5 Best Stocks To Buy According To Billionaire Larry Robbins

2. Bausch Health Companies Inc. (NYSE: BHC)

Value: $341,828,000
Percent of Larry Robbins’ 13F Portfolio: 7.83%
No. of Hedge Fund Holders: 43

Canada-based Bausch Health makes treatments for skin diseases, gastrointestinal disorders, eye health and neurology. In March, Bank of America downgraded the stock to Underperform from Neutral, citing valuation concerns. The bank said that the stock is priced to “perfection.” BofA set a price target of $27 for Bausch stock.

Glenview Capital currently holds 16.4 million shares of BHC that amounts $341.8 million. BHC occupies 7.83% of Glenview Capital’s total portfolio.

In one of their investor letters, Chou Associates Management highlighted a few stocks and Bausch Health Companies Inc. (NYSE:BHC) is one of them. Here is what Chou Associates Management said:

“In early August, Bausch Health Companies Inc. announced that it is planning to spin off its eye care business, Bausch + Lomb, into an independent publicly traded company. This will allow the company to concentrate on its gastroenterology, aesthetics/dermatology, neurology and international pharma business.

Chairman and CEO Joseph Papa said, “We’ve looked at the value of our pure health companies like Alcon and Cooper and believe that Bausch + Lomb would compare very favorably when investors have an opportunity to make a judgment about the relative value of the stand-alone business”.

Comparables like Cooper Companies and Alcon Inc. are currently trading between 18 and 20 times EBITDA. If Bausch + Lomb trades at similar multiples as a stand-alone company, the total value of Bausch Health using sum-of-the-parts method, net of debt, should be worth north of $35 per share, as an inference. For a long time we have felt that Bausch was undervalued, but the investors were not giving credit that management has done a good job in running the operations, selling non-core assets, as well as de-leveraging its balance sheet. They felt the process was too slow, we hope the spin-off of Bausch + Lomb unit will be the catalyst that is needed for investors to price the company closer to its intrinsic value.”