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King of Consistency - Larry Robbins’ High Conviction Stocks in Review

December 31, 2013 | About:
Sally Jones

Sally Jones

49 followers

To ring in the New Year, here’s inspiration from hedge fund hotshot Larry Robbins who once said: “Consistency of effort often makes the difference between who wins and who loses …We know that the key is to realize that on January 1st, when the sheet reads zero point zero, we have to remember that it’s not about what you did before, but about that persistence and continuity of work effort.”

The New Yorker has described the vocal Guru Larry Robbins, founder, portfolio manager and CEO of Glenview Capital Management, as a “hotshot who utilizes a variety of strategies.” Over his investing career, Robbins has mentioned the value of consistency as the differentiator between winners and losers. The former hockey player also values the holistic approach, saying, “I grew up in the Midwest as a student and a hockey player. Playing hockey, you quickly learn that it is a team sport where everybody is good and that you need to work hard, and you need to work hard throughout the whole game.”

Based in Manhattan, Glenview Capital Management is an employee-owned hedge fund. The firm invests in public equity and fixed income markets of the U.S., and runs two funds: Glenview Funds, a short fund, and Little Arbor Fund, a multi-strategy fund. The Glenview Capital hedge fund portfolio currently lists 65 stocks, 13 of them new, with a total value of $11.86 billion, and a quarter-over-quarter turnover of 17%. The portfolio is heavily weighted with healthcare at 36.4%, technology at 14.6% and industrials at 12.8%, as of Sept. 30, 2013. The stocks bought by Larry Robbins have averaged a 12-month return of 28.18%. Glenview Capital manages around $7.1 billion.

Bullish on hospitals, Robbins invests heavily the U.S. healthcare sector and believes there is asset mispricing in the sector. Last month, Forbes suggested that Larry Robbins’ bet on companies that may benefit from the Affordable Care Act could make him one of the top-performing hedge fund managers this year.

A long/short multi-strategy manager, Robbins realizes returns making concentrated bets on large cap stocks. Sometimes taking an activist approach, Robbins has challenged what company management does and publicly voices the need for change. Glenview Capital seeks low valuations and excess capital, looking for strong companies that can succeed regardless of the economy. Using fundamental research on stock selection to deliver absolute returns, Glenview is known for doing intense internal analysis using a team consisting of seven contributing groups. Robbins has compared looking for investments to the recycling business. He is a keen observer of a variety of changes that play on a business – such as stock price, raw materials, management and regulations.

According to Forbes, Robbins’ main hedge fund dropped 11% in 2011, but he is bouncing back in a big way. In the first 10 months of this year, Glenview’s main hedge fund had a net return of 37%, compared to the S&P’s 25%.

Here’s an update on three high-conviction stocks in the Glenview Capital portfolio, as of Sept. 30, 2013.

McKesson Corp. (MCK)

Shares: 4,612,936

Value: $591,840,000

Weightings: 5%

Up 65% over 12 months, McKesson Corp. (MCK) has a market cap of $37.05 billion; its shares were traded at around $161.31 with a P/E ratio of 27.30. The dividend yield is 0.60%.

McKesson Corporation delivers medicines, pharmaceutical supplies, information and care management products and services designed to reduce costs and improve quality across the healthcare industry. The company operates in two segments: The McKesson Distribution Solutions segment and The McKesson Technology Solutions segment.

The company is rated with 3.5 stars out of five stars for business predictability.

The GuruFocus analysis of the company shows five warning signs and two good signs.

Guru Action: As of Sept. 30, 2013, Larry Robbins increased his position by 8.19%, buying 349,236 shares at an average price of $122.85 per share, gaining 30.8%.

Over a five-year trading history, he has averaged a gain of 113% on 12,609,851 shares bought at an average price of $75.44 per share. Selling, he has averaged a gain of 101% on 7,996,915 shares bought at an average price of $80.04 per share.

Check out his remarkable MCK trading history:

1388524198282.png

Tracking historical share price, revenue and net income:

<a href="http://www.gurufocus.com/chart/MCK#&serie=,,id:Revenue_2,s:MCK,,id:Net_Income_2,s:MCK&log=0&per=0">1388524820954.png

Flextronics International Ltd. (FLEX)

Shares: 59,180,959

Value: $537,955,000

Weightings: 4.5%

Up 22% over 12 months, Flextronics International Ltd. has a market cap of $4.72 billion; its shares were traded at around $7.77 with a P/E ratio of 27.90.

Flextronics International Ltd. was incorporated in the Republic of Singapore in May 1990. The company is a provider of advanced design, manufacturing and services to OEMs or original equipment manufacturers of a wide range of electronic products in several markets.

The company is rated with one out of five stars for business predictability.

The GuruFocus analysis of the company shows one warning sign.

Guru Action: As of Sept. 30, 2013, Larry Robbins increased his position by 0.17%, buying 100,000 shares at an average price of $8.74 per share, losing 11.1%.

Over a five-year trading history, he has averaged a gain of 14% on 70,885,622 shares bought at an average price of $6.84 per share. Selling, he has averaged a gain of 10% on 11,704,663 shares bought at an average price of $7.05 per share.

Tracking historical share price, revenue and net income:

1388525190293.png

HCA Holdings Inc. (HCA)

Shares: 10,341,713

Value: $442,108,000

Weightings: 3.7%

Up 53% over 12 months, HCA Holdings Inc. has a market cap of $21.38 billion; its shares were traded at around $47.74 with a P/E ratio of 15.30. The company does not pay a dividend.

First incorporated in 1990, HCA Holdings Inc. owns and operates hospitals and related health care entities.

The company is rated with one out of five stars for business predictability.

The GuruFocus analysis of the company shows three warning signs and one good sign.

Guru Action: As of Sept. 30, 2013, Larry Robbins increased his position by 5.08%, buying 500,000 shares at an average price of $39.07 per share, gaining 22.2%.

Overall, he has averaged a gain of 66% on 12,702,018 shares bought at an average price of $28.71 per share. Selling, he has averaged a gain of 83% on 2,360,305 shares bought at an average price of $26.03 per share.

Tracking historical share price, revenue and net income:

1388525407219.png

Check out the complete portfolio of Larry Robbins.

One of the younger gurus, age 43, Larry Robbins began his career as an analyst for Gleacher & Company, a merger and advisory firm in New York. He also worked with Leon Cooperman and became a partner at Omega Advisors.

Larry Robbins is a graduate of the Wharton School and the Moore School of the University of Pennsylvania.

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About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

Rating: 3.3/5 (3 votes)

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