How To Invest Like Larry Robbins' Glenview Capital

By Howard Kim 

Larry Robbins is a billionaire hedge fund manager who owns Glenview Capital Management LLC, valued at $20.15 billion. In the third quarter, his portfolio posted a loss of 14.20% and in the past 3 years returned +20.40%. Let's take a look at some of his activity for the quarter ending September 30, 2015.

Robbins increased his stake in Humana Inc HUM in Q3 by 1%, which now represents 6% of his total holdings. In the third quarter, Humana had a series of ups and downs. The company posted its Q2 earnings in June, which surpassed analysts' expectations for revenue and EPS.

However, some analysts expressed concern regarding the company's high capital expenses relative to a decrease in operating cash flow, creating weak cash flow. The company also had issues with legal costs in addition to paying the newly instated health insurance industry fee. The company's deal with Aetna, valued at $37 billion, also generated buzz, creating anti-trust concerns.

Doctor and hospital organizations lobbied in front of Congress, claiming the deal would endanger Medicare advantage plans, eliminate competition, and give these companies too much power in the industry. On September 30, 2015, the last day of the quarter, Humana shares were trading at $179. Last Friday, shares closed at around $162. In the last 3 months, one analyst rated the company as Buy while 2 others remain on the sidelines. The average 12-month price target is $210, marking a 29% increase from where shares last closed.

Robbins also increased his investment in CIGNA Corporation CI by 63%, now owning $620.5 million worth of shares. In July, the company announced an acquisition by Anthem for $54 billion, creating the largest insurer in the U.S. However, this deal resulted in legal action by shareholders regarding the fairness of the deal and whether or not the company's board acted in their best interest.

Also, U.S. hospitals wrote a letter to the Department of Justice asking them to evaluate if this deal will increase healthcare costs. In the letter, the hospitals claimed the deal will hurt competition, as this deal, along with others in the industry, decreases the number of national insurers from 5 to 3. Despite scrutiny, the deal was a catalyst for analysts' upgrades.

Robbins and analysts agree on Cigna, as 2 out of the 5 analysts who have rated the company in the past 3 months gave a Buy rating, while the other 3 remain on the sidelines. The average 12-month price target for the stock is $174.20, marking a 28% upside from where shares last closed.

Monsanto Company MON marked another investment by Robbins, as the hedge fund increased its investment in the agricultural giant by 22%, which now represents 6% of his holdings. The third quarter's main even for this company included the Syngenta deal.

As Monsanto's main competitor, the company offered to acquire the company for $45 billion. The company eventually upped their offer by $2 billion due to investor pressure, but ended up abandoning the deal when this number was yet again rejected. Other third quarter events included better than expected profit and sales in their Q3 earnings and an independent review of their herbicide Roundup amid claims by the World Health Organization that the product causes cancer.

On September 28, 2 days before the end of the third quarter, the stock dipped to its 52-week low of about $83. Last Friday, the stock closed at about $91. Robbins' bullish actions mirror analyst consensus, as all 4 of the analysts who have rated the company in the past 3 months gave a Buy rating. The average 12-month price target for the stock is $113, marking a 24% upside from where shares last closed.

This was originally shared on TipRanks