Billionaire Larry Robbins Knows How To Pick Mega-Cap Stocks

Larry Robbins’ Glenview Capital Management reported an equity portfolio worth over $13.98 billion in its latest 13F filing. The fund has a heavy concentration in the financial sector, which amassed 59% of the total value. Glenview Capital Management has given a stellar return of more than 300% after fees and expenses between January 2001 and December 2010 significantly outperforming the broader market indices.

We backtested a portfolio of five of Larry Robbins largest positions in mega-cap stocks (with a market cap of $50 billion or more), and calculated their returns. These stocks returned 0.64% on an average each month between 2002 and 2012. During the same period, S&P 500 Index gained just 0.29% per month. Thus, Larry Robbins’ picks outperformed the S&P Index by a whopping 53 basis points per month, or 6.36% per year. Given Glenview Capital Management’s expertise at picking mega-cap stocks, we have analyzed the fund’s top mega-cap picks.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs (see more details).

Thermo Fisher Scientific Inc. (NYSE:TMO) ranked on the 10th spot in Glenview Capital Management’s 13F portfolio at the end of September. The fund sold 171,924 shares of the company but still held 2.69 million shares worth $427.29 million at the end of the third quarter. The stock price has inched up by 2% over the last one year and has underperformed the broader market. The stock has an average ‘Buy’ recommendation from analysts Though the number of funds tracked by us having Thermo Fisher Scientific Inc. (NYSE:TMO) in their portfolios declined to 46 from 57, the value of their holdings increased to $2.92 billion from $2.79 billion during the third quarter.

AbbVie Inc (NYSE:ABBV) is another healthcare stock, in which Glenview held a $380.32 million stake containing 6.03 million shares, down by 51% over the quarter. AbbVie Inc (NYSE:ABBV) has gained 5% since the beginning of the year and sports a dividend yield of 4.12%. AbbVie Inc (NYSE:ABBV) has a decent immunology portfolio, which has been driving its profit margins and share price. The company reported third-quarter earnings of $1.21 per share, beating estimates by $0.01, while revenue of $6.40 billion missed the expectations by $160 million. The number of smart money investors from our database long AbbVie Inc (NYSE:ABBV) inched down by one to 56 and the value of their holdings also declined by $60 million to $4.17 billion between July and September.

Glenview Capital Management held 371,849 class A shares of Alphabet Inc (NASDAQ:GOOGL) worth $298.9 million at the end of the third quarter. This stock has registered a gain of 4% over the last year. Other funds having large stakes in Alphabet Inc (NASDAQ:GOOGL) included Andreas Halvorsen’s Viking Global and Ken Fisher’s Fisher Asset Management. The technology giant posted strong third quarter results with revenues beating analyst estimates and announced a $7 billion stock buyback program in October. Alphabet Inc (NASDAQ:GOOGL) enjoys a strong competitive advantage in the form of a dominant internet search product. Its core advertising business should also benefit from increasing mobile searches and video streaming. The stock is a favorite among hedge funds in our database. A total of 137 funds held $14.78 billion worth of Alphabet Inc (NASDAQ:GOOGL)’s shares as at the end of September, versus 135 funds owning $11.55 billion worth of stock in the quarter earlier.

In Charter Communications, Inc. (NASDAQ:CHTR), Glenview Capital cut its stake by 353,850 shares to 672,597 shares worth $181.58 million during the third quarter. Charter Communications, Inc. (NASDAQ:CHTR) was also the largest holding of Stephen Mandel’s Lone Pine Capital, with the fund holding 5.25 million shares worth more than $1.4 billion at the end of September. The company which is now the second-largest broadband provider in USA reaches 49 million homes and businesses. The stock is currently trading near its 52-week high and has a ‘Buy’ rating from most analysts covering the stock. Though the number of funds from our database owning shares of Charter Communications, Inc. (NASDAQ:CHTR) decreased to 112 from 134 in the second quarter, the value of their holdings went up to $18.47 billion from $18.43 billion quarter over quarter.

Glenview Capital also owned 1.8 million shares of E I Du Pont De Nemours And Co (NYSE:DD) worth $122.02 million at the end of September. The stock of the science and technology company operates in six segments. Mason Hawkins’ Southeastern Asset Management also held 4.16 million shares of E I Du Pont De Nemours worth more than $278 million. Back in October, E I Du Pont De Nemours And Co (NYSE:DD) posted earnings of $0.34 per share, which were higher than the expected $0.21 per share, and revenue of $4.92 billion for the third quarter, versus the consensus estimate of $4.87 billion. Though the number of funds tracked by us long  I Du Pont De Nemours And Co (NYSE:DD) remained constant at 36 during the third quarter, the value of their holdings declined to $3.46 billion from $3.52 billion.

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