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.

blog comments powered by Disqus
Insider Monkey Headlines
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

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

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 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!