Most investors aren’t happy about the performance of their investments over the last decade. Some of those who gained couldn’t even beat the inflation. The investors who trusted their savings with Glenview Capital though didn't have that problem. They saw their investments quadruple over the last 10 years. Larry Robbins’ Glenview returned 301% after fees and expenses between January 2001 and December 2010. Glenview Capital also returned 15.7% in 2010, performing better than average hedge funds and the S&P 500 index. Insider Monkey, your source for free insider trading data, follows talented/informed investors like Larry Robbins to gain insights about the future of the financial markets and develop investment themes.
Larry Robbins is extremely bullish about the stock market in the medium term. “We remain constructive on the investment environment over the medium term supported by attractive valuations, excessive corporate liquidity, a growing economy and ample global liquidity,” Robbins said in his latest investor letter. In December Robbins predicted the stock market to increase by more than 50% over the next three years.
“Forward risks are no longer tilted towards deflation / double digit recession but instead include inflationary pressures and the corresponding impact on sovereign creditworthiness,” Robbins said about the interest rates. This implies long-term bonds aren’t attractive investments and investors should stay away from Treasury ETFs such as TLT, TLH, ZROZ, TRSY, TENZ, DLBL, DTYL and TLO.
Larry Robbins follows a more complicated strategy. He says, “In the Glenview and GO Funds, we continue to withdraw capital from long fixed income strategies and redeploy capital in long equity strategies with superior risk / reward characteristics. With the evolution of risk scenarios that now include inflationary pressures, we have adjusted our alternative hedge positioning towards protection from rising interest rates as well as mortgage putback liabilities, while harvesting a portion of our sovereign CDS hedges.”
Robbins clearly thinks equities are the place to be in the medium term. At the end of December, Larry Robbins was most bullish about the following 30 stocks:
|LIFE TECHNOLOGIES CORP||LIFE||-4.2%||491209|
|EXPRESS SCRIPTS INC||ESRX||5.3%||406165|
|FLEXTRONICS INTL LTD||FLEX||-7.3%||259795|
|CVS CAREMARK CORP||CVS||0.3%||257058|
|FIDELITY NATL INFORMATION||FIS||21.1%||248335|
|THERMO FISHER SCIENTIFIC||TMO||0.9%||237422|
|TYCO INTERNATIONAL LTD||TYC||11.9%||225472|
|HEWLETT PACKARD CO||HPQ||-4.0%||173462|
|VIACOM INC NEW||VIA||18.4%||137258|
|BMC SOFTWARE INC||BMC||7.9%||119663|
|URS CORP NEW||URS||9.8%||115272|
|HARTFORD FINL SVCS||HIG||4.4%||95327|
|EXPEDIA INC DEL||EXPE||-10.3%||95213|
|LABORATORY CORP AMER||LH||6.4%||90144|
|PITNEY BOWES INC||PBI||7.6%||85287|
|BAXTER INTL INC||BAX||7.9%||84292|
|MEDCO HEALTH SOLUTIONS||MHS||-7.1%||72575|
|CISCO SYS INC||CSCO||-15.4%||72096|
Robbins’ top 30 picks underperformed the market by 1.5 percentage points so far in 2011. His biggest position, Life Technologies, lost 4.2%. Lee Ainslie’s Maverick Capital also had a $238 Million LIFE position at the end of December. His second biggest position, McKesson, returned 12.9%, doubling the performance of SPY. Lee Ainslie’s Maverick and Andreas Halvorsen’s Viking Global are other hedge funds with MCK holdings.
Larry Robbins is more cautious over the short term. The Japanese earthquake, the potential withdrawal of stimulus and coming expiration of QE2 is making him a little bit nervous.
This is how he summarizes his short term outlook: “In summary, it is likely that this tragedy has the economic effect of pushing the inflationary challenges out in time, but may exacerbate their magnitude. Additionally, economic disruptions are likely to not only reduce global growth but to pressure 1H 2011 earnings growth, which creates a bit more challenging environment for stock picking in the immediate term. As you would expect, we have modestly reduced gross long and net long exposures within our equity book to compensate for this additional uncertainty, though these changes are more modest than one may expect due to our domestic defensive investment orientation.”