In this article, we discuss the 10 best stocks to buy now according to billionaire Larry Robbins.
Larry Robbins is a billionaire hedge fund manager as well as a philanthropist. He manages Glenview Capital which he named after the suburban hockey area where he used to play hockey in his teen years. The fund has nearly $6 billion in assets under management as of the first quarter of 2022.
Robbins grew up in Arlington Heights, Illinois. He’s a graduate in Economics and worked at Omega Advisors prior to founding Glenview.
Healthcare stocks are a favorite of Larry Robbins. In 2012, he successfully bet that Obamacare would be a bonanza for for-profit hospital companies and started concentrating his portfolio in the healthcare sector, delivering 54% return on his flagship Glenview Capital Opportunity Fund in the same year.
In the following year, the returns jumped to 84%, making Glenview Capital the number one fund on the Bloomberg-Markets ranking of the best performing hedge funds.
Investment Philosophy
“I think one of the challenges that many people have is that, in their pursuit of highly diversified investment strategies, they end up investing their own capital – or capital that they are the fiduciary for – on things that, due to time constraints, they have no contact with. Or of which they don’t have a capacity to develop a deep understanding. The theory, when we started Glenview – and that perpetuates today – is to invest in businesses that we believe we can adequately describe in a matter of minutes. Businesses where we can look at past and present fundamentals and try to predict future fundamentals – including future earnings growth, cash flow growth, shareholder returns, and where we can invest capital at valuations – absolute valuations – that we find reasonable. And the final thing is that, all along the way, we wanted to think and act like owners – which the business has allowed us to do.”
-Larry Robbins
Glenview Capital had a “suggestivist” approach to investment. The fund cultivates relationships with its holdings’ management boards to suggest changes that could be of benefit to shareholders. Later on, Robbins, whose portfolio is concentrated in healthcare stocks, switched to a more activist approach due to his observation that hospital companies are massively “underleveraged” and should be relatively more frequent with stock buybacks and bond issuance.
Robbins is a long-term holder. His fund does not employ stop-losses and has insignificant portfolio turnovers. Robbins looks for capital appreciation in well-established companies and in this regard, can be described as a value and growth investor. Glenview Capital focuses on predictable companies with advantages that go beyond economic cycles.
Glenview Capital
As of the first quarter of 2022, Glenview Capital has nearly $5 billion in managed securities. Healthcare and Services together make up the largest share in the fund’s portfolio. The tech sector takes up one of the smallest portions but there’s prominent stocks to see in the portfolio like Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms, Inc. (NASDAQ:META) and Uber Technologies, Inc. (NYSE:UBER).
The main fund of Glenview Capital has averaged out at 13% in annual returns in the years 2000-2015, compared to the S&P 500’s average of 4.6% with dividends for the same period.
Larry Robbins of Glenview Capital
Our Methodology
We’ve selected the top 10 stocks to buy now according to billionaire Larry Robbins, from his 13F filings of Q1 2022. We’ve highlighted key elements like the fund’s stake value in each of the given stocks as well as the percentage each holding takes up in its portfolio.
10. Coca-Cola Europacific Partners PLC (NASDAQ:CCEP)
Glenview Capital’s Stake Value: $138 million
Percentage of Glenview Capital’s 13F Portfolio: 2.8%
Number of Hedge Fund Holders: 31
Number ten on the list of best stocks to buy now according to billionaire Larry Robbins is Coca-Cola Europacific Partners PLC (NASDAQ:CCEP). It is a bottling company for The Coca-Cola Company (NYSE:KO). It was formed by the merger of European bottling companies: Coca-Cola Enterprises, Coca-Cola Erfrischungsgetränke AG and Coca-Cola Iberian Partners, S.A. and an Asia Pacific company, Coca-Cola Amatil.
On April 28, Deutsche Bank analyst Mitch Collett lowered the price target on Coca-Cola Europacific Partners PLC (NASDAQ:CCEP) to $59 from $66 and kept a Buy rating on the shares after strong first quarter results.
Coca-Cola Europacific Partners PLC (NASDAQ:CCEP) is a dividend paying stock. Investors of record on May 13 were paid a quarterly dividend of $0.59 per share on May 26. As of June 24, its annual dividend yield is 4.17%.
Glenview Capital’s stake in the company is only slightly higher than its stake in Amazon.com, Inc. (NASDAQ:AMZN) and Uber Technologies, Inc. (NYSE:UBER) but considerably higher than its Meta Platforms, Inc. (NASDAQ:META) stake.
9. US Foods Holding Corp. (NYSE:USFD)
Glenview Capital’s Stake Value: $166 million
Percentage of Glenview Capital’s 13F Portfolio: 3.3%
Number of Hedge Fund Holders: 40
US Foods Holding Corp. (NYSE:USFD) is a leading American food distributor catering to restaurants, hospitals and educational institutions among others. It has over 25,000 employees working in more than 60 locations across the country.
