Highline Capital Management Bets on Healthcare, Basic Materials & Services Stocks

Highline Capital Management is a fund led by Jacob Doft. Founded in 1995, Highline is a long/short equity hedge fund which has an equity portfolio worth $1.46 billion, unchanged in comparison with the previous quarter. Even though the fund holds a diversified equity portfolio, it primarily invests in Services stocks, which account for slightly less than a half of the equity portfolio, followed by Basic Materials and  Healthcare sectors. In this piece we will analyze the top five picks in terms of value in which Highline holds long positions as of the end of March.

AbbVie Inc (NYSE:ABBV)

Highline’s commitment to Healthcare stocks is already seen by looking at the first largest holding which is represented by AbbVie Inc (NYSE:ABBV), of which the fund owns 2.07 million shares, with a reported value of $106.36 million. The fund has considerably raised its exposure to this pharmaceutical company, in the previous quarter holding some 33,800 shares. AbbVie Inc (NYSE:ABBV) recently reported that the FDA received orphan drug designation for its HUMIRA® drug developed for treatment of non-infectious eye diseases. David E. Shaw‘s D E Shaw is also bullish on AbbVie Inc (NYSE:ABBV), holding 5.86 million shares as of the end of March, up by almost 70% on the quarter. The value of Shaw’s stake amounts to $301.20 million.

On the second place comes Comcast Corporation (NASDAQ:CMCSA), in which Highline reported a $103.82 million position, which contains around 2.07 million shares, down by 17% on the quarter. Following the upcoming acquisition of Time Warner Cable Inc (NYSE:TWC), Comcast Corporation (NASDAQ:CMCSA) will increase its potential and will strenghten its position as one of the leaders on the telecommunications market. Alex Snow‘s Lansdowne Partners, and Jean-Marie Eveillard‘s First Eagle Investment Management are two of the largest shareholders of Comcast Corporation (NASDAQ:CMCSA), owning 26.80 million and 20.22 million shares respectively.

Next comes $4.2 billion Teekay Corporation (NYSE:TK), of which Jacob Doft’s fund reported holding 1.63 million shares, worth $91.62 million. The stock of Teekay boosted by 21% since the beginning of the year and trades at a forward P/E of 35.40. Teekay is engaged in providing marine transportation services for crude oil and gas. Teekay has reported losses for the past two years, however, for the current year, the company is expected to report Earnings per Share of $0.49 in comparison with -$1.13 posted for the last year. Aside from Highline, Alec Litowitz and Ross Laser‘s Magnetar Capital also owns shares of Teekay Corporation, reporting holding 5.07 million shares in its latest 13F.

The fourth and, respectively, the fifth largest positions in Highline’s equity portfolio are represented by Huntsman Corporation (NYSE:HUN) and Universal Health Services, Inc. (NYSE:UHS). In Huntsman, the fund reported a $87.49 million stake, which contains more than 3.58 million shares, the stake being increased by around 50% on the quarter. The stock of the $6.5 billion manufacturer of chemical products raised by 9% since the beginning of the year and sports a P/E of 30.2, significantly above the industry average of 17.00. Soroban Capital Partners, led by Eric W. Mandelblatt, reported holding 8.74 million shares of Huntsman Corporation (NYSE:HUN), down by 24% on the quarter.

Universal Health Services, Inc. (NYSE:UHS) is a company specialized in operating different healthcare facilities, such as acute care hospitals, or behavioral health centers. Highline edged up its stake in the company by 4% to 982,600 shares, worth $80.64 million. Another hedge fund that is bullish on Universal Health Services, Inc. (NYSE:UHS) is Israel Englander‘s Millennium Management, which raised its stake by 16% to 912,100 shares held as of the end of March.

Disclosure: none

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