In this article we presented 10 best stocks to buy according to billionaire Larry Robbins. Click to skip our detailed discussion on Robbins' investment strategy and see 5 Best Stocks To Buy According To Billionaire Larry Robbins.
Larry Robbins is an American billionaire and hedge fund manager who founded Glenview Capital Management in 2000. As of the end of 2020, the New York-based hedge fund has $13.3 billion worth of assets under management and $4.36 billion in managed 13F securities. In January 2021, when most of the famous hedge funds were getting clobbered by the onslaught of Reddit and retail investors, Robbins’ hedge fund gained 6.4%. According to Bloomberg, Glenview climbed 9.5% in 2020.
Raised in Illinois, Robbins graduated from the University of Pennsylvania in 1992. The 52-year-old billionaire worked at Gleacher & Company and Leon Cooperman’s Omega Advisors before starting Glenview Capital Management. Robbins is a hockey enthusiast and was the captain of the University of Pennsylvania hockey club team for three years. Glenview is named after the suburban hockey area where Robbins used to play in his childhood.
Last year, the billionaire talked about several important topics during an interview. Here's what he said:
"I think by a matter of months. When we look at the timeline, mobility will likely increase over the summer because it's summer, the weather will naturally damp in fact. I don't think that's an investable difference but I think it will be measurable in the second and third quarters of next year. It will be a measurable difference but not necessarily an investable difference.
We should note by the way, that US is coming from a deeper hole given the disease prevalence here versus for example in Australia or other places. In Asia, they've done a phenomenal job of controlling the disease. So because we've had a deeper disease incidents, we're likely to have a greater uplift from a mobility perspective.
I do think for the first time in this battle in the last several weeks, there's been real light at the end of the tunnel with this confirmatory vaccine data that I think allows investors to potentially shift legs, we've seen that aggressively earlier this month, but we think that, it has much further to go.
The best letter that people thought of was that, this is the "K" economy, that half of businesses in this economy kind of went straight up as a result of this so-called 'stay-at-home' businesses, and then half of them went straight down which are the ones that are designer mobility. The easiest to understand is the travel related names. We are not long nor not recommending that people buy capital consumers like airlines or like cruise ships, because yes while their businesses will turn back on the amount of cash losses that they are racking up every day, as this pandemic rages on, are material and that's debt that they will eventually have to pay back. So unless you have a business who could be just simply slower cash flow positive or cash flow neutral than in fact many enterprises have gone backwards. So I think that's why you've seen good news rallies and those types of names be extremely short-lived because the most careful analysts understand that American Airline (NASDAQ: AAL)'s total enterprise value is actually higher today even though the stock is lower because of all the debt that they've had to take on in order to fund the cash losses of their operation. The aspects of the bottom leg of the "K", that we are really interested in are the things that are not only deferred by behavior, but there needs to be a catch up, and that these are mandatory businesses.
Once the government engaged the private testing industry with companies like Thermo Fisher Scientific (NYSE: TMO) and Whole Logics, providing the equipment and the solutions, but Lab Corp. (NYSE: LH) and Quest (NYSE: DGX) actually ramping up commercially their ability to do the tests. We've gone from having no testing to 100,000 a day, now we're up to 1.7 million tests a day. The gating agent is not the test's availability, it's people's willingness to go actually get tested. We are no longer capacity constrained and turnaround times are down to a day and a half except for some hot spots in the country."
Larry Robbins of Glenview Capital
Robbins is an exception in a struggling industry. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Let’s start our list of Larry Robbins’ top 10 stock picks.
10. Nuance Communications, Inc. (NASDAQ: NUAN)
Value: $98,690,000 Percent of Larry Robbins’ 13F Portfolio: 2.26% No. of Hedge Fund Holders: 60
Nuance Communications ranks 10th in the list of 10 best stocks to buy according to Larry Robbins. The artificial intelligence software company received positive comments from WedBush’s Daniel Ives in March who added the stock to his attractive ideas list. The analyst has an Outperform rating on the stock with a price target of $65. In February, the company posted better-than-expected Q1 results and increased its revenue guidance for the full year.
According to our database, the number of NUAN’s long hedge funds positions increased at the end of the fourth quarter of 2020. There were 60 hedge funds that hold a position in NUAN compared to 45 funds in the third quarter. The biggest stakeholder of the company is Philippe Laffont's Coatue Management, with 16.6 million shares, worth $732.6 million.
Artisan Mid Cap Fund, in their Q4 2020 investor letter, mentioned Nuance Communications, Inc. (NASDAQ: NUAN). Here is what Artisan Mid Cap Fund has to say about Nuance Communications, Inc. in their Q4 2020 investor letter:
"We started new investment campaigns in Nuance Communications in Q4. Nuance Communications is a leader in automated voice transcription technologies. The company’s relatively new management team has spent the past couple of years divesting sub-par businesses, paying down high yield debt and refocusing the company on higher growth, cloud-based recurring revenue opportunities primarily in health care, but also in large enterprises. The company has recently launched Dragon Ambient Experience (DAX), a tool physicians can use to automatically document patient encounters efficiently, accurately and consistently in telehealth and in-office settings. Health care practitioners can spend over 20% of their time documenting, and DAX can virtually eliminate this duty so more time can be dedicated to patient care. DAX is very early in its launch and could be a very meaningful profit cycle driver over time.”
