Larry Robbins is the successful fund manager of Glenview Capital. New York-based Glenview Capital has $6.66 billion of assets under management, up by $600 million from the previous quarter. Healthcare and discretionary consumer stocks constitute 58% of the company's portfolio. In the last quarter, Robbins added 17 new positions and sold out 16 positions. Here, is a brief analysis of his latest 3 big sell-offs and 2 new positions (data from finviz, and current as of June 3rd's close):
Pitney Bowes Inc (PBI) provides consumer goods and business equipment. As of June 3rd's close, the company's market cap was $4.74 billion, P/E ratio was 15.44, while the forward ratio rate falls to 10.33. Profit margin is 6.20%, and operating margin is 9.42%. In the last 6 months insiders increased their holdings by 15.42%.
In the past 5 years, EPS decreased by 5.93% annually, and for the next 5 years EPS growth rate is expected to be as low as -4.00%. Although fundamental indicators imply not-so-good growth expectations, PBI is an admirable dividend stock. Annual projected dividend of $1.48 per share implies a yield of 6.47%. Larry Robbins made a nifty profit from the PBI, and sold at $23 - $26 range. In last September, the stock was trading for as low as $18. While, I think PBI is a nice dividend payer, top 5 institutions significantly reduced their holdings. Currently, the stock is testing its 200 day moving average support level (the last support level).
Baxter International Inc (BAX) is a producer and distributor of healthcare and medical instruments. As of June 3rd's close, company had a market cap of $33.05 billion, P/E ratio was 16.60, and forward P/E ratio was 12.38. In the last 5 years, annualized EPS growth was 9.44%, and for the next 5 years EPS is expected grow by 9.99%.
BAX pays regular dividends. Current yield as of June 3rd's close was 2.14%. In the last six month, insider shares increased their stocks by 7.04%. Glenview closed its position in BAX. However, since April 1st, the stock is up by 10%. The firm performed very good last year, as well as, in the last quarter. However, currently the stock is in a correction state. Last week's performance of -2.24% counts as an evidence for the short-term downward trend. Given the profitability of the company, a 10% growth rate justifies a P/E ratio of 12. I would rather wait until the company falls into that price range.
Cisco (CSCO), the fallen star of techno-bubble show, is a blue chip technology company. Cisco has almost monopoly power in networking and communicating products. While the company is doing pretty well, the shares have been heading to the south for a while.
The current P/E ratio of 12.61 as of June 3rd's close is expected to fall as low as 9.42. Analysts expect annualized EPS growth of 10.75% for the next 5 years, which is very reasonable given the past 5 year EPS growth of 8.87%. Company didn’t pay any dividend in the last 10 years. However, the recent dividend payment imply a yield of 1.5%. While, not as high as Intel's (INTC) yield, it was a pleasant surprise for shareholders.
Glenview closed all its position from the CSCO, and sold out shares worth $72 million. That was a wise decision, since the Cisco shares are in free-fall state. I think Cisco is a deeply underpriced company, still punished for its past sins. Once the techno-bubble popped, shareholders were devastated with significant losses. Cisco, the $500 billion company of tech-bubble, is trading 80% below its peak value. The ten year annualized return for Cisco has been -3%. The stock is still going down. Since November, the shares lost 50%. I am not a big fan of Cisco, nor the company's management, but as a stock, the company looks attractively valued. Analysts have an average target price of $21, implying 35% upside potential in intermediate term.
Pfizer Inc (PFE) is a well-known medicine and healthcare company, producing medicine for patients all over the world. As of June 3rd's close Pfizer's P/E ratio was 19.95, but forward P/E is expected to be as low as 9.18. P/S ratio was 2.45, and P/C ratio was 6.77. Pfizer is a high dividend payer, and yield as of June 3rd's close was 3.84%.
Larry Robins initiated a new position in Pfizer, buying 9.7 million shares worth $198 million. Pfizer is in a high momentum stage. Since December, the stock is up by a stunning 24%. Robbins made his purchase between $17-$20 range, which is significantly lower than the current price. The momentum still looks strong. While I would rather wait for a pull-back, for a momentum investor, Pfizer offers a good opportunity.
Time Warner Cable (TWC) is one of the largest cable operators in the United States. Company offers video, high-speed data and voice services. As of June 3rd's close P/E ratio was 19.24, whereas the forward P/E ratio falls to 13.32. Company earned 3.94 per share in the last twelve months. Analysts are extremely bullish on Timer Warner's future profits. They estimate an annualized EPS growth of 15% for the next five years. Time Warner is a strong dividend payer, and yield as of June 3rd's close is 2.53%. In the last 6 months, insiders increased their holdings by 80%.
Why Glenview chose to invest $118 million is not hard to predict, given the company’s year-to-date performance. The stock is up by 16.33% since January. TWC pays a good dividend, and increasing its profitability. The shares are fairly priced for a growth of 10% to 12%. Analysts have an average target price of $83, implying 12%-14% upside potential in intermediate term.