As one of Robbins’ new buys in the third quarter, Community Health Systems is one of 45 stocks in his $6.11 billion portfolio. With a market cap of $2.73 billion, Community Health Systems operates more than 135 general acute care hospitals in 29 U.S. states. The company is headquartered in Tennessee and has been publicly traded since June 9, 2000.
In its 2011 annual report, Community Health described record numbers in its revenue, income from continuing operations and earnings per share and cash flow – positive trends that were projected to be carried out to 2012.
Community Health has adhered to the projection, experiencing stable growth in several areas for 2012. In its trailing 12 months, EBITDA has risen 9.9 percent, its free cash flow sees a positive growth number as well, at 38.4 percent in the last year and its revenue per share has had an annual growth trendline of 25.89 percent, although one of its five Medium Warning signs expresses a slow down in per-share revenue for the past year.
In the 2011 annual report, Wayne T. Smith, Community Health Systems president and CEO, said:
“Real challenges exist that threaten the economic stability of independent community hospitals. In turn, these hospitals are looking for established and operationally focused partners with the financial resources and experience to keep these hospitals viable in the local community…Community Health Systems has a solid history of profitable growth and a proven ability to succeed in a dynamic environment. Our performance in 2011 further extended this record.”
As part of the 30.5 percent that makes up the health care sector in Robbins’ portfolio, which is the largest sector represented, Community Health Care’s stock is down 3.33 percent for this morning’s trading, at the share price of $29.03, close to its one-year high. GuruFocus places it under one Severe Warning sign for an Altman-Z Score in distress zone, and two Good Signs for an expanding operating margin and a P/E ratio close to its 10-year low.
Known to have taken an activist approach in several of his past bets, Robbins’ top holdings are Life Technologies Corp. (LIFE), Tenet Healthcare Corp (NYSE:THC), American International Group Inc. (NYSE:AIG), McKesson Inc. (NYSE:MCK) and HCA Holdings Inc. (NYSE:HCA).
In a shareholder letter released in March of last year, Robbins described the qualities his firm looks for in stocks:
“While our portfolio holdings are diversified by industry, end market and growth drivers, we felt that the common elements of modest valuations, above consensus earnings growth and accelerating productive capital deployment would all serve to promote value for our largest equity holdings. It is therefore not a coincidence that of our eight largest individual equity winners in the quarter, all of them beat consensus earnings for the September quarter, and six of them were aggressive repurchasers of their own shares. We believe these trends of secular growth, excess capital deployment and a modest expansion of valuation multiples will continue to drive positive absolute returns from our investment portfolio in 2011 and beyond.”
Besides Robbins, Community Health Systems appears in several other Guru portfolios including that of Jeremy Grantham, Louis Moore, Richard Snow, Steven Cohen and Ron Baron (view its Guru holding history at CYH: Holding History).
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