On June 9, Barclays analyst Jeffrey Bernstein lowered the price target on US Foods Holding Corp. (NYSE:USFD) to $34 from $38 and kept an Equal Weight rating on the stock.
Bernstein said that investors often look at consumer discretionary stocks like restaurant companies as uninvestable during periods of economic uncertainty, such as the present one where the likelihood of a recession is increasing.
However, the analyst believes that the sentiment is inaccurate and doesn’t factor-in the historical context. He observed that US Foods Holding Corp. (NYSE:USFD) is the extreme staple-end of consumer discretionary and was confident that it could weather the storm.
8. Baxter International Inc. (NYSE:BAX)
Glenview Capital’s Stake Value: $171 million
Percentage of Glenview Capital’s 13F Portfolio: 3.4%
Number of Hedge Fund Holders: 45
Baxter International Inc. (NYSE:BAX) is a multinational healthcare company headquartered in Illinois. The company develops products to treat various acute and chronic diseases but its primary focus is on developing treatments for kidney diseases.
On June 24, JPMorgan analyst Robbie Marcus lowered the price target on Baxter International Inc. (NYSE:BAX) to $78 from $90 and kept an Overweight rating on the shares.
Baxter International Inc. (NYSE:BAX) has a dividend yield of 1.74% as of June 24. The company has been growing its dividend payouts consecutively for seven years.
Cooper Investors mentioned Baxter in their Q3 2021 investor letter. Here’s what they said:
“During the quarter we exited our position in Baxter, having originally bought in 2017 as a Low Risk Turnaround with clear Stalwart attributes. In essence, the core businesses were highly durable, providing life sustaining or saving medical products such as IV medication or pumps and dialysis machines.
They had been mismanaged prior to the company spinning off its biopharmaceutical business in 2015 which had generated most of the Baxter’s operating profit. With a new CEO in Joe Almeida, who came with a successful track record leading another medical device company (Covidien) we identified three sources of value latency for the new standalone Baxter.
Firstly, optimising the cost structure. Baxter were successful here – they were able to effectively double operating margins from low single digits to mid-to-high teens over a relatively short four-year period. Secondly, accelerating sales growth through a more focused R&D effort. This is inherently more difficult than cost optimisation and on this front success has been muted with only moderate impact to revenues from new product introductions. Finally, capital deployment through Baxter’s significantly under-levered balance sheet. Several smaller bolt-on acquisitions were nicely complementary to the existing portfolio, but in early September the company announced the acquisition of Hil-Rom Holdings, a medical device company with leading positions in bed systems and patient monitoring. The deal is significant at US$12.5bn in size, and exhausts all balance sheet latency in one fell swoop.”
7. Bausch Health Companies Inc. (NYSE:BHC)
Glenview Capital’s Stake Value: $211.5 million
Percentage of Glenview Capital’s 13F Portfolio: 4.2%
Number of Hedge Fund Holders: 48
Bausch Health Companies Inc. (NYSE:BHC) is a Canadian multinational pharmaceutical company that develops and sells drugs primarily for skin, gastrointestinal and neurological diseases. Glenview Capital holds nine million shares in the company but the hedge fund Icahn Capital LP takes the lead with nearly 35 million shares as of Q1 2022.
On June 13, JPMorgan analyst Chris Schott resumed coverage of Bausch Health Companies Inc. (NYSE:BHC) with an Overweight rating and a price target of $12. That said, the analyst noted that the company’s challenges like the Xifaxan patent litigation and Bausch & Lomb separation pathway seem well reflected in the stock’s valuation.
Schott is of the view that this creates a favorable upside/downside for shares from the current level for investors willing to look at the complex story.
6. Fiserv, Inc. (NASDAQ:FISV)
Glenview Capital’s Stake Value: $217 million
Percentage of Glenview Capital’s 13F Portfolio: 4.3%
Number of Hedge Fund Holders: 58
Fiserv, Inc. (NASDAQ:FISV) is a multinational finance company that offers financial technology solutions to clients like banks, stock brokers, insurance companies and credit card issuers.
On June 8, Fiserv expanded the portfolio of payout options to businesses using its Carat operating system, to include digital checks. The new feature speeds the delivery of funds as well as cuts operational costs associated with paper checks.
On May 27, Tigress Financial analyst Ivan Feinseth raised his price target on Fiserv, Inc. (NASDAQ:FISV) to $152 from $150 and kept a Buy rating on the shares.
The analyst told investors in a research note that high consumer spending led to strong Q1 results for Fiserv, Inc. (NASDAQ:FISV) and recent acquisitions position the company well to gain its piece of the pie in e-commerce and bank IT verticals.
