In this article, we discuss 5 best stocks to buy according to billionaire Larry Robbins. For Robbins’ investment philosophy and his comments on certain stocks please see 10 Best Stocks To Buy According To Billionaire Larry Robbins.
5. Cigna Corporation (NYSE: CI)
Value: $261,270,000
Percent of Larry Robbins’ 13F Portfolio: 5.99%
No. of Hedge Fund Holders: 57
Insurance giant Cigna is amongst the 10 best stocks to buy according to billionaire Larry Robbins. Cigna recently announced to double its spending on share buybacks – to $8 billion for 2021- 2025 compared to $3 billion in 2019-2020. The company also said that its COVID-19-related losses would halve as mass rollouts of vaccines would cause a decline in COVID-19 testing costs and its memberships are also expected to recover following plummeting joblessness in the country.
Andreas Halvorsen’s Viking Global is one of the 57 hedge funds tracked by Insider Monkey having stakes in CI at the end of the fourth quarter. The fund owns over 1.95 million shares of the company.
Artisan Value Fund, in their Q4 2020 investor letter, mentioned Cigna Corporation (NYSE: CI). Here is what Artisan Value Fund has to say about Cigna Corporation in their Q4 2020 investor letter:
“New purchases include Cigna. Cigna is a leading managed care company which operates through the following major segments: health services, integrated medical, international markets and group disability. It’s one of the few managed care organizations in the United States with the scale and size to compete effectively. Cigna has recently focused on deleveraging its balance sheet and further diversifying its business, after completing the Express Scripts acquisition in late 2018. Additionally, the company has partnered with Amazon, which will offer two new pharmacy options—including a self-pay offering. Cigna will administer the self-pay option through its health services division Evernorth. The partnership should be one of many strong earnings drivers for Cigna, which we believe is currently trading at an attractive valuation.”
4. DXC Technology Company (NYSE: DXC)
Value: $261,338,000
Percent of Larry Robbins’ 13F Portfolio: 5.99%
No. of Hedge Fund Holders: 39
IT solutions company DXC Technology ranks 4th in the list of 10 best stocks to buy according to Larry Robbins. The stock recently received a Buy rating from Deutsche Bank. The bank’s analyst Brian Keane also increased his price target for DXC stock to $44 from $28, saying the company’s CEO Mike Salvino has “cleaned up” the problems in his first 18 months with the company. The analyst also likes the company’s enterprise technology stack.
Larry Robins’ Glenview Capital currently owns 10.1 shares of DXC, worth $261.3 million. DXC occupies 5.99% of DXC’s overall equity.
In one of their investor letters, Miller Value highlighted a few stocks and DXC Technology Co (NYSE:DXC) is one of them. Here is what Miller Value said:
“Finally, I’d like to highlight a holding that we’ve been recently scaling higher, DXC Technology (DXC), a combination of CSC and the Enterprise Service business of Hewlett Packard Enterprise. We are very familiar with the business, having owned both companies at different points in time over the past 15 years. DXC Technology is a Global IT services company that is focused on helping clients with their mission-critical system and leading digital transformation. While the Technology sector has been a market favorite over the past couple of years, DXC has been far from that. The stock price has been under significant pressure, down more than 80% from its post-merger highs as the company ran into integration challenges. DXC’s new CEO, Mike Salvino, has a strong track record in the industry, previously a very successful senior executive at Accenture. His plan for the company has a lot of similarities to successful action steps taken by Maxar Technologies’ (MAXR) new CEO early in their turnaround: focusing on improving key customer relationships and employee morale, selling non-core assets, significantly reducing cost structure, and looking to reduce capital intensity of the business overtime. DXC’s new CEO is also rolling out new cross-selling initiatives, and his significant multi-year cost reduction program will begin in the back half of this year. Upon completion, it has the potential for more than $700M in savings or greater than $2/EPS. Success in implementing the enhancements should allow the company to return to double-digit EBIT margins and mid-high teens ROE supporting normalized EPS greater than $7/share. It’s worth mentioning that DXC peers, Accenture (ACN) and Cognizant Technology Solutions (CTSH), have low to mid-teens EBIT margins and are currently being valued at price–to-sales of 2 to 3 times, while DXC’s market price is currently at a 70% discount to sales! As the turnaround plan improves operating results and returns the company to growth, we believe the valuation discount will begin to narrow between DXC and their peers. The upside potential for DXC is significant and could be multiples of their current share price over the next couple of years.”