9. Lyft, Inc. (NASDAQ: LYFT)
Value: $101,413,000 Percent of Larry Robbins’ 13F Portfolio: 2.32% No. of Hedge Fund Holders: 52
Ride-sharing company Lyft is amongst the 10 best stocks to buy according to billionaire Larry Robbins as Glenview Capital owned a $101.4 billion stake in the company at the end of the fourth quarter of 2020. The company in March said that its rideshare volume reached its highest level since the start of the pandemic.
Larry Robins' Glenview Capital currently holds 2.2 million shares of Lyft Inc. that amounts $101.4 million. LYFT occupies 2.32% of Glenview Capital’s total portfolio.
"Lyft (long +78%) is a ride-sharing company in the U.S. that competes with Uber. Since its IPO in 2019, the company has suffered from regulatory uncertainty (from California’s push to reclassify drivers as employees) and question marks over its ability to compete effectively with Uber. Together with the COVID-19 pandemic curtailing demand, the stock had declined over 60% when we initiated a position in October. Our thesis was that with Uber and Lyft both prioritising profitability and no new competitors emerging, market share would remain stable while demand would recover rapidly post-COVID. Our thesis was further supported by early polling ahead of the U.S. elections which indicated that California would pass driver reclassification legislation, permanently enshrining drivers’ contractor status as part of the Prop 22 ballot. The November vaccine news and the passing of the Prop 22 ballot have resulted in the shares nearly doubling since we first invested. Despite this strong performance, we continue to see substantial upside in Lyft. We believe Lyft can generate significant earnings growth over the medium term with the ability to generate consistent top-line growth above 30% and deliver long term EBITDA margins of ~25%.”
8. Laboratory Corporation of America Holdings (NYSE: LH)
Value: $112,398,000 Percent of Larry Robbins’ 13F Portfolio: 2.57% No. of Hedge Fund Holders: 66
Laboratory Corporation of America Holdings, commonly known as LabCorp, is a Fortune 500 company that operates clinical laboratories around the world. The stock jumped in March after the company hired Goldman Sachs to review its structure and capital allocation strategy, saying that its board believes the current value of the company is not reflected in LabCorp’s stock price. This came after activist hedge fund JANA Partners nominated directors to the company’s board. JANA owns a $165.21 million stake in the company.
As of the end of the fourth quarter, there were 66 hedge funds in Insider Monkey’s database that held stakes in LH, compared to 57 funds in the third quarter. Iridian Asset Management, with 1.06 million shares of LH, is the biggest stakeholder in the company.
7. McKesson Corporation (NYSE: MCK)
Value: $203,084,000 Percent of Larry Robbins’ 13F Portfolio: 4.65% No. of Hedge Fund Holders: 51
McKesson Corporation ranks 7th in the list of 10 best stocks to buy according to billionaire Larry Robbins. The company sells medical supplies and pharma products. Investment firm Baird in March gave a bullish outlook for McKesson stock, along with several other pharmaceutical services companies. The firm set a price target of $235 on the stock.
The company is also getting the attention of the smart money, as 51 hedge funds tracked by Insider Monkey reported owning stakes in the company at the end of the fourth quarter, down from 54 funds a quarter earlier.
6. HCA Healthcare, Inc. (NYSE: HCA)
Value: $213,828,000 Percent of Larry Robbins’ 13F Portfolio: 4.9% No. of Hedge Fund Holders: 73
Larry Robbins’ Glenview Capital ended the fourth quarter with a $214 million stake in the Tennessee-based healthcare services company HCA Healthcare. The company operates over 180 hospitals and 2,000 healthcare sites. In February, the company bought 80% equity in Brookdale Health Care Services, involving the firm’s home health, hospice and outpatient therapy segments. The stock has gained 121% over the last 12 months.
A total of 73 hedge funds tracked by Insider Monkey were bullish HCA at the end of the fourth quarter, up from 71 funds a quarter earlier.
Bireme Capital, in their Q4 2020 investor letter, said that HCA Healthcare, Inc. (NYSE: HCA)’s stock price is still cheap today. Here is what Bireme Capital has to say about HCA Healthcare, Inc. in their Q4 2020 investor letter:
"Since March we have increasingly tilted the long book towards stocks whose businesses will improve as the pandemic fades, a strategy we first discussed in our 1Q20 letter. Now that 2020 is — thankfully — over, let’s take a look back at some of our predictions from Q1.
HCA Healthcare (HCA) runs for-profit hospitals. In Q1, we said:
“We were shocked to see HCA initially trade down more than 50% in mid-March, in line with hotel companies and online travel agents. HCA will likely earn $11-12 in EPS when the COVID-19 crisis recedes, and we think the stock will trade back towards $150. Therefore, during Q1 we added we added ~80% to our shareholdings at an average price of roughly $90.”
If anything, this prediction was pessimistic. Despite the raging pandemic, 2020 revenue of $51.5b was actually up year-over-year. Earnings increased as well, with 2020 EPS of $10.93 and guidance of $12.10-13.10 in EPS for 2021. Said another way, in March HCA was trading for about 5 times 2021 earnings. We think that at $175 this stock is still cheap today and should trade at well over $200 per share.”
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Disclosure: None. 10 Best Stocks To Buy According To Billionaire Larry Robbins is originally published on Insider Monkey.