Former trader for Leon Cooperman's Omega Advisors, Larry Robbins, runs Glenview Capital, a multi-strategy investment firm with over $5 billion in AUM. At the funds height, pre-financial crisis, AUM topped $9 billion in AUM. In a two part series, we take a look at his top holdings.
LIFE TECHNOLOGIES CORP
CROWN CASTLE INTL
AMERICAN INTERNATIONAL GROUP
THERMO FISHER SCIENTIFIC
FIDELITY NATIONAL INFO SVCS
CARDINAL HEALTH INC
B M C SOFTWARE INC
Life Technologies is by far the largest position in Larry Robbins' portfolio. It is a life science tools company that develops instruments, reagents, consumables, software for research institutions, biopharma companies, food safety labs, and clinical diagnostics market. A couple days ago, LIFE announced a collaborative agreement with OpGen (private) to develop microbial analysis and surveillance systems for the public health and infectious disease markets. The companies will leverage LIFE's Ion Torrent technology and OpGen's Whole Genome Mapping (WGM). There is also the possibility of expanding the agreement to non-microbial organisms. We view this as a smart and cost-effective way to look for technologies that complement LIFE's next generation sequencing (NGS). The company's Ion Proton launch this year will be a major catalyst as it will be the first NGS system to deliver a $1,000 genome in under a day. But until LIFE can prove its Proton technology, we are on the sidelines.
Crown Castle International is Glenview's second largest position. Crown Castle is one of the largest providers of tower space in the US with over 24,000 towers. There seem to be strong tailwinds for CCI including the Sprint Network Vision program getting off the ground and Clearwire/T-Mobile increasing activity in wireless that bode well for towers. Given these tailwinds and limited exposure to concerns in Europe (CCI's ~5% international revenue all comes from Australia vs. competitor American Tower's (AMT) ~30% exposure to the Euro) we think the stock can trade to 17.0x 2013 AFFO (adjusted funds from operations). This represents a discount to AMT, which is a REIT and thus offers income through its dividend.
Flextronics is the second largest electronics manufacturing services (EMS) company in the world with offshore and low-cost manufacturing capabilities that produce products for original equipment manufacturers (OEMs). The company has turned its focus to a few market initiatives laid out at its last investor day: FLEX wants to increase diversification of its customer base and by next year, expects no one customer to contribute more than 10% of sales. FLEX also intends to increase diversification of its end-market mix and grow profitability through enhanced end-to-end customer solutions. FY2013 sales target is set at $26 billion to $27 billion with EPS of $1.00 to $1.10 per share. We think these targets are achievable as FLEX grows its high margin business. FLEX is also held by Thomas Claugus, Ron Gutfleish, and D.E. Shaw.
American International Group The bottom line with AIG is that we believe the perceived risk is overdone. The company has de-levered more than other cyclical financials, mitigating additional downside in a difficult market environment. We do expect earnings volatility due to its significant exposure to subprime mortgage and European credit, but view the Treasury exiting the company at 50% of book value as a positive. Trading at just about half of 50% of tangible book when management has a clear strategy for an earnings turnaround and with a Treasury selling its stake serving as a catalyst, we think are buyers of AIG. Meanwhile, the company can sell its non-core assets to get $22 billion to fund share repurchases. Bruce Berkowitz is the most bullish fund manager with a nearly $3 billion position in the stock (see Berkowitz's top picks).
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.