Glenview Capital’s Top Healthcare Stock Picks: HCA Holdings Inc (HCA), Life Technologies Corp. (LIFE), Tenet Healthcare Corp (THC)

The fund increased its stake in the largest publicly traded U.S. hospital stock, HCA Holdings Inc (NYSE:HCA), to 8.9 million shares. HCA made our list of the most popular healthcare stocks among hedge funds for the fourth quarter of 2012 (find more healthcare stocks hedge funds love) and it is arguably a candidate for pure value status: the trailing and forward P/Es are 11 and 10, respectively. However, HCA Holdings Inc (NYSE:HCA) experienced a steep decline in net income in its most recent quarter compared to the same period in the previous year. The stock is certainly cheap, but we’d want to investigate the causes of that drop.

Glenview just couldn’t get enough hospitals, with its position in Community Health Systems (NYSE:CYH) increasing from a relatively small one to 8.6 million shares. It is another stock which up strongly in the last year on much improved earnings- at least in percentage terms- but a considerably lower growth rate on the top line. We’d note that the company’s business also includes a number of home care agencies. Community Health Systems carries a trailing earnings multiple of 15, so only moderate growth is need to justify the valuation.

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Disclosure: I own no shares of any stocks mentioned in this article.