Billionaire Robbins Turns Activist on Tenet Healthcare Corp (THC), Buffett Keeps Buying Phillips 66 (PSX), Plus 2 Other Moves

Numerous stock market participants are looking forward to hedge funds’ 13F filings for the fourth quarter, which will reveal the early-2016 bets of the world’s brightest and most successful investors. The Form 13F filing deadline for the fourth quarter is February 15, 2016. As most hedge funds usually submit their 13Fs close to the deadline, it will take a little while longer until we can get a full handle on hedge funds’ collective fourth-quarter moves. Individual investors, whose investment strategies heavily rely on hedge funds’ quarterly filings, can also examine funds’ 13D, 13G, and Form 4 filings as part of their analysis process. Without further ado, let’s proceed with a discussion of four filings submitted with the SEC by Warren Buffett, Larry Robbins, and two other hedge fund managers.

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According to a Schedule 13D filing with the SEC, Larry Robbins’ Glenview Capital Management owns 17.89 million shares of Tenet Healthcare Corp (NYSE:THC), which account for a whopping 17.95% of the company’s outstanding common stock. Glenview has changed its filing status from passive (13G) to active (13D), but has not adjusted its ownership position in Tenet since the investment firm filed its latest 13G (filed in November) on the company. Most importantly, Glenview Capital Management and the diversified healthcare services company reached an agreement on January 18, under which the company increased the size of its Board by two members to 12 and appointed Randolph C. Simpson and Matthew J. Ripperger (two senior employees of Glenview) as new independent directors. Furthermore, the agreement stipulates that Larry Robbins’ firm may propose two additional candidates (independent of both Tenet and Glenview) for appointment as directors through the completion of the company’s 2017 annual meeting of shareholders.

Tenet Healthcare Corp (NYSE:THC)’s shares have lost 47% over the past one-year period, after embarking on a steady downtrend since mid-July. The company operates 83 hospitals, 19 short-stay surgical hospitals, more than 425 outpatient centers and nine facilities in the United Kingdom as of September 30. Tenet Healthcare reported net operating revenue of $13.61 billion for the nine months that ended September 30, up from $12.14 billion reported a year earlier. The increase was partly attributable to acquisitions, increases in outpatient volumes, and improved managed care pricing. The hedge fund sentiment towards the stock was not overly positive in the third quarter, as the number of smart money investors in our system with positions in the company dropped to 44 from 48 quarter-over-quarter. Meanwhile, analysts anticipate earnings per share of $2.16 for fiscal year 2016, which yields an attractive price-to-earnings ratio of 10.71 (this compares favorably with the average of 15.65 for the S&P 500 companies). Jacob Gottlieb’s Visium Asset Management holds a 2.31 million-share position in Tenet Healthcare Corp (NYSE:THC) as of the end of the third quarter.

Let’s head to the next two pages of this article, where we discuss the other three filings submitted with the SEC.

As stated by a Form 4 filing, Glenn Krevlin’s Glenhill Advisors LLC purchased 307,367 shares of Lionbridge Technologies Inc. (NASDAQ:LIOX) last week at a weighted average cost of $4.19, enlarging its overall holding to 6.86 million shares. The Insider Monkey team discussed the fund’s 13G filing on the company last week, which disclosed an ownership stake of 8.15 million shares. It is important to note that Glenhill reported sole voting power with respect to 6.55 million shares, shared voting power with respect to 1.60 million shares, and sole dispositive power with respect to 8.15 million shares. Hence, the fund’s economic exposure to Lionbridge Technologies Inc. (NASDAQ:LIOX) after disclosing the recent purchase totals 8.46 million shares.

The provider of globalization solutions generated $419.17 million in revenue for the nine months that ended September 30, compared to $370.93 million reported for the same period of the prior year. It should also be mentioned that Microsoft Corporation (NASDAQ:MSFT) has been a client of Lionbridge for more than a decade and contributed roughly 14% of the company’s third-quarter revenue, compared with 18% reported for the same period of the previous year. Hence, the company was able to achieve significant top-line growth despite experiencing lower revenue from Microsoft. Importantly, the stock trades at a very eye-catching forward P/E ratio of 9.72, which is substantially below the forward P/E of the S&P 500 benchmark. George McCabe’s Portolan Capital Management reported owning 1.65 million shares of Lionbridge Technologies Inc. (NASDAQ:LIOX) through its 13F for the September quarter.

In a separate Form 4 filing, Berkshire Hathaway reported purchasing an additional 1.59 million shares of Phillips 66 (NYSE:PSX) last Wednesday, at prices that ranged from $77.54 per share to $78.93 per share. After yet another sizable purchase, Buffett’s holding company has 69.03 million shares of the oil refiner, which account for 12.94% of its outstanding stock. It seems that Phillips 66 (NYSE:PSX) has been wrongly punished by investors as a result of the falling crude oil prices, so the financial guru might have decided to make the most of this investment opportunity. Of course, the depressed crude oil prices put some weight on the company’s top-line results, but its bottom-line figure benefits from this outcome. Put differently, Phillips 66 is a buyer of oil, so it predominantly benefits from lower manufacturing costs. The crack spread, which measures the discrepancy between market prices for refined petroleum products and crude oil, has increased in the past several months, positively impacting the refiner’s profitability. At the same time, Phillips operates in four main segments, including midstream, chemicals, refining, and marketing and specialties, which is yet another likely reason to put money into the company’s stock. Most importantly, the stock trades at a forward P/E ratio of only 11.05, so there is growing evidence that Buffett’s move represents a safe investment. A total of 33 smart money investors from our database had stakes in the company at the end of the third quarter, amassing 16.30% of its shares. Steven Cohen’s Point72 Asset Management, one of the big winners in 2015 in the hedge fund industry, acquired a 290,000-share stake in Phillips 66 (NYSE:PSX) during the third quarter.

Lastly, in a freshly-submitted filing with the SEC, Glenn W. Welling’s Engaged Capital LLC urges HeartWare International Inc. (NASDAQ:HTWR)’s shareholders to vote against the acquisition of private company Valtech Cardio at the company’s Special Meeting that takes place on February 19. Let us remind you that HeartWare International sealed a merger agreement with the Israeli company last year, under which the two companies are set to become subsidiaries of a new holding company called HW Global. Engaged Capital, which owns 1.3% of HeartWare International Inc. (NASDAQ:HTWR)’s outstanding common stock, publicly revealed its opposition to the proposed acquisition of Valtech at the end of December. To be more specific, the investment firm urged the medical device company’s Board to walk away from the deal, arguing that the acquisition significantly dilutes shareholder value and adds unnecessary long-term business risks. Moreover, Engaged Capital believes that there is no point in “taking on the enormous and unnecessary risks associated with Valtech, when there is a clear, lower-risk path to significant shareholder value creation: executing in the company’s core VAD business”. Other investors may not agree with Welling’s assessment, as the number of hedge funds tracked by Insider Monkey with positions in HeartWare climbed to 21 from 15 during the third quarter, during which time the deal was announced. Adage Capital Management owns 1.72 million shares of HeartWare International Inc. (NASDAQ:HTWR) as of September 30.

Disclosure: None