Glenview Capital Management recently disclosed its portfolio updates for the first quarter of 2021, which ended on March 31.
Founded by Larry Robbins (Trades, Portfolio) in 2000, Glenview is a New York-based hedge fund that focuses on deep fundamental research and individual security selection. It operates via Two Funds: the Glenview Fund, which runs a long/short strategy, and the Glenview Opportunity Fund, a more concentrated and opportunistic vehicle. The firm primarily focuses on U.S. securities, though it also has some exposure to Western Europe. The majority of its investments are in the health care industry.
Based on its investing strategy, the firm's top buys during the quarter were for Cigna Corp. (CI, Financial) and Facebook Inc. (FB, Financial), while its biggest sells were for Tenet Healthcare Corp. (THC, Financial) and Lyft Inc. (LYFT, Financial).
Cigna
The firm added 603,846 shares, or 48.11%, to its investment in Cigna (CI, Financial) for a total of 1,858,867 shares. The trade had a 2.47% impact on the equity portfolio. During the quarter, shares traded for an average price of $222.64.
Based in Bloomfield, Connecticut, Cigna is a multinational managed health care and insurance company that offers health, pharmacy, dental, supplemental insurance and Medicare plans to individuals, families and businesses.
On May 24, shares of Cigna traded around $261.53 for a market cap of $89.60 billion. According to the GuruFocus Value chart, the stock is fairly valued.
The company has a financial strength rating of 4 out of 10 and a profitability rating of 7 out of 10. The cash-debt ratio of 0.20 is lower than 86% of industry peers, but the interest coverage ratio of 9.07 indicates the company can continue meeting its interest payments for now. The return on invested capital has surpassed the weighted average cost of capital in recent quarters, suggesting a turn to profitability.
The firm upped its stake in Facebook (FB, Financial) by 482,269 shares, or 5,030.97%, for a total holding of 491,855 shares. The trade had a 2.40% impact on the equity portfolio. Shares traded for an average price of $269.28 during the quarter.
Facebook is a social media giant based in Menlo Park, California. It was founded by Mark Zuckerberg and several fellow Harvard students. Since its launch in 2004, it has become an icon of the social media industry and expanded into news, advertising, business, data collection and other avenues.
On May 24, shares of Facebook traded around $324.63 for a market cap of $920.48 billion. According to the GF Value chart, the stock is fairly valued.
The company has a financial strength rating of 7 out of 10 and a profitability rating of 10 out of 10. The Piotroski F-Score of 7 out of 9 and Altman Z-Score of 20.55 indicate a fortress-like balance sheet. The three-year revenue growth rate is 29.4%, while the three-year Ebitda growth rate is 19.6%.
Tenet Healthcare
The firm trimmed its top holding, Tenet Healthcare (THC, Financial), by 4,533,490 shares (or 24.83%) in the first quarter and by another 3,080,000 shares (or 22.44%) on April 21. The holding now makes up 12.09% of the equity portfolio compared to 16.72% at the end of the fourth quarter of 2020. Shares traded for an average price of $50.54 during the first quarter and $54.53 on April 21.
Tenet Healthcare is a Dallas-based medical care company that owns 65 acute care and specialty hospitals throughout the United States, as well as supporting facilities such as imaging centers, ambulatory surgery centers and off-campus EDs and micro-hospitals.
On May 24, shares of Tenet Healthcare traded around $63.61 for a market cap of $6.79 billion. According to the GF Value chart, the stock is significantly overvalued.
The company has a financial strength rating of 3 out of 10 and a profitability rating of 5 out of 10. The Altman Z-Score of 1.04 suggests potential liquidity issues, though the Piotroski F-Score of 6 out of 9 is typical of a financially stable company. The ROIC has often been below the WACC in recent years, indicating struggles with growing in a profitable manner.
Lyft
The firm also reduces its investment in Lyft (LYFT, Financial) by 1,598,418 shares, or 77.44%, leaving a remaining holding of 465,761 shares. The trade had a -1.80% impact on the equity portfolio. During the quarter, shares traded for an average price of $55.85.
Lyft is a ridesharing company that develops, markets and operates its namesake mobile app, which offers vehicles for hire as well as motorized scooters, a bicycle-sharing system and food delivery. Based in San Francisco, it operates in 644 cities in the United States and 12 cities in Canada.
On May 24, shares of Lyft traded around $53.31 for a market cap of $17.56 billion. Since the company went public in March of 2019, shares are down 25%.
The company has a financial strength rating of 4 out of 10 and a profitability rating of 1 out of 10. The Altman Z-Score of 0.16 indicates the company could face liquidity issues in the near future, though the current ratio of 1.16 shows it can meet its financial obligations in the short term. The operating margin of -68.39% and net margin of -70.18% mean the company is not yet profitable.
Portfolio overview
As of the quarter's end, the firm held shares in 63 stocks valued at a total of $5.90 billion. The top holdings were Tenet Healthcare with 12.09% of the equity portfolio, Bausch Health Companies Inc. (BHC, Financial) with 8.40% and Cigna with 7.61%.
In terms of sector weighting, 67.02% of the equity portfolio was devoted to health care, with technology a distant second place at 12.42%.
Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Portfolio updates reflect only common stock positions as per the regulatory filings for the quarter in question and may not include changes made after the quarter ended.
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