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Larry Robbins founded Glenview Capital Management in 2000, and it currently has around $7 billion under management, which is split between the Glenview Funds, a short fund, and Little Arbor Funds, a multi-strategy fund. He is well known for making concentrated bets on large cap stocks and for taking an active approach to many of his larger investments demanding operational, balance sheet and management changes that will hopefully unlock further shareholder value. When looking for an investment he focuses on identifying good businesses with low valuations and excess capital, which he believes can succeed regardless of the economic environment.

In this article I will analyze five recent stock picks by Larry Robbins to determine whether they represent solid investment opportunities that will continue to grow in value despite the ongoing economic and market volatility. SEE, LH and BMC are buys while LBTYA and HCA should be avoided.

Sealed Air Corporation (NYSE:SEE)

Sealed Air has a market cap of $3.34 billion and is currently trading at around $17, with a price to earnings ratio of 12.44. Its 52 week trading range is $15.05 to $28.77. It reported third quarter 2011 earnings of $1.25 billion, an increase from second quarter earnings of $1.21 billion. The income statement showed net income in the third quarter of $73.70 million, an increase from second quarter net income of $65 million. It has quarterly revenue growth of 10.4%, a return on equity of 10.13% and pays a dividend with a yield of 3.2%.

One of Sealed Air’s competitors is Bemis Company Inc (NYSE:BMS), which has a market cap of $3.01 billion and is trading at around $29, with a price to earnings ratio of 14.67. It has quarterly revenue growth of 4.9%, a return on equity of 12.2% and pays a dividend with a yield of 3.4%. This data indicates that Sealed Air is growing revenue at a greater rate but is marginally lagging on return on equity.

Robbins holds 4,318,800 shares of Sealed Air, buying the entire holding in the third quarter 2011. The average purchase price per share was $19.80. Based upon the last trading price of $17.36, he has made a return of -12.32%.

Sealed Air’s cash position has improved in the last quarter. Its balance sheet showed $800.30 million in cash for the third quarter, an increase from $705 million in the second quarter. The net tangible assets have increased to $590.60 million in the third quarter 2011, from $622.70 billion in the second quarter. Sealed Air’s quarterly revenue growth of 10.4%, versus an industry average of 5.9%, and a return on equity of 10.13%, versus an industry average of 12.2%, indicates that it is outperforming many of its competitors.

The earnings outlook for the packaging and container industry is cautiously positive with some indications of earnings growth in 2012,. This outlook is based on the view that there are some indications of improvement in the U.S. economy, which should lead to increased demand for industry products and services. In addition, the devalued U.S. dollar should make U.S. manufactured products more competitive and this bodes well for U.S. based manufactures such as Sealed Air.

Sealed Air’s stronger balance sheet, increased net income and solid performance indicators show that it is well positioned for further earnings growth, especially if there is an uplift in the overall economy. In addition, it pays a dividend with an attractive yield and is currently trading close to the bottom of its 52 week trading range, which represents a buying opportunity. Accordingly, I agree with Robbins’ investment decision and rate Sealed Air as a buy.

Laboratory Corporation of America (NYSE:LH)

Laboratory Corporation has a market cap of $8.42 billion and is trading at around $85, with a price to earnings ratio of 17. Its 52 week trading range is $74.57 to $100.94. It reported third quarter 2011 earnings of $1.40 billion, a slight increase from second quarter earnings of $1.39 billion. Third quarter net income was reported at $134 million, an increase from second quarter net income of $122.90 million. It has quarterly revenue growth of 10% and a return on equity of 21.21%.

One of Laboratory Corporation’s competitors is Quest Diagnostics Inc (NYSE:DGX), which has a market cap of $9.21 billion and is trading at around $58, with a price to earnings ratio of 21.42. It has quarterly revenue growth of 2.2%, a return on equity of 13.02% and pays a dividend with a yield of 1.2%. Based on these indicators it is being outperformed by Laboratory Corporation.

