Larry Robbins‘ Glenview Capital has revealed its top stock picks for 2015 in its latest 13F filing with the SEC. It is no surprise that three of the top five stocks, in terms of value, operate in the health care sector, since that has always been the major focus of Glenview Capital. Moreover, three of the top five cpicks still continue to be Robbins’ favorites from a year ago when the fund submitted its filing at that time. They include Thermo Fisher Scientific Inc. (NYSE:TMO), Monsanto Company (NYSE:MON) and Tenet Healthcare Corp (NYSE:THC). The two new picks in the list are Flextronics International Ltd. (NASDAQ:FLEX) and Community Health Systems (NYSE:CYH).
A graduate from Wharton School and Moore School of the University of Pennsylvania, Larry Robbins had worked under the apprenticeship of Eric Gleacher of Gleacher & Company, and the renowned Leon Cooperman of Omega Advisors, before he set up his own fund in 2001. Glenview Capital has provided annualized returns of over 14% since its inception, making it one of the most successful funds during that time, and returned 9.6% net during the first half of 2014, a year in which many funds lagged the S&P 500. Besides investing in stocks, Robbins is also a debt investor. He is well known for his activism and for publicly voicing his concerns over management’s failings at certain companies, and if necessary, demanding a complete overhaul. Business Insider described him as one of the most optimistic hedge fund managers around.
Thermo Fisher Scientific Inc. (NYSE:TMO) is what Robbins is most optimistic about nowadays, since after adding an additional 11,598 shares during the fourth quarter, the stock now forms 7.14% of his portfolio. The market value of the position stands at a significant $1.43 billion. Robbins shares his sentiment regarding this equipment and software provider to the pharmaceutical and biotech companies as well as clinical labs and research institutions, with Andreas Halvorsen of Viking Global, who has a stake worth $725 million in the company, though he trimmed his position during the fourth quarter to 5.79 million shares.
Having a market capitalisation of $51.24 billion, Thermo Fisher Scientific Inc. (NYSE:TMO) has a forward earnings multiple of 15.55. The company posted strong fourth quarter results with Earnings Per Share (EPS) beating estimates by $0.05, standing at $1.99 for the quarter. The stock is up about 4% year-to-date.
The second largest contributor in Glenview Capital’s portfolio, and the first of the two non-healthcare stocks in this list of top five picks was Monsanto Company (NYSE:MON). No shares were added or reduced during the last quarter in the position, with the fund’s 9.62 million shares worth 5.75% of the value of Glenview Capital’s portfolio. Monsanto also has the backing of Jonathon Jacobson of Highfields Capital Management and D.E Shaw, who have stakes of 4.36 million and 3.15 million shares respectively.
Despite reporting a fall in earnings for the first quarter of the fiscal year 2015, the provider of agricultural products’ stock price is up nearly 5% year-to-date. The reason being that investors believe that the headwinds that the company is facing in terms of lower sales of corn seeds, since farmers have turned away from the crop in light of its prevalent low price, will be offset by stronger sales from the soybean division. Revenues from Soybean increased by 48.31% during the first quarter.
Although Flextronics International Ltd. (NASDAQ:FLEX) has had a presence on Glenview Capital’s sheets for a long time, the stock received a strong boost in its portfolio contribution during the last fiscal year. An additional stake amounting to 18% of the previously held position was added in the second quarter, while another 8% was added in the fourth. The current position forms 4.2% of the portfolio value, with ownership of 75.13 million shares.
Ken Griffin of Citadel Investment Group has also increased his stake in Flextronics by 156% from its third quarter holdings in the company, now owning 4.91 million shares of the Singapore-based provider of global supply chain solutions.
Tenet Healthcare Corp (NYSE:THC) ‘s stake remained untouched during the fourth quarter, at 13.81 million shares. However, the portfolio contribution of the healthcare services company dipped from 4.29% in the third quarter to 3.5% in the fourth. This is because Tenet’s stock price has fallen nearly 25% since the end of last year’s third quarter. The company is set to release its fourth quarter earnings report on February 24.
Another position that remained unchanged, at 12.09 million shares, was that of Community Health Systems (NYSE:CYH), of which Glenview was the largest shareholder at the end of 2014. The stake, valued at $625 million, forms 3.26% of Glenview Capital’s portfolio value.
Richard Barrera‘s Roystone Capital Partners and Jacob Doft’s Highline Capital Management have shown considerable faith in the provider of health care services as they increased their stakes by 48% and 39% respectively, giving them 2.36 million and 2.23 million shares total.
The stock is down nearly 9.2% year-to-date. The company’s $4.8 billion revenues for the third quarter missed the estimated revenues mark by $120 million. Its fourth quarter earnings report will be released on February 20.
