Prior to establishing Glenview Capital in 2001 Larry Robbins (pictured) was a trader at the veteran investor Leon Cooperman‘s Omega Advisors. A cursory look at their latest 13F portfolios reveals that an association between the two still persists and the funds have a similar outlook when it comes to investment prospects of Allergan PLC (NYSE:AGN), eBay Inc (NASDAQ:EBAY), American International Group Inc (NYSE:AIG), Sunedison Inc (NYSE:SUNE), and Citigroup Inc (NYSE:C).
Glenview is a larger concern than Omega as the market value for its public equity portfolio stood at $21.90 billion at the end of March, as compared to $6.27 billion for Omega. While the healthcare sector represented 36% of Glenview’s holdings, the finance sector formed a majority of Omega’s portfolio at 26%.
Why do we pay attention to hedge fund sentiment? Most investors ignore hedge funds’ moves because as a group their average net returns trailed the market since 2008 by a large margin. Unfortunately, most investors don’t realize that hedge funds are hedged and they also charge an arm and a leg, so they are likely to underperform the market in a bull market. We ignore their short positions and by imitating hedge funds’ stock picks independently, we don’t have to pay them a dime. Our research have shown that hedge funds’ long stock picks generate strong risk adjusted returns. For instance the 15 most popular small-cap stocks outperformed the S&P 500 Index by an average of 95 basis points per month in our back-tests spanning the 1999-2012 period. We have been tracking the performance of these stocks in real-time since the end of August 2012. After all, things change and we need to verify that back-test results aren’t just a statistical fluke. We weren’t proven wrong. These 15 stocks managed to return more than 145% over the last 34 months and outperformed the S&P 500 Index by 85 percentage points (see the details here).
Formerly known as Actavis, Allergan PLC (NYSE:AGN) occupied the top spot in Omega’s portfolio with some 933,500 shares valued at $277.82 million. The holding represented 4.43% of the fund’s portfolio. Glenview increased its holding in the $120 billion specialty pharmaceutical company by 7% during the first quarter to 1.98 million shares valued at $590.09 million. So far this year, Allergan PLC (NYSE:AGN)’s stock has appreciated by almost 20%, and it was also the most popular company among the hedge funds that we track, by the end of the March quarter. Andreas Halvorsen‘s Viking Global is the largest stockholder of Allergan PLC (NYSE:AGN) holding 6.11 million shares valued at $1.82 billion. Larry Robbins sees a nearly 50% upside in Allergan shares over the next 18 months. Here is what Robbins said about AGN in a recent investor letter: