According to a recent filing with the Securities and Exchange Commission, Larry Robbins‘ Glenview Capital has hiked its stake in Tenet Healthcare Corp (NYSE:THC) by acquiring an additional 979,500 shares through its affiliated funds, taking its total stake in the $5.66 billion healthcare company to 14.79 million shares. The new holding amasses about 15% of the company’s outstanding stock.
Larry Robbins worked at veteran investor Leon Cooperman’s Omega Advisors before he established Glenview Capital in 2001. During the peak of the financial crises in 2008, the fund lost about 50%, but quickly got back on its feet in the following year when it posted gains of 82.7%. At the end of March, the market value of Glenview’s public equity portfolio stood at $21.90 billion, up from $19.98 billion at the end of the previous quarter. The healthcare sector, which is up by about 14.46% year to date, represented 36% of the fund’s holdings.
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Glenview has held a position in Tenet Healthcare Corp (NYSE:THC) since the first quarter of 2012. The stock has appreciated by about 212% since then, putting its average annual return at 46.12%. On a year-to-date basis the gains amount to nearly 13%, which is almost the same as the industry’s gains of 13.53% during the same period. With a current twelve-month trailing earnings multiple of 55.75 as compared to the industry’s average of 25.98, the stock may seem overpriced, but Tenet Healthcare Corp (NYSE:THC) has quite a few catalysts that will boost its future earnings, chief among them being the recent favorable ruling by the Supreme Court with regards to tax subsidies related to the Affordable Care Act.
Just yesterday Tenet Healthcare Corp (NYSE:THC) was upgraded by Wells Fargo to an ‘Outperform’ rating from ‘Market Perform’, and given a price target of $64, which provides about 12% upside from the current trading levels. The company also initiated a $2.4 billion debt offering this month to fund the repayment of $400 million worth of term loans and for general corporate purposes. Tenet posted solid financial results for the first quarter, beating estimates for both the top and bottom lines. Moreover, in light of Tenet Healthcare Corp (NYSE:THC)’s recent joint venture with United Surgical Partners International, the company has established itself as a leader in the ambulatory surgery market.
Judging from the hedge funds that we track, the smart money had a neutral outlook towards Tenet Healthcare Corp (NYSE:THC) during the first quarter. By the end of the first quarter a total of 42 firms had an aggregate investment of $1.40 billion in the company as compared with 46 funds with $1.25 billion at the end of the previous quarter. So while the number of funds with positions dropped, the value of their collective holdings was increased even during a time that Tenet’s shares dipped slightly in value. Aside from Glenview, Richard Perry‘s Perry Capital and Christopher Medlock James‘ Partner Fund Management were the two largest stockholders of Tenet Healthcare Corp (NYSE:THC) among these funds with respective stakes of 1.58 million shares valued at $78.23 million, and 1.44 million shares valued at $71.46 million.
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