3. Takeda Pharmaceutical Company Limited (NYSE: TAK)
Value: $277,741,000
Percent of Larry Robbins’ 13F Portfolio: 6.36%
No. of Hedge Fund Holders: 18
Japan-based Takeda is another healthcare stock in billionaire Larry Robbins’ portfolio as of the end of the fourth quarter. One of the biggest pharma companies in the world, Takeda makes treatments mostly for metabolic disorders, gastroenterology, neurology, inflammation and oncology. The company recently completed the sale of its OTC and prescription pharmaceutical business in Europe along with some other assets to Orifarm for $670 million.
As of the end of the fourth quarter, 18 hedge funds in Insider Monkey’s database of 887 funds held stakes in TAK, compared to 19 funds in the third quarter. Glenview Capital is the biggest stakeholder in the company, with 15.3 million shares, worth $277.7 million.
2. Bausch Health Companies Inc. (NYSE: BHC)
Value: $341,828,000
Percent of Larry Robbins’ 13F Portfolio: 7.83%
No. of Hedge Fund Holders: 43
Canada-based Bausch Health makes treatments for skin diseases, gastrointestinal disorders, eye health and neurology. In March, Bank of America downgraded the stock to Underperform from Neutral, citing valuation concerns. The bank said that the stock is priced to “perfection.” BofA set a price target of $27 for Bausch stock.
Glenview Capital currently holds 16.4 million shares of BHC that amounts $341.8 million. BHC occupies 7.83% of Glenview Capital’s total portfolio.
In one of their investor letters, Chou Associates Management highlighted a few stocks and Bausch Health Companies Inc. (NYSE:BHC) is one of them. Here is what Chou Associates Management said:
“In early August, Bausch Health Companies Inc. announced that it is planning to spin off its eye care business, Bausch + Lomb, into an independent publicly traded company. This will allow the company to concentrate on its gastroenterology, aesthetics/dermatology, neurology and international pharma business.
Chairman and CEO Joseph Papa said, “We’ve looked at the value of our pure health companies like Alcon and Cooper and believe that Bausch + Lomb would compare very favorably when investors have an opportunity to make a judgment about the relative value of the stand-alone business”.
Comparables like Cooper Companies and Alcon Inc. are currently trading between 18 and 20 times EBITDA. If Bausch + Lomb trades at similar multiples as a stand-alone company, the total value of Bausch Health using sum-of-the-parts method, net of debt, should be worth north of $35 per share, as an inference. For a long time we have felt that Bausch was undervalued, but the investors were not giving credit that management has done a good job in running the operations, selling non-core assets, as well as de-leveraging its balance sheet. They felt the process was too slow, we hope the spin-off of Bausch + Lomb unit will be the catalyst that is needed for investors to price the company closer to its intrinsic value.”
1. Tenet Healthcare Corporation (NYSE: THC)
Value: $729,074,000
Percent of Larry Robbins’ 13F Portfolio: 16.71%
No. of Hedge Fund Holders: 34
Tenet Healthcare tops the list of 10 best stocks to buy according to billionaire Larry Robbins. Glenview Capital entered 2021 with a $729 million stake in the company. The healthcare services company operates over 60 hospitals and 500 healthcare facilities. In February, CFRA upgraded the stock to Buy from Hold, citing favorable commercial mix and cost cutting. The firm also upped its price target for the stock to $57.
According to our database, the number of THC’s long hedge funds positions increased at the end of the fourth quarter of 2020. There were 34 hedge funds that hold a position in THC compared to 33 funds in the third quarter. The biggest stakeholder of the company is Larry Robbins’ Glenview Capital, with 18.3 million shares, worth $729.1 million.
You can also take a peek at Top 20 Valuable and Innovative AI Companies in the World and 15 Biggest News Companies in the World.
