5. Baxter International Inc. (NYSE:BAX)
Glenview Capital’s Stake Value: $171,444,000
Percentage of Glenview Capital’s 13F Portfolio: 3.47%
Number of Hedge Fund Holders: 45
Baxter International Inc. (NYSE:BAX) develops and provides a portfolio of healthcare products worldwide. As of March 31, Glenview Capital’s stake in Baxter International Inc. (NYSE:BAX) is valued at $171.44 million, up 2% from its prior stakes. The investment covers 3.47% of Larry Robbins’ 13F portfolio. Glenview Capital is also the third-largest shareholder in the healthcare company.
On May 3, Baxter Internation Inc. (NYSE:BAX) announced that its board of directors has declared a quarterly cash dividend of $0.29 per share, up 3.6% from its prior dividend of $0.28. The dividend is payable on July 1 to investors of record on June 3.
On June 24, JPMorgan analyst Robbie Marcus slashed his price target on Baxter International Inc. (NYSE:BAX) to $78 from $90 and maintained a Buy-side Overweight rating on the shares.
Insider Monkey found 45 hedge funds bullish on Baxter International Inc. (NYSE:BAX) at the close of Q1 2022. These funds held collective stakes worth $2.82 billion in the company, down from $3.88 billion in the previous quarter with 42 positions.
Cooper Investors mentioned Baxter International Inc. (NYSE:BAX) in its third-quarter 2021 investor letter, here is what the firm said:
“During the quarter we exited our position in Baxter, having originally bought in 2017 as a Low Risk Turnaround with clear Stalwart attributes. In essence, the core businesses were highly durable, providing life sustaining or saving medical products such as IV medication or pumps and dialysis machines.
They had been mismanaged prior to the company spinning off its biopharmaceutical business in 2015 which had generated most of the Baxter’s operating profit. With a new CEO in Joe Almeida, who came with a successful track record leading another medical device company (Covidien) we identified three sources of value latency for the new standalone Baxter.
Firstly, optimising the cost structure. Baxter were successful here – they were able to effectively double operating margins from low single digits to mid-to-high teens over a relatively short four-year period. Secondly, accelerating sales growth through a more focused R&D effort. This is inherently more difficult than cost optimisation and on this front success has been muted with only moderate impact to revenues from new product introductions. Finally, capital deployment through Baxter’s significantly under-levered balance sheet. Several smaller bolt-on acquisitions were nicely complementary to the existing portfolio, but in early September the company announced the acquisition of Hil-Rom Holdings, a medical device company with leading positions in bed systems and patient monitoring. The deal is significant at US$12.5bn in size, and exhausts all balance sheet latency in one fell swoop.
Whilst it is “EPS accretive” we believe the high single digit ROIC management are targeting over five years is most reflective of the financial merits of the deal. Put another way, despite visions of providing digital and connected healthcare (think a Baxter IV pump combined with a Hil-Rom smart bed), ultimately the combined entity will likely remain a low-to-mid-single digit grower. Baxter look like they are getting bigger but not necessarily better.
This combination of uncertainty around the merits of the Hil-Rom acquisition and the underwhelming performance on the product development side of the business led us to conclude that the investment proposition today is less attractive relative to other opportunities.”
4. Bausch Health Companies (NYSE:BHC)
Glenview Capital’s Stake Value: $211,515,000
Percentage of Glenview Capital’s 13F Portfolio: 4.28%
Number of Hedge Fund Holders: 48
As of this February, RBC Capital analyst Douglas Miehm has a $34 price target and Outperform rating on Bausch Health Companies (NYSE:BHC). Bausch Health Companies (NYSE:BHC) develops, manufactures, and markets a range of pharmaceutical, medical device, and over-the-counter (OTC) products for eye health, gastroenterology, and dermatology.
On May 10, Bausch Health Companies (NYSE:BHC) released earnings for the fiscal first quarter of 2022. The company registered an EPS of $0.72, missing estimates by $0.30. The company’s revenue for the quarter came in at $1.92 billion, down 5.38% year over year, and was short of expectations by $121.51 million.
As of March 31, Glenview Capital owns over 9.2 million shares of Bausch Health Companies (NYSE:BHC). The fund’s stakes are valued at $211.51 million, which covers 4.28% of its investment portfolio. Glenview Capital is among the top five shareholders in the company.
At the close of Q1 2022, 48 hedge funds were long Bausch Health Companies (NYSE:BHC) with stakes worth $3.17 billion in the company. This is compared to 53 positions in the previous quarter with stakes of $3.86 billion.
3. McKesson Corporation (NYSE:MCK)
Glenview Capital’s Stake Value: $286,550,000
Percentage of Glenview Capital’s 13F Portfolio: 5.8%
Number of Hedge Fund Holders: 59
McKesson Corporation (NYSE:MCK) provides healthcare services in the United States and internationally. The company has four business segments: U.S. Pharmaceutical, International, Medical-Surgical Solutions, and Prescription Technology Solutions. As of Q1 2022, Glenview Capital’s stakes in McKesson Corporation (NYSE:MCK) are valued at $286.55 million. The investment covers 5.8% of Larry Robbins’ 13F portfolio.
On May 31, McKesson Corporation (NYSE:MCK) reported that Britt Vitalone, the company’s CFO sold 27,300 shares of common stock on May 27 for a transaction of $9.1 million.
