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Billionaire Andreas Halvorsen’s New Healthcare Pick

As a new filing with the Securities and Exchange Commission showed, Andreas Halvorsen‘s Viking Global has initiated a new position in Envision Healthcare Holdings Inc (NYSE:EVHC), a $7.3 billion provider of outsourced medical services. Viking owns nearly 11.54 million shares of Envision Healthcare, the passive stake amassing 6.3% of the company’s outstanding stock. With the addition of the company to its equity portfolio, Viking Global has become the largest shareholder of Envision Healthcare Holdings among the funds that we track.

Andreas Halvorsen

As mentioned earlier, Envision Healthcare Holdings Inc (NYSE:EVHC) provides outsourced medical services. Among its clients are consumers, as well as hospitals, healthcare plans and government organizations. The stock of the company returned more than 25% in the last calendar year, slightly beating the Long-Term Care Facilities industry, which had an average return of around 21%. The growth came on the back of consistent revenue growth reported for the last several quarters and both EPS and EBITDA appreciation. Overall, for 2014, Envision Healthcare Holdings posted revenue of $4.40 billion, versus $3.73 billion for the previous year, while its diluted EPS surged to $0.66 from $0.04. In the last two months both Cantor Fitzgerald and Jefferies Group raised their price targets on the stock to $47, both reiterating ‘Buy’ ratings, which coincide with the consensus from other analysts.

Aside from Viking Global, among other investors that are bullish on Envision Healthcare Holdings Inc (NYSE:EVHC) are some of the largest and best-performing hedge funds, some of which have a significant exposure to the healthcare sector, such as Roberto Mignone’s Bridger Management and Richard Barrera’s Roystone Capital Partners, while others have more diversified equity portfolios like Ken Griffin’s Citadel Investment Group and David Gallo’s Valinor Management. However, the previous round of 13F filings showed a decrease in popularity in the stock, as the number of funds holding shares of Envision Healthcare Holdings Inc (NYSE:EVHC) dropped to 30 from 39 a quarter earlier. The second-largest stake (after Viking) is held by Daniel S. Och‘s OZ Management, which disclosed 4.56 million shares in its latest 13F filing.

In addition, earlier this month, three top executives exercised their option rights and purchased shares that have been sold at a significant profit. The largest transaction has been disclosed by William Sanger, the company’s CEO and Chairman, who acquired 418,500 shares at $6.06 per unit (through options) and sold them at $40.00 per share.

With the addition of Envision Healthcare Holdings Inc (NYSE:EVHC), Mr. Halvorsen has increased his fund’s exposure to the healthcare sector, which already amasses the largest portion of Viking’s $21.78 billion equity portfolio, 31% as of the end of 2014. Overall, Viking Global currently has 15 long positions in healthcare companies out of a total of 62 disclosed in its latest 13F filing. During the first three months of 2015, Mr. Halvorsen’s healthcare picks returned around 16%, outperforming his overall equity portfolio, which had weighted average returns of 6.3%. Moreover, Viking’s three largest holdings in terms of value are represented by healthcare stocks, two of which posted double-digit growth during the January-March period. Let’s take a closer look at these companies.

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