Robbins holds 768,200 shares of Laboratory Corporation, buying the entire holding in third quarter 2011. The average purchase price per share was $86.73. Based upon the last trading price of $85.72, he has made a return of -1.16%.

Laboratory Corporation’s cash position has declined, with $85.80 million in cash for the third quarter 2011, a decrease from $118.90 million in the second quarter. Laboratory Corporation’s quarterly revenue growth of 10%, versus an industry average of 15%, and a return on equity of 21.21%, versus an industry average of 1.5%, indicates that it is underperforming many of its competitors on earnings growth but is delivering a superior return on equity.

The earnings outlook for the medical laboratories and research industry is subdued primarily due to the poor economic climate and a precarious medical healthcare environment. The key drivers of this outlook are the impact the U.S. healthcare reforms will have on providers when fully implemented, the volatile economic outlook and high unemployment that is pushing down demand and negative consumer sentiment, which has seen a substantial drop in discretionary spending.

Despite the company’s weaker balance sheet and the poor industry outlook, I believe that Laboratory Corporation represents a solid investment opportunity as it has increased net income in a difficult operating environment and is generating a solid return on shareholders’ equity, which demonstrates the company has strong balance sheet conscious management. Accordingly, I agree with Robbins decision to invest in the company and rate it as a buy.

Liberty Global Inc (NASDAQ:LBTYA)

Liberty Global has a market cap of $10.89 billion and is currently trading at around $39. Its 52 week trading range is $32.06 to $47.31. Third quarter 2011 earnings of $2.61 billion were reported, a slight decrease from second quarter earnings of $2.62 billion. Third quarter net income was -$333.10 million, an increase from second quarter net income of -$347 million. It has quarterly revenue growth of 16.1% and a return on equity of -4.65%.

One of Liberty Global’s competitors is Time Warner Cable Inc (NYSE:TWC), the Time Warner sister company, which has a market cap of $19.30 billion and is trading at around $60. It has quarterly revenue growth of 3.7%, a return on equity of 17.51% and pays a dividend with a yield of 3.3%. Based on this data Time Warner is lagging in earnings growth but is delivering a superior return on equity.

Robbins holds 979,791 shares of Liberty Global, buying the entire holding in the third quarter 2011.The average purchase price per share was $39.89. Based upon the last trading price of $39.39, he has made a return of -1.25%.

Liberty Global’s cash position has declined with the balance sheet showing $2.82 billion in cash for the third quarter, a decrease from $4.95 billion in the second quarter. Net tangible assets have decreased to -$11.02 billion in the third quarter 2011, from -$10.67 billion in the second quarter. Liberty Global’s quarterly revenue growth of 16.1%, versus an industry average of 16.9%, and a return on equity of -4.65%, versus an industry average of 18.4%, indicates that it is underperforming many of its competitors.

The outlook for the CATV systems industry is cautiously positive although this outlook could be worse, as cable TV companies face increased competition from phone and satellite TV companies. The key driver of further industry earnings growth will be a recovery in the housing market and a growth in rental equipment income. The current positive outlook can be attributed to consumers seeking cheaper entertainment opportunities due to the subdued economic outlook. Accordingly any uplift in the economy that sees an increasing in housing demand should bode well for cable TV companies such as Liberty Global.

Despite the positive industry outlook and Liberty Global’s increased net income, I do not believe that it represents a good investment opportunity at this time. I have taken this view as it is still unable to translate significant earnings into positive net income, reporting a net loss for the last two quarters. In addition, the company's balance sheet is weaker with a decrease in cash holdings. At this time I believe it is better to take a wait and see approach and rate Liberty Global as a hold.

BMC Software Inc (NASDAQ:BMC)

BMC Software has a market cap of $6.04 billion and is trading at around $35.50, with a price to earnings ratio of 14.54. Its 52 week trading range is $32.91 to $56.55. It reported third quarter 2011 earnings of $556.70 million, an increase from second quarter earnings of $502.40 million. Third quarter net income was $114.70 million a significant increase from second quarter net income of $95.70 million. It has quarterly revenue growth of 10.8% and a return on equity of 29.45%.

One of BMC Software’s competitors is CA Inc (NASDAQ:CA), which has a market cap of $10.44 billion and is trading at around $21, with a price to earnings ratio of 12.42. It has quarterly revenue growth of 10.3%, a return on equity of 15.46% and pays a dividend with a yield of 1%. Based on these indicators it is underperforming BMC Software.

Robbins holds 5,630,062 shares of BMC Software, buying 2,461,935 shares in third quarter 2011, adding to the 3,168,127 shares already held. The average purchase price per share was $41.07. Based upon the last trading price of $35.43, he has made a return of -13.73%.

BMC Software’s cash position has declined. The balance sheet showed $1.50 billion in cash for the third quarter 2011, a decrease from $1.58 billion in the second quarter. The net tangible assets have decreased to -$303.30 million in the third quarter 2011, from -$216.40 million in the second quarter. BMC Software’s quarterly revenue growth of 10.3%, versus an industry average of 21.9%, and a return on equity of 15.46%, versus an industry average of 24.9%, indicates that it underperforming many of its competitors.

The earnings outlook for the application software industry is positive despite the current poor global economic outlook, high unemployment and negative consumer sentiment. Forrester Research believes the global software industry will continue to grow in 2012 despite the decrease in projected growth for the computer hardware industry. The primary driver of this outlook is that the overwhelming majority of profit for corporate software companies is driven by maintenance, not license or consulting services. Accordingly, earnings for these companies are less likely to suffer in a difficult economic environment, as corporate customers seek to maintain their licenses and keep software updated.

When the positive industry outlook is considered in conjunction with BC Software’s increase in earnings and net income it presents as an attractive investment opportunity, more so when its solid performance indicators are taken into account. The company is currently trading at close to the bottom of its 52 week trading range, which has created a buying opportunity. Accordingly, I agree with Robbins’ investment in BMC Software and rate the company as a buy.

HCA Holdings Inc (NYSE:HCA)

HCA Holdings a market cap of $10.64 billion and it is trading at around $24, with a price to earnings ratio of 14.71. Its 52 week trading range is $17.03 to $35.37. It reported third quarter 2011 earnings of $5.89 billion, a significant decrease from second quarter earnings of $8.06 billion. Third quarter net income was $61 million, a substantial decrease from second quarter net income of $229 million. It has quarterly revenue growth of 5.3%.

One of HCA’s competitors is Tenet Healthcare Corporation (NYSE:THC), which has a market cap of $2.02 billion and is trading at around $5, with a price to earnings ratio of 11.20. It has quarterly revenue growth of 3.5% and a return on equity of 12.2%. Based on these indicators, it is marginally outperforming HCA.

Robbins holds 7,844,267 shares of HCA Holdings, buying 4,612,562 shares in the third quarter 2011, adding to an existing holding of 3,231,705 shares. The average purchase price per share was $24.60. Based upon the last trading price of $24.47, he has made a return of -0.53%.

HCA’s cash position has declined in the last quarter. The balance sheet showed $359 million in cash for the third quarter 2011, a decrease from $539 million in the second quarter. The net tangible assets have decreased to -$12.90 billion in the third quarter 2011, from -$11.40 billion in the second quarter. HCA Holdings quarterly revenue growth of 5.3%, versus an industry average of 13.4%, and no return on equity, versus an industry average of 144%, indicates that it is underperforming many of its competitors.

The outlook for the hospital industry is quite subdued primarily due to the recent healthcare reforms taking effect and the poor economic outlook, high unemployment and negative consumer sentiment. This has lead to a drop in discretionary spending, decreasing insurance coverage and the potential for lower profits triggered by the healthcare reforms constraining pricing models.

When the negative industry outlook is considered in conjunction with HCA’s decreased earnings and net income, weaker balance sheet and poor performance indicators it is difficult to understand why Robbins has invested in the company. It is also underperforming many of its competitors and therefore there are better investment opportunities in the market. I rate HCA as a sell.

Source: Larry Robbins' Latest Stock Picks To Protect Your Portfolio