Glenview Capital’s Major New Positions

Community Health Systems, Inc. (NYSE:CYH) was Glenview’s third addition.  The healthcare service provider should feel at home in the hedge fund’s holdings, where over 30% of the funds assets under management are employed in the medical and healthcare industries (see which other health stock Glenview likes). CYH has been a steady riser, consistently beating earnings in 2012 and being rewarded positive marks by Morgan Stanley, BofA/Merrill Lynch, and JP Morgan in the last month alone.  Forward P/E stands at 9 and reflects a drop from Trailing P/E; coupled with a relatively low PEG ratio (under 1), we agree with the big banks in anticipating higher earnings and continued growth in 2013.

The fourth position built in Q3 2012 was in B/E Aerospace Inc (NASDAQ:BEAV).  The company primarily makes cabin products for commercial and business aircraft and is a favorite amongst sell-side analysts, with a vast majority viewing a buying opportunity in the stock.  Price targets a year from now average out to $56.18, and with BEAV currently trading around $36.50, Wall Street is expecting a gain of almost 14%.  B/E Aerospace continues to make strides in their niche, being awarded $250mm worth of contracts to outfit various airlines’ cabins last month alone.  A continued bull-market in 2013 could keep airline passengers buying tickets, putting money in the pockets of those airlines to renovate and update new and existing cabins, meaning more upside for BEAV.  (See which other hedge fund managers are bullish on BEAV.)

Finally, CIT Group (NYSE:CIT) rounds out Glenview’s latest large additions, increasing the fund’s modest financial holdings.  The company provides commercial financing and leasing products to companies that fall in the middle market or smaller size segments.  Earnings estimates for the previous quarter (due out January 29^th) are hopeful, but peeling back the cover reveals three negative earnings reports in a row in 2012.  Quarterly revenue growth was equally disappointing and decidedly negative versus a year prior, so Glenview may just be hoping to capitalize on an expected positive increase in the beginning of 2013.  Watch out for a drop in share price if they miss their estimates, and pull out completely if reported earnings fall back into the negative.

Disclosure: I do not own shares of any stocks mentioned in this article.