Larry Robbins (Trades, Portfolio)’ Glenview Capital Management has revealed its portfolio for the second quarter of the year. Top trades include a large addition to its ViacomCBS Inc. (VIAC, Financial) holding, reductions in its Tenet Healthcare Corp. (THC, Financial) and Cigna Corp. (CI, Financial) positions, a new buy into Centene Corp. (CNC, Financial) and selling out of a holding in Nuance Communications Inc. (NUAN, Financial).
Founded in 2000, Glenview Capital Management operates as a privately held investment firm. It is focused on delivering attractive absolute returns through an intense focus on deep fundamental research and individual security selection. The firm's investments are primarily focused on the U.S., with a smaller amount of exposure in Western Europe.
Portfolio overview
At the end of the quarter, Glenview Capital’s portfolio contained 64 stocks with 15 new holdings. It was valued at $5.96 billion and has seen a turnover rate of 19%. Top holdings include Tenet Healthcare, Bausch Health Companies Inc. (BHC, Financial), Cigna, McKesson Corp. (MCK, Financial) and DXC Technology Co. (DXC, Financial).
The top sectors represented are health care (61.89%), technology (8.95%) and communication services (7.30%).
ViacomCBS
The firm leaned into its long standing ViacomCBS (VIAC, Financial) holding after a year of reductions. The holding grew by 773.74% with the addition of 3.86 million shares that traded at an average price of $41.42. Overall, the addition had a 2.93% impact on the equity portfolio and GuruFocus estimates the total loss of the holding at 9.34%.
ViacomCBS is the recombination of CBS and Viacom that has created a media conglomerate operating around the world. CBS's television assets include the CBS television network, 28 local TV stations and 50% of CW, a joint venture between CBS and Time Warner. The company also owns Showtime and Simon & Schuster. Viacom owns several leading cable network properties, including Nickelodeon, MTV, BET, Comedy Central, VH1, CMT and Paramount. Viacom has also built several online properties on the strength of these brands.
On Aug. 23, the stock was trading at $40.11 per share with a market cap of $26.13 billion. According to the GF Value Line, the stock is trading at a significantly overvalued rating.
GuruFocus gives the company a financial strength rating of 4 out of 10, a profitability rank of 8 out of 10 and a valuation rank of 10 out of 10. There are currently three severe warning signs issued for assets growing faster than revenue, a declining operating margin and an Altman Z-Score of 1.66 placing the company in the distress column. The company’s financial strength rank is pulled down by a cash-to-debt ratio of 0.28 that ranks the company lower than 73.94% of industry competitors as debt remains at elevated levels.
Other top gurus invested in ViacomCBS (VIAC, Financial) are John Rogers (Trades, Portfolio), Pioneer Investments, Philippe Laffont (Trades, Portfolio), David Tepper (Trades, Portfolio) and Jeremy Grantham (Trades, Portfolio).
Tenet Healthcare
The firm’s largest holding, Tenet Healthcare (THC, Financial), was pulled back for the third quarter in a row. The sale of 3.08 million shares cut the holding by 22.44% as the shares traded at an average price of $61.78 throughout the quarter. GuruFocus estimates the total gain of the holding at 105.22% and the sale had a -2.71% impact on the equity portfolio overall.
Tenet Healthcare is a Dallas-based health care provider organization operating a collection of hospitals (65 at the end of 2020) and many outpatient facilities, including ambulatory surgery centers, urgent care centers, freestanding imaging centers, freestanding emergency rooms/micro-hospitals and physician practices across the United States. Additionally, Tenet enjoys the number-one ambulatory surgical center position nationwide.
As of Aug. 23, the stock was trading at $72.89 per share with a market cap of $7.8 billion. The shares are trading at a significantly overvalued rating as seen on the GF Value Line.
GuruFocus gives the company a financial strength rating of 3 out of 10, a profitability rank of 5 out of 10 and a valuation rank of 5 out of 10. There are currently three severe warning signs issued for declining revenue per share, poor financial strength and an Altman Z-Score of 1.15 placing the company in the distress column. A combination of consistently high debt, inconsistent net income and an equity-to-asset ratio ranking the company lower than 91.79% of competitors have led to the company’s poor financial strength rating.
Alongside Robbins, Andreas Halvorsen (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Lee Ainslie (Trades, Portfolio) and Ray Dalio (Trades, Portfolio) maintain positions in Tenet Healthcare (THC, Financial).
