How Did Billionaire Larry Robbins’ Top Long-Term Picks Perform Over Years?

Billionaire Larry Robbins‘ Glenview Capital was one of the best-performing large hedge funds in the period between 2012 and 2014. However, that winning streak ended in 2015 when the firm’s big bets on healthcare and pharmaceutical underperformed and it registered a loss of over 18% for the year. The magnitude of the loss suffered by the firm can be gauged from its assets under management (AUM), which fell from almost $12 billion to under $10 billion during 2015. To people who don’t know much about Mr. Robbins or Glenview that kind of loss might seem humongous, but Glenview Capital is no stranger to large drawdowns. Its flagship fund lost 50% in the midst of the financial crisis in 2008, but recouped all of those losses in the subsequent years with gains of 82.7% in 2009 alone. Taking into account Mr. Robbins’ track record of bouncing back from the lows and his philosophy of investing for the long-term, in this article, we will be going through the five stocks that Glenview has held for the past several years.

We track prominent investors and hedge funds because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks among a select group of investors delivered a monthly alpha of 80 basis points between 1999 and 2012 (see the details here).

#5 Tenet Healthcare Corp (NYSE:THC)

– Shares Owned by Glenview Capital (as of December 31): 17.9 million

– Value of Holding (as of December 31): $542.07 million

Glenview Capital has held a stake in Tenet Healthcare Corp (NYSE:THC) since the first quarter of 2012. While shares of Tenet Healthcare Corp (NYSE:THC) saw a huge rally from the time the fund initiated its stake till mid-2015, they have fallen over 60% since July last year. Glenview might have seen this slump as an opportunity and that’s why increased its stake in the company by 9% during the fourth quarter. However, it was not the only fund to do so, Ross Margolies‘ Stelliam Investment Management also increased its stake in the company by 30% to 2.32 million shares during the same period. On February 22, the company reported its fourth quarter earnings, beating analysts’ expectations of EPS of $0.34 on revenue of $4.82 billion by declaring EPS of $0.35 on revenue of $5.21 billion. On March 24, analysts at Credit Suisse reiterated their ‘Neutral’ rating on the stock, but boosted their price target on it to $31 from $30.

#4 Flextronics International Ltd. (NASDAQ:FLEX)

– Shares Owned by Glenview Capital (as of December 31): 55.13 million

– Value of Holding (as of December 31): $618.02 million

Shares of Flextronics International Ltd. (NASDAQ:FLEX) have appreciated by over 300% since Glenview Capital first reported owning a stake in the company in the first quarter of 2009. Though Glenview reduced its stake in the company by 27% in the fourth quarter of 2015, it still held over 10% of all outstanding shares of the company at the end of December. Billionaire David E. Shaw‘s firm D.E. Shaw increased its stake in the company by 349% to 3.46 million shares during the same period. Flextronics International Ltd. (NASDAQ:FLEX)’s stock has been on a consistent uptrend since January 28, when the Singapore-based company reported its fourth-quarter results and is currently trading up 7.6% year-to-date. However, most analysts believe that  the stock can go much higher from here because of the low forward P/E of  9.68, it currently trades at.  Moreover, they also think that the stock has little downside risk currently because of the strong free cash flow the company generates and its commitment to return 50% of its free cash flow to shareholders.

#3 Thermo Fisher Scientific Inc. (NYSE:TMO)

– Shares Owned by Glenview Capital (as of December 31): 5.93 million

– Value of Holding (as of December 31): $841.64 million

Thermo Fisher Scientific Inc. (NYSE:TMO) has been a part of Glenview Capital’s portfolio since the second quarter of 2006, when its stock used to trade near the $35 levels. In the period between 2012 and 2015, shares of Thermo Fisher Scientific Inc. (NYSE:TMO) rose gradually and made their lifetime high of $143.65 in late-December last year. While Glenview went against the popular saying of “cut your losses short and let your winners run” during the fourth quarter and reduced its stake in the company by 30%, Billionaire Ken Griffin‘s Citadel Investment Group increased its stake in the company by 25% to 780,000 shares during the same period. Thermo Fisher Scientific Inc.’s stock also saw a notable decline amid a decline in the broader market at the beginning of 2016, but it has recouped those losses in the last couple of weeks and is currently trading very close to its lifetime high. On March 31, the company completed its $1.3 billion acquisition of Affymetrix, Inc. (NASDAQ:AFFX), which it announced in early-January.

#2 HCA Holdings Inc (NYSE:HCA)

– Shares Owned by Glenview Capital (as of December 31): 14.30 million

– Value of Holding (as of December 31): $967 million

Glenview Capital has held a stake in HCA Holdings Inc (NYSE:HCA) since the first quarter of 2011, when the company made its debut on the New York Stock Exchange. However, the fund really displayed its conviction in the stock during the second-half of last year, when shares of HCA Holdings Inc (NYSE:HCA) fell significantly. After increasing its stake in the company by 7% during the third quarter, Glenview Capital again increased it by a whopping 160% during the fourth quarter and became the largest shareholder of  HCA Holdings Inc going into 2016 among funds tracked by us. The fund’s conviction in the stock has been rewarded handsomely this year with shares of HCA Holdings Inc trading up over 15% year-to-date. According to a lot of analysts, HCA Holdings is undervalued right now because it is better positioned than its peers to capitalize on the expansion of Medicaid and despite that it is currently trading at a trailing P/E of 15.79, much below the hospital industry average trailing P/E of 22.42. Richard Perry‘s Perry Capital initiated a stake in the company during the fourth quarter of 2015 by purchasing 3 million shares.

#1 CIGNA Corporation (NYSE:CI)

– Shares Owned by Glenview Capital (as of December 31): 7 million

– Value of Holding (as of December 31): $1 billion

Though shares of CIGNA Corporation (NYSE:CI) fell by over 60% within a year after Glenview Capital initiated a stake in the company in the fourth quarter of 2007, they saw an amazing bull run after the financial crisis, rising tenfold in the period between 2009 and mid-2015. When that bull run ended in late-June last year after Anthem Inc (NYSE:ANTM) announced that it will acquire the company for $54 billion and CIGNA Corporation (NYSE:CI)’s stock started falling, Glenview Capital proceeded to solidify its stake in the company, boosting it by 63% and 53% during the third and fourth quarter, respectively. The Anthem-Cigna deal was approved by the shareholders of both the companies last December, but it is still being scrutinized by antitrust regulators. CIGNA Corporation’s stock currently sports an average rating of ‘Overweight’ and an average price target of $171.14 from the 17 leading analysts on the Street who cover it. With ownership of 2.21 million shares of CIGNA Corporation, D. E. Shaw & Co. trailed Glenview Capital as the largest shareholder of the company at the end of December among the funds in our database.

Disclosure: None