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Larry Robbins Grows in Tenet Healthcare Shares
Posted by: Dianne Tordillo (IP Logged)
Date: October 24, 2012 03:06PM
Glenview Capital’s Larry Robbins has increased his holding of Tenet Healthcare Corp. (THC) in the past six weeks with four separate purchases; his most recent purchase was reported Oct. 19, adding 200,000 shares to his previous holding, according to GuruFocus Real Time Picks.
This places Robbins’ total holding of Tenet Healthcare to 56.5 million shares, boosting his ownership of the company to almost 15 percent.
Tenet Healthcare Corp. is an investor-owned health care delivery systems that operates 49 hospitals and 100 outpatient centers in 10 states, according to the company’s website description.
Robbins first acquired Tenet Healthcare in the first quarter, starting off with a little over 25.4 million shares. In the second quarter, he increased his shares by 62.5 percent, bringing his holding up to 41.2 million shares.
In September alone, Robbins purchased 14.5 million more shares of Tenet Healthcare, while in October thus far, he’s acquired more than 633,000, showing his incremental growth in the company’s stake.
With Tenet Healthcare’s recent announcement of a reverse stock split, which exchanges one new share for every four existing shares, Tenet Healthcare is currently trading at $23.33.
To see Tenet Health Care’s year-to-date price variations, visit GuruFocus Interactive Charts.
In its second quarter fiscal report, Tenet reported an adjusted earnings before interest, taxes and amortizations (EBITDA) of $288 million, which is an increase of 4.7 percent compared to the same quarter last year. Tenet Healthcare also reported increases in net operating revenues at 6.2 percent and net patient revenue at 5.3 percent.
A loss of $6 million, or $0.01 per diluted share, also impacted Tenet’s net income attributable to common shareholders compared to 2011’s $55 million, or $0.11 per diluted share in the second quarter.
To accelerate growth and enhance shareholder value, Tenet announced several financial initiatives on Oct. 1
In addition to the reverse stock split option mentioned, Tenet anticipates $400 million worth of near-term acquisitions to “enhance the Company’s primary business lines,” according to a Tenet press release, a $500 million authorization to repurchase common stock in open market transactions and $800 million of new debt, which is said to help reduce the company’s outstanding balance, contribute to the funding of the said acquisitions and cover $216 million of 7.375 percent of its debt due in February 2013, to name a few.
The reverse stock split, which took effect Oct. 11 without changing the par value per share, decreased Tenet’s authorized shares of common stock from about a billion shares down to a little above 262 million shares. At the same time, the split also reduced the number of shares outstanding from about 418 million to about 104.5 million.
“We have attractive opportunities to accelerate the growth of our core business and position our balance sheet to enhance shareholder value,” Tenet president and CEO, Trevor Fetter, said in the company’s Four-Point Plan news release. “Historic low interest rates and a strong acquisition pipeline across our three major business lines provide the compelling catalysts for these aggressive actions.”
With a market cap of $2.45 billion, Tenet Healthcare has a P/E (ttm) ratio of 36.8, a P/B ratio of 2.1 and a P/S ratio of 0.3.
Tenet Healthcare has a higher P/E (ttm) ratio compared to a few of its competitors. Health Management Associates Inc. (HMA) has a P/E ratio of 12.5 with the same P/B and P/S ratios as Tenet, whereas, Universal Health Services Inc. (UHS) has a P/E ratio of 10.5 and Community Health Systems (CYH) has a P/E ratio of 9.1.
Besides Robbins, the following Gurus also hold shares of Tenet Healthcare: SAC Capital Advisors’ Steven Cohen at 177,233 shares, The Tudor Group’s Paul Tudor Jones at 35,700 shares and Vanguard Health Care Fund’s Edward Owens at 5.6 million shares.
Having opted for an activist approach in previous investments, Robbins makes his returns by acquiring concentrated shareholding of mid to large cap stocks, and voicing his opinions on improving management and operations.
Larry Robbins’ Top Buys, Sales and Holdings Bubble Chart
Among the 48 stocks in his portfolio, the majority of his investments belong in the healthcare, industrial and consumer services sectors.
Additional healthcare-related stocks that Robbins has invested include Allscripts Healthcare Solutions Inc. (MDRX), Hospira Inc. (HSP) and AmerisourceBergen Corp. (ABC).
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Guru Discussed: Larry Robbins: Current Portfolio, Stock Picks
Stocks Discussed: THC, HMA, UHS, CYH, MDRX, HSP, ABC,