Fiserv, Inc. (NASDAQ:FISV) is a notable company in Glenview Capital’s portfolio in addition to Amazon.com, Inc. (NASDAQ:AMZN), Uber Technologies, Inc. (NYSE:UBER) and Meta Platforms, Inc. (NASDAQ:META) but unlike the latter three, it’s one of the top stock picks of billionaire Larry Robbins.
ClearBridge Investments brought up Fiserv, Inc. (NASDAQ:FISV) in their Q4 2021 investor letter. Here’s what they said:
“While the threat of disruption risk to these established payment companies should not be taken lightly, it is important to note that many of these emerging disruptors are small relative to the massive global payments network and heavily reliant on the very payment infrastructure they are trying to disrupt. This led us to initiate a position in Fiserv, whose stock dropped to a level that embedded projections for negative long-term growth despite no current evidence of disruption. We think Fiserv will continue to grow despite perceived disruption risks given its scale and efficiency. Fiserv also owns cloud-based payments hardware and software system Clover, which is both bigger and faster growing than Square; this provides an additional degree of protection against further disruption risk.
5. DXC Technology Company (NYSE:DXC)
Glenview Capital’s Stake Value: $246 million
Percentage of Glenview Capital’s 13F Portfolio: 4.9%
Number of Hedge Fund Holders: 27
Number five on the list of best stocks to buy now according to billionaire Larry Robbins is DXC Technology Company (NYSE:DXC). It is a Virginia based IT company. Glenview leads the hedge funds invested in the company with 7.5 million shares. Harris Associates is a close second, owning 6.7 million shares as of Q1 2022. The total equity owned by 27 hedge funds amounts to $509 million.
On May 26, RBC Capital analyst Daniel Perlin lowered his price target on DXC to $39 from $47 but kept an Outperform rating on the stock. He told investors in his research note that the company’s FY23 guidance was light, but DXC Technology is progressing fast on its transition to a more digitally focused, consistent and transparent operator.
Miller Value Partners mentioned DXC technology in their Q2 2021 investor letter. Here’s what they had to say:
“DXC Technology Company (DXC) continued to climb higher during the quarter gaining 24.57%. The company reported solid Fiscal Year 4th quarter (FY4Q) results with revenue of $4.385B beating consensus of $4.29B and earnings per share (EPS) of $0.74 ahead of expectations for $0.70. The company guided for fiscal 2022 revenue of $16.6-$16.8B, below the Street at $16.9B and adjusted EPS of $3.45-3.65, ahead of the consensus of $3.43. By FY2024, the company expects organic revenue growth of 1-3%, adjusted earnings before income and taxes (EBIT) margin of 10-11%, adjusted diluted EPS of $5.00-$5.25 and free cash flow (FCF) of $1.5B. Later in the month, the company held an investor day where management highlighted their confidence that they can hit all of their targets while also stressing the progress they have made on their turnaround to date.”
4. McKesson Corporation (NYSE:MCK)
Glenview Capital’s Stake Value: $286.5 million
Percentage of Glenview Capital’s 13F Portfolio: 5.8%
Number of Hedge Fund Holders: 59
McKesson Corporation (NYSE:MCK) is an American pharmaceutical distributor and a provider of digital health services, medical supplies and care management equipment. The company has a 78,000-strong workforce and delivers 33% of all pharmaceuticals across the United States and Canada.
As of Q1 2022, Berkshire Hathaway, managed by Warren Buffett, is the leading stakeholder in the company, with nearly three million shares. The total money invested by 59 hedge funds in McKesson Corporation is north of $3.7 billion.
On June 7, Deutsche Bank analyst George Hill raised McKesson Corp to Buy from Hold and set a price target of $378 from $343. Hill’s bullish thesis on McKesson is a result of the analyst looking for defensive equity positioning due to concerns surrounding recessionary risks in the U.S.
Hill noted to investors that they can pay attention to McKesson Corporation that is trading at a discount relative to the market since the company is targeting double-digit sustainable and visible earnings and cash-flow growth in a defensive non-cyclical sector with sharply visible demand.
Baron Funds discussed McKesson Corporation (MCK) in their Q1, 2022 investor letter. Here’s what they said:
“Investments in health care distributors, health care services, and health care facilities along with cash exposure in a down market contributed to relative results. Within health care distributors, higher exposure to this strong performing sub-industry and outperformance of pharmaceutical distributor and technology solutions provider McKesson Corporation (NYSE:MCK) added value. McKesson was the top contributor as investors rotated into value stocks that were trading at low multiples of earnings. We continue to believe that McKesson’s stock is inexpensive in light of the company’s strong competitive position in growing end markets and earnings growth potential.”