On June 7, Deutsche Bank analyst George Hill reiterated his price target of $378 on McKesson Corporation (NYSE:MCK) and upgraded the stock to Buy from Hold.
Insider Monkey found 59 hedge funds bullish on McKesson Corporation (NYSE:MCK) at the close of Q1 2022. These funds held collective stakes worth $3.79 billion in the company, up from $2.55 billion in the previous quarter with 57 positions. The hedge fund sentiment for the stock is positive.
Here is what Baron Funds had to say about McKesson Corporation (NYSE:MCK) in its first-quarter 2022 investor letter:
“Investments in health care distributors, health care services, and health care facilities along with cash exposure in a down market contributed to relative results. Within health care distributors, higher exposure to this strong performing sub-industry and outperformance of pharmaceutical distributor and technology solutions provider McKesson Corporation (NYSE:MCK) added value. McKesson was the top contributor as investors rotated into value stocks that were trading at low multiples of earnings. We continue to believe that McKesson’s stock is inexpensive in light of the company’s strong competitive position in growing end markets and earnings growth potential.”
2. Cigna Corporation (NYSE:CI)
Glenview Capital’s Stake Value: $382,417,000
Percentage of Glenview Capital’s 13F Portfolio: 7.74%
Number of Hedge Fund Holders: 63
Cigna Corporation (NYSE:CI) provides insurance and related products and services in the United States. In the first quarter of 2022, Glenview Capital raised its stakes in Cigna Corporation (NYSE:CI) by 44%, bringing them to $382.41 million. The investment covers 7.74% of Larry Robbins’ investment portfolio.
On June 16, Cigna Corporation (NYSE:CI) announced that its board of directors has authorized an accelerated $3.5 billion share repurchase program which will allow the company to buy back shares of its common stock through agreements with Mizuho Markets Americas and Morgan Stanley.
On June 21, Morgan Stanley analyst Ricky Goldwasser raised his price target on Cigna Corporation (NYSE:CI) to $296 from $283 and upgraded the stock to Overweight from Equal Weight.
At the close of Q1 2022, 63 hedge funds disclosed ownership of stakes in Cigna Corporation (NYSE:CI). The total value of these stakes amounted to $2.69 billion, up from $1.92 billion a quarter ago with 53 positions. The hedge fund sentiment around the stock is positive.
Here is what Davis Funds had to say about Cigna Corporation (NYSE:CI) in its fourth-quarter 2021 investor letter:
“Healthcare is included in the portfolio both for company-specific reasons, as well as big picture trends. At the company level, we hold select companies in pharmaceuticals, healthcare services and health insurance at attractive valuations. This is at a time when the average age of the U.S. population is fast approaching 40, older than Asia-Pacific and a little younger than the aged populations of Europe and Japan. The number of seniors in the U.S.—i.e., 65 years or older— now surpasses 54 million, or about 15% of the population. Seniors, on average, take a much greater number of medications and account for a large and disproportionate share of healthcare spending, and we expect that trend to continue due to both raw demographics and a proliferation in the number of available treatments and services available now, the latter being driven by innovation and investment in the healthcare industry. Representative holdings in the Fund include Cigna, United Health Group, Viatris and Quest Diagnostics.”
1. Tenet Healthcare Corporation (NYSE:THC)
Glenview Capital’s Stake Value: $548,514,000
Percentage of Glenview Capital’s 13F Portfolio: 11.1%
Number of Hedge Fund Holders: 55
Tenet Healthcare Corporation (NYSE:THC) operates as a diversified healthcare services company. The company has three business segments: Hospital Operations, Ambulatory Care, and Conifer. As of June 27, Tenet Healthcare Corporation (NYSE:THC) has a trailing twelve-month PE ratio of 6.33, which makes it one of the best undervalued healthcare stocks to buy now according to billionaire Larry Robbins.
Analysts are bullish on Tenet Healthcare Corporation (NYSE:THC). On June 3, Raymond James added the company to its “Analyst Current Favorites” list, which includes stocks that are Buy rated. On June 16, Loop Capital analyst Joseph France initiated coverage of Tenet Healthcare Corporation (NYSE:THC) with a Buy rating and an $80 price target.
As of March 31, Glenview Capital owns 6.3 million shares of Tenet Healthcare Corporation (NYSE:THC) which brings the fund’s stakes to $548.51 million. The investment covers 11.1% of Larry Robbins’ 13F portfolio. Glenview Capital is the largest shareholder in Tenet Healthcare Corporation (NYSE:THC) as of Q1 2022.
Tenet Healthcare Corporation (NYSE:THC) was spotted on 55 investment portfolios at the end of Q1 2022. The total stakes of these funds in the company were valued at $2.0 billion, down from $2.15 billion a quarter ago with 49 positions.
Oakmark Funds mentioned Tenet Healthcare Corporation (NYSE:THC) in its third-quarter 2021 investor letter, here is what the firm had to say:
“Tenet may be best known as the second-largest public hospital chain in the U.S., but its largest business is outpatient acute care centers. In early 2020, investors fled the health care industry because of the great uncertainty that the pandemic presented. The early days of the pandemic were very hard on the hospital industry especially, but as the Covid-19 surge peaked and diminished, hospitals were able to schedule elective procedures and engage in profitable activities.”
You can also take a look at 10 Healthcare Dividend Stocks that Hedge Funds are Buying and 10 Healthcare Stocks to Buy According to Mario Gabelli.
