Glenview Now Above 13% of Health Management Associates

GLENVIEW CAPITALA filing with the SEC has disclosed that Glenview Capital now owns close to 34 million shares of Health Management Associates, Inc. (NYSE:HMA), a $2.3 billion market cap hospital operator. This gives the fund, which is managed by former Omega Advisors trader Larry Robbins, over 13% of the outstanding shares of the stock. According to its 13F for the third quarter of 2012, Glenview had owned about 26 million shares and this in turn had been up 47% from three months earlier; the fund was overweight the healthcare sector at the end of September. See the full list of Glenview’s stock picks.

In the third quarter of the year, net revenue was up 18% compared to the same period in 2011. This is roughly the same growth rate Health Management Associates, Inc. had been experiencing in the first half of the year. However, costs have also been up strongly and so net income has been down, though the rate of decline was low last quarter. At the current market price the trailing P/E is 16, which is moderately low but should be accompanied by at least modest growth or strong prospects for improvement. Clearly Glenview is in that camp, and it’s also notable that in mid-December a company insider bought 10,000 shares at an average price of $7.76 per share (read more about the insider purchase). We track insider purchases because they indicate that an insider is confident enough in the company to ignore the benefits of diversification; studies show that stocks bought the insiders beat the market on average (though not always) (learn more about studies on insider trading).

Analyst consensus is also bullish, with consensus for 2013 being 89 cents of earnings per share; this would imply a forward P/E of 10. Glenview was by far the largest hedge fund holder of Health Management Associates, Inc. at the end of last quarter in our database of 13F filings, though Carlson Capital and billionaire David Shaw’s D.E. Shaw were buying the stock.

The largest publicly traded U.S. hospital is HCA Holdings Inc (NYSE:HCA). HCA trades at a discount to Health Management according to Wall Street analysts, with a forward P/E of 9. It too had its sales come in higher last quarter than in the third quarter of 2011; though the growth rate was lower than Health Management’s at 11%, we’re not sure that is enough to justify expectations of continually lower growth. Of course, the combination of a low multiple and recent top-line growth suggests that HCA might be a good value in its own right, and it could be worth it to take a closer look at the company.

Other hospital stocks include Universal Health Services, Inc. (NYSE:UHS), Tenet Healthcare Corporation (NYSE:THC), Community Health Systems (NYSE:CYH), and LifePoint Hospitals, Inc. (NASDAQ:LPNT). Community Health Systems is an outlier at 8 times forward earnings estimates, which could be explained by the fact that the company saw a sharp hit to its earnings last quarter versus a year earlier and analyst estimates depend on improvement in 2013. The other three hospitals all carry a forward P/E of 11, but there has been a wide spread in terms of their recent financial performance. Looking at revenue growth in their most recent quarter compared to the same period in the previous year, Universal’s sales were up 3%; Tenet’s were up 6%; Lifepoint’s were up 14%. Since there are some differences among these companies- Universal, for example, operates behavioral health centers in addition to hospitals- they are not as directly comparable with Health Management as we would like. Still, they seem priced about even.

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!