Percentage of Glenview Capital’s 13F Portfolio: 1.85%
Number of Hedge Fund Holders: 48
Encompass Health Corporation (NYSE:EHC) is an American home and facility-based post-acute health care services company. The company’s operations revolve around three divisions – inpatient rehabilitation, home health, and hospice. Glenview Capital increased its holdings in the company by 73% in Q1 2022. By the end of the quarter, Encompass Health Corporation (NYSE:EHC) represented 1.85% of Glenview Capital’s portfolio with 1.285 million shares valued at $91.4 million.
On July 20, Encompass Health Corporation (NYSE:EHC) announced a joint venture with BJC HealthCare for a 40-bed inpatient rehabilitation hospital in West County. The total cost of construction is expected to be around $30 million and the land was bought for $3.5 million in December 2021. The facility is expected to start accepting patients in 2024. Moreover, according to the company, it will employ 80 to 110 people.
On June 21, Truist analyst David MacDonald lowered Encompass Health Corporation (NYSE:EHC)’s health price target from $85 to $75, keeping the recent market multiples in mind. However, the analyst maintained a Buy rating on the company shares.
Encompass Health Corporation (NYSE:EHC) is a significant stock in Glenview Capital’s portfolio along with Tenet Healthcare Corporation (NYSE:THC), Cigna Corporation (NYSE:CI), and Global Payments Inc. (NYSE:GPN).
Heartland Advisors mentioned Encompass Health Corporation (NYSE:EHC) in its Q4 2021 investor letter. Here is what it said:
“COVID complications. Shares of many Health Care companies lagged as the continuing threat of COVID-19 dampened demand for elective medical procedures and healthcare providers struggled to maintain adequate staffing in the face of burnout and resistance to vaccine mandates. The Strategy’s holdings in the sector trailed the benchmark average, and the group contained a key detractor, Encompass Health Corporation (EHC).
Encompass provides inpatient rehabilitation services as well as home-based health and hospice care. Both businesses enjoy a competitive advantage over many of their peers and, we believe, are well positioned to grow organically, and acquire smaller competitors that could further economies of scale.
A labor shortage has taken a toll on sales and profit margins at Encompass as the company struggles to fill positions in a challenging environment for nursing wages and availability. Revenues have also been hurt by a slowdown in elective surgeries performed, which results in a smaller pool of patients in need of rehabilitation services.
When we took a stake in Encompass late in the summer of 2020, we recognized that COVID-related headwinds could endure longer than anticipated. However, the team believes the current challenges will eventually fade as enhanced nurse recruiting outreach helps mitigate staffing pressures while COVID-19 containment and treatment efforts gain traction. With shares producing an 8% free cash flow yield and trading at just 9x 2022 enterprise value/earnings before interest, taxes, depreciation, and amortization, we believe our patience will be rewarded.”
6. Centene Corporation (NYSE:CNC)
Glenview Capital’s Stake Value: $92.055 million
Percentage of Glenview Capital’s 13F Portfolio: 1.86%
Number of Hedge Fund Holders: 60
Centene Corporation (NYSE:CNC) is a managed-care company headquartered in St. Louis, Missouri. In May, the company announced its exit from the pharmacy benefit management business after divesting Magellan Rx and PANTHERx Rare for $2.8 billion. Centene Corporation (NYSE:CNC) updated its EPS guidance after its Q1 2022 results from $5.3-$5.5 to $5.40-$5.55.
On June 14, Jefferies analyst David Windley upgraded Centene Corporation (NYSE:CNC)’s from Hold to Buy. According to Windley, “high-teens EPS growth through a recession is stout and likely compares favorably to peers”. In addition, the analyst raised his price target of the company to $115 from $82.
As of the first quarter of 2022, Glenview Capital had a stake worth $92.055 million in Centene Corporation (NYSE:CNC) with 1.09 million shares, making up 1.86% of the portfolio. The most prominent stake was held by Viking Global with 7.8 million shares, valued at $657.19 million.
Click to continue reading and see 5 Healthcare Stocks to Buy Now According to Billionaire Larry Robbins.
Suggested articles:
- Top 10 Stock Picks of Minerva Advisors
- 7 Energy Stocks to Buy Now According to Billionaire Leon Cooperman
- The 10 Stocks That Jim Cramer Is Talking About
Disclosure: None. 10 Healthcare Stocks to Buy Now According to Billionaire Larry Robbins is originally published on Insider Monkey.