3. Global Payments Inc. (NYSE:GPN)
Glenview Capital’s Stake Value: $322 million
Percentage of Glenview Capital’s 13F Portfolio: 6.5%
Number of Hedge Fund Holders: 64
Global Payments Inc. (NYSE:GPN) is a Fortune-500 financial technology company that provides payment processing solutions.
Global Payments Inc. (NYSE:GPN) has 64 hedge funds invested in its stock. The total hedge fund ownership equity stands at $3.2 billion as of the first quarter of 2022.
On May 17, Goldman Sachs analyst Will Nance initiated coverage of Global Payments Inc. (NYSE:GPN) with a Neutral rating on the shares and set a price target of $151, implying 24% upside. While constructive on Global Payments’ software-oriented approach, Nance views the company’s greater SMB and credit volume exposures as more economically sensitive and prefers to take a more defensive stance given the levels of macroeconomic uncertainty.
Oakmark Funds mentioned Global Payments Inc. (GPN) in their Q1 2022 investor letter. Here’s what they said:
“Global Payments (NYSE:GPN) is a leading provider of merchant acquiring services. The company is also one of the largest providers of payment processing and related technology solutions to credit card issuers. We believe Global Payments’ merchant acquiring business is well positioned given its strength in software-driven payments. This is one of the fastest growing parts of the industry as small business customers are increasingly recognizing the efficiency benefits of having payments seamlessly integrated into the software they use to run their businesses. In addition, Global Payments benefits from the broader secular shift away from cash and toward electronic payment methods. Together, these tailwinds have the potential to drive low-double-digit revenue growth and even faster earnings growth. With this strong outlook and with management returning a significant portion of free cash flow to shareholders via repurchase, we think the stock looks attractive at its current valuation of just 12.5x next year’s expected EPS.”
2. Cigna Corporation (NYSE:CI)
Glenview Capital’s Stake Value: $382 million
Percentage of Glenview Capital’s 13F Portfolio: 7.7%
Number of Hedge Fund Holders: 63
Cigna Corporation (NYSE:CI) is a managed healthcare and insurance company. It is headquartered in Bloomfield, Connecticut. The company’s equity that is owned by 63 hedge funds is worth $2.6 billion as of the first quarter of 2022.
On June 16, Loop Capital analyst Joseph France initiated coverage of Cigna Corporation with a Hold rating and a $270 price target.
Cigna Corporation was brought up by Davis Funds in their Q4 2021 letter. Here’s what they said:
“Healthcare is included in the portfolio both for company-specific reasons, as well as big picture trends. At the company level, we hold select companies in pharmaceuticals, healthcare services and health insurance at attractive valuations. This is at a time when the average age of the U.S. population is fast approaching 40, older than Asia-Pacific and a little younger than the aged populations of Europe and Japan. The number of seniors in the U.S.—i.e., 65 years or older— now surpasses 54 million, or about 15% of the population. Seniors, on average, take a much greater number of medications and account for a large and disproportionate share of healthcare spending, and we expect that trend to continue due to both raw demographics and a proliferation in the number of available treatments and services available now, the latter being driven by innovation and investment in the healthcare industry. Representative holdings in the Fund include Cigna, United Health Group, Viatris and Quest Diagnostics.”
1. Tenet Healthcare Corporation (NYSE:THC)
Glenview Capital’s Stake Value: $548 million
Percentage of Glenview Capital’s 13F Portfolio: 11%
Number of Hedge Fund Holders: 55
The number one stock on the list of 10 best stocks to buy now according to billionaire Larry Robbins is Tenet Healthcare Corporation (NYSE:THC). It is one of the largest healthcare corporations in the US. The company operates 65 hospitals and more than 450 healthcare facilities.
On June 16, Loop Capital analyst Joseph France initiated coverage of Tenet Healthcare Corporation with a Buy rating on the shares and a $80 price target. The analyst said that the company’s rapidly growing ambulatory surgery business could generate well over half of its adjusted EBITDA within a span of two years. France added that he likes THC because he expects that the valuation discrepancy will ultimately be addressed by Tenet’s management.
Oakmark Funds discussed Tenet Healthcare in their Q3 2021 letter. Here’s what they had to say:
“Tenet may be best known as the second-largest public hospital chain in the U.S., but its largest business is outpatient acute care centers. In early 2020, investors fled the health care industry because of the great uncertainty that the pandemic presented. The early days of the pandemic were very hard on the hospital industry especially, but as the Covid-19 surge peaked and diminished, hospitals were able to schedule elective procedures and engage in profitable activities.”
You can also take a peek at 5 Value Stocks to Buy According to Billionaire David Tepper and Top 10 Stock Picks of Randall Smith’s Alden Global
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Disclosure: none. 10 Best Stocks to Buy Now According to Billionaire Larry Robbins is originally published on Insider Monkey.
