Tipp Hill Cashes Out of Gold Stocks, Puts It Into Healthcare

Syracuse University graduate Richard L. Haydon named his fund after the Tipperary Hill area, his childhood neighborhood. Before establishing Tipp Hill Capital Management in 2009, Mr. Haydon was also a Partner and Senior Portfolio Manager at Omega Advisors, which is led by veteran investor and billionaire Leon Cooperman. By the end of March, the value of the multi-sector focused, long/short hedge fund’s equity portfolio stood at about $101.18 million. Looking a little closer at this portfolio reveals that the contribution of the materials sector dropped to 6% from 14% during the first quarter, while the healthcare sector was absent from the portfolio at the end of December, and shot up to 25% representation by the end of March. In this article we are going to dig a little deeper into these changes and see which materials stocks were sold and were healthcare stocks were purchased to take their place.

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Goldcorp Inc. (USA) (NYSE:GG)

 – Shares Owned by Tipp Hill (as of March 31): – 0

 – Value of Holding (as of March 31): – $0

After initiating a position in Goldcorp Inc. (USA) (NYSE:GG) of about 340,000 shares during the fourth quarter, Tipp Hill liquidated the entire stake during the first three months of this year. The holding represented about 4.25% of Tipp Hill’s portfolio at the end of December. The rising gold prices have given a hefty boost to the stock price of the $13.76 billion gold miner, with its shares being up by about 37% year-to-date. However, Tipp Hill’s move to unload the stock is bound to be a smart one given that Moody’s lowered the company’s senior unsecured ratings to Baa3 from Baa2, owing to expected production declines, management changes, and execution problems at several mines. Eric Sprott‘s Sprott Asset Management also lowered its Goldcorp Inc. (USA) (NYSE:GG) stake during the first trimester, by 31% to about 584,600 shares.

Barrick Gold Corporation (USA) (NYSE:ABX)

 – Shares Owned by Tipp Hill (as of March 31): – 0

 – Value of Holding (as of March 31): – $0

Tipp Hill’s Barrick Gold Corporation (USA) (NYSE:ABX) holding represented 8.66% of the fund’s portfolio and comprised 1.08 million shares. The stock price has gained more than 118% so far this year, making the now-sold off position a likely windfall for the firm. Just this month the $18.5 billion gold miner was upgraded by Credit Suisse to ‘Outperform’ from ‘Neutral’, while its price target was increased to $17 by the financial services company, which suggests further upside of about 6%. Higher gold prices and the company’s commitment to reduce its debt to $8 billion by the end of 2016 from $10 billion at the end of last year are the main reasons for an upbeat outlook for the company. After an increase of 43% to its holding during the fourth quarter, Jim Simons‘ renowned quant fund Renaissance Technologies held about 25.71 million shares of Barrick Gold Corporation (USA) (NYSE:ABX).

We analyze three big healthcare positions that Tipp Hill added to its portfolio during the first quarter.

Community Health Systems (NYSE:CYH)

 – Shares Owned by Tipp Hill (as of March 31): 275,000

 – Value of Holding (as of March 31): $5.09 Million

The new holding of 275,000 shares of Community Health Systems amassed about 5.03% of Tipp Hill’s equity portfolio as of March 31. Shares of the operator of acute care hospitals have dropped by more than 28% this year, with a major dip coming in mid-February after the company announced its fourth quarter financial results, which saw a 1.5% decline in adjusted admissions. However, the stock is up by 18% since then, as Community Health Systems (NYSE:CYH)’s spin-off Quorum Health Corporation (NYSE:QHC) recently reported a 1.1% increase in adjusted admissions, raising hopes for better results from Community Health Systems itself. Ray Carroll‘s Breton Hill Capital was also bullish on Community Health Systems (NYSE:CYH) during the first quarter, as it raised its stake by 42% to over 48,500 shares. Moreover, Conan Laughlin’s North Tide Capital reported a more than 100% hike to its Community Health Systems stake in late March, adding further to the bullish momentum.

AbbVie Inc (NYSE:ABBV)

 – Shares Owned by Tipp Hill (as of March 31): 138,000

 – Value of Holding (as of March 31): $7.88 Million

Tipp Hill’s new stake in AbbVie represented about 7.8% of the fund’s equity portfolio on March 31. As far as AbbVie Inc (NYSE:ABBV)’s upcoming drugs are concerned, the FDA recently approved the research-based biopharmaceutical company’s New Drug Application for VIEKIRA PAK without Ribavirin, for the treatment of chronic hepatitis C virus (HCV) genotype 1b infection and compensated cirrhosis (Child-Pugh A). Although highly profitable, the competition in the hepatitis C space is stiff, with ‘ Gilead Sciences, Inc. (NASDAQ:GILD)’s Sovaldi and Harvoni treatments being the market leaders. AbbVie Inc (NYSE:ABBV)’s shares are down by 7.8% in the past 12 months, but are up by 2.8% so far this year. Woodford Investment Management, which is led by Neil Woodford, upped its stake in AbbVie during the first quarter by 26% to 11.06 million shares.

Tenet Healthcare Corp (NYSE:THC)

 – Shares Owned by Tipp Hill (as of March 31): 293,000

 – Value of Holding (as of March 31): $8.48 Million

Lastly in Tenet Healthcare, in which Tipp Hill initiated a 293,000-share position during the first quarter, representing an 8.37% slice of its equity portfolio on March 31. In late March, Tenet announced the completion of its sale of assets from five Atlanta-area hospitals to Wellstar Health System for $575 million in cash. The company was also excluded from the S&P 500 index recently, as Standard & Poor’s believes that it is more representative of the mid-cap space, with the company currently having a market cap of $3.23 billion. Susquehanna recently upgraded Tenet Healthcare Corp (NYSE:THC) to ‘Positive’ from ‘Neutral’. Billionaire Larry Robbins‘ Glenview Capital is another believer in Tenet Healthcare Corp (NYSE:THC)’s operations, as the fund held about 17% of the healthcare services company’s outstanding stock by the end of last year.

Disclosure: None