Centene
A new buy from the firm was established in Centene (CNC, Financial) for the third time since 2014. A total of 2.02 million shares were purchased at an average price of $68.44 throughout the quarter. The new buy had a 2.47% impact on the portfolio overall and GuruFocus estimates that the firm has gained 7.09% on the holding throughout its lifetime.
Centene is a managed-care organization focused on government-sponsored health care plans, including Medicaid, Medicare and the individual exchanges. After acquiring WellCare in early 2020, Centene now serves 21 million medical members, mostly in Medicaid (14 million), Medicare Advantage (1 million total), the individual exchanges (2 million) and other plans (4 million), including Tricare (West region), correctional facility and international plans. The company also serves 4 million users through the Medicare Part D pharmaceutical program.
The stock was trading at $64.82 per share with a market cap of $37.79 billion on Aug. 23. The GF Value Line shows the stock trading at a modestly undervalued rating.
GuruFocus gives the company a financial strength rating of 5 out of 10, a profitability rank of 7 out of 10 and a valuation rank of 6 out of 10. There are currently three severe warning signs issued for new long-term debt, a declining operating margin and assets growing faster than revenue. Despite a strong profitability rank, the company has struggled to find a balance between its weighted average cost of capital and return on invested capital.
Centene (CNC, Financial) is also held by Andreas Halvorsen (Trades, Portfolio), the Vanguard Health Care Fund (Trades, Portfolio), Lee Ainslie (Trades, Portfolio) and Hotchkis & Wiley.
Cigna
Cigna (CI, Financial) was cut back by 30.91% in the firm's portfolio with the sale of 574,514 shares. Throughout the quarter, the shares traded at an average price of $249.66, landing the holding at a total estimated gain of 26.70%. Overall, the sale had a -2.35% impact on the equity portfolio.
Cigna primarily provides pharmacy benefit management and health insurance services. Its PBM services were greatly expanded by its 2018 merger with Express Scripts and are mostly sold to health insurance plans and employers. Its largest PBM contract is the Department of Defense. In health insurance and other benefits, Cigna mostly serves employers through self-funding arrangements, but it also operates in government programs, such as Medicare Advantage. The company operates mostly in the U.S. with 15 million medical members covered at the end of 2020, but its services extend internationally, covering another 2 million people.
On Aug. 23, the stock was trading at $208.14 per share with a market cap of $70.79 billion. According to the GF Value Line, the shares are trading at a modestly undervalued rating.
GuruFocus gives the company a financial strength rating of 4 out of 10, a profitability rank of 7 out of 10 and a valuation rank of 9 out of 10. There are currently no severe warning signs for the company, but a medium warning sign is issued for revenue per share growth slowing down. The company’s above-average profitability rank is propped up by a net margin that beats 63.64% of competitors and returns on equity and assets that do similarly well.
Other top guru shareholders include Dodge & Cox, Chris Davis (Trades, Portfolio), Pioneer Investments, Jeremy Grantham (Trades, Portfolio) and Richard Pzena (Trades, Portfolio).
Nuance Communications
The firm cut ties with its Nuance Communications (NUAN, Financial) position to round out its top five trades. The 3.09 million shares were sold at an average price of $52.44 during the quarter. The sale had a -2.28% impact on the equity portfolio and GuruFocus estimates the total gain of the holding at 46.94%.
Nuance Communications is the pioneer in conversational artificial intelligence innovations that bring intelligence to everyday work and life. The company delivers solutions that understand, analyze and respond to people to increase productivity and security. The company generates maximum revenue from its healthcare segment. Geographically, it derives a majority of revenue from the United States.
As of Aug. 23, the stock was trading at $55.07 per share with a market cap of $17.32 billion. The stock is significantly overvalued according to the GF Value Line.
GuruFocus gives the company a financial strength rating of 5 out of 10, a profitability rank of 4 out of 10 and a valuation rank of 1 out of 10. There is currently one severe warning sign issued for declining revenue per share. The company’s cash flows have been on a steady decline over the last several years after peaking in 2016.
Philippe Laffont (Trades, Portfolio), Primecap Management, Paul Tudor Jones (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio) and George Soros (Trades, Portfolio) maintain positions in Nuance Communications (NUAN, Financial).
