Glenview Capital was among the best performing hedge funds in 2012, 2013, and 2014. His fund returned 24.2% in 2012, 42.9% in 2013, and 14.4% in 2014. However, his recent performance isn’t encouraging. Robbins’ main fund lost 18.1% in 2015 and 2.7% in 2016.
You don’t have to be a math genius to notice that Glenview’s investors actually lost more than 2 percentage points annually in the last 3 years. What is shocking is that our analysis shows that Robbins’ best performing stock picks actually returned 4.33% per month on average over the last 3 years. S&P 500 ETF (SPY) returned only 0.5% per month during the same period.
You may be thinking that why we didn’t tell you about Robbins’ best stock picks 3 years ago before they started beating the market by nearly 4 percentage points per month. Actually, we did exactly that in the February 2014 issue of our monthly newsletter. Currently we offer a 14-day free subscription where you can download the latest issue of our monthly newsletter to read about the details of Larry Robbins’ best performing stock picks.
We discovered another profitable investment strategy while studying the historical performance of Robbins’ stock picks 3 years ago. Our analysis showed at the time that Glenview’s large-cap stock picks outperformed the S&P 500 Total Return Index by about 5 percentage points a year between 2002 and 2012. Obviously this isn’t as spectacular as beating the market by nearly 4 percentage points per month, but this is still very rare.
Most investors think that they can’t outperform the market and they have been switching to low cost index funds in recent years. Well, if they invested in Larry Robbins’ large-cap stock picks over the last 3 years they would have generated an average monthly return of 0.84% vs. 0.76% gain for the S&P 500 Total Return Index. You should keep in mind that Robbins’ picks were less riskier than the stock picks of the S&P’s index committee. When adjusted for risk, Robbins’ large-cap stock picks generated an annual alpha of 3 percentage points.
Larry Robbins’ main hedge fund generated negative returns in the last 3 years, so it isn’t really the best time period to get an idea about the “real” performance of these stocks. If we look at the performance of these stocks since the beginning of 2008 we see that Robbins’ large-cap stock picks returned 1.1% per month vs. 0.68% per month for the S&P 500 TR Index.
This period, which includes the 2008-2009 financial crisis, is probably a better time period to analyze performance of hedge funds. Robbins’ large-cap picks beat the market by 5 percentage points in this period and even when almost everything was going against Robbins in the last three years, they still managed to beat the market. So, let’s take a closer look at the top 5 large-cap stock picks of Larry Robbins: HCA Holdings Inc (NYSE:HCA), Humana Inc. (NYSE:HUM), Anthem Inc (NYSE:ANTM), Cigna Corporation (NYSE:CI), Aetna Inc (NYSE:AET).
Our analysis didn’t cover the stock returns in 2017. When we look at the performance of Robbins’ top 5 large-cap stock picks, we see that they returned an average of 14.5% excluding dividends and outperformed the S&P 500 ETFs by about 8 percentage points in 4 short months.
