Tenet Healthcare Corp (THC), Health Management Associates Inc (HMA): Hedge Fund Glenview Capital’s Best Bets

The fund moved heavily into Community Health Systems (NYSE:CYH), as Robbins added shares for a total of almost 26 million by the end of December. Community Health Systems (NYSE:CYH) operates hospitals and home health care agencies; its recent financials have been somewhat similar to those of Health Management Associates, with an almost certainly unsustainably high earnings growth rate but still decent revenue numbers. The stock carries trailing and forward P/Es of 14 and 9, respectively, making it at least a prospective value stock as well.

Glenview disclosed ownership of 3.7 million shares of URS Corp (NYSE:URS), unchanged from the beginning of October. The company is diversified among engineering services, infrastructure project management, and work with aerospace and defense companies. Like many of the fund’s small cap picks, it is priced somewhat cheaply (the trailing P/E is 11). In its last quarterly report revenue grew 24% compared to the fourth quarter of 2011, and earnings were much higher as well. While we wouldn’t put too much emphasis on one quarter’s results we certainly think it is worth doing more research on the company.

With many of the fund’s small cap picks featuring at least somewhat low multiples, we think the best “leads” are those which have been growing their business recently including the hospitals and URS. Of course we can also take Robbins’s bullishness on hospitals as a reason to look at the entire industry, including larger cap companies and peers which his fund did not own.

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