Glenview Capital Updates Community Health Systems Stake

Larry Robbins' hedge fund Glenview Capital has filed an amended 13G and 13D with the SEC regarding their positions in Community Health Systems (CYH) and Health Management Associates (former ticker HMA).

On January 27th, CYH announced it had completed its acquisition of HMA.  As such, Glenview received over 2.6 million shares of CYH in exchange for its 37.7 million shares of HMA at an exchange rate of 0.06942 CYH shares per each share of HMA owned (and adjusted for cash received in lieu of the fractional shares).

As a result of this transaction, Glenview now owns over 12 million shares of CYH, or 10.67% of the company.

Glenview has bet big on hospitals and profited handsomely from their wagers as a whole.  For more portfolio activity from this hedge fund, click here.

Glenview's Larry Robbins on Healthcare, For-Profit Hospital Stocks

At the Robin Hood Investors Conference late last week, Glenview Capital's Larry Robbins also made a rare media appearance on CNBC and talked about the Affordable Care Act, his healthcare investments, and other topics.

He articulated that the key focus on more Americans gaining healthcare is who is getting insurance versus how many.  He feels that people who actively use health services are the ones signing up first, which benefits hospitals (and he thinks managed care will have some issues).

On for-profit hospitals versus not-for-profit: "Regardless of what the competitive environment is, they (for-profit)  have fared better in the past and they will in the future."

On why he wanted Health Management Associates (HMA) to merge with Community Health (CYH):  "Consolidation is important, scale is important."

Touching on general market valuation, he noted that his portfolio is trading at lower multiples since that's what they've focused on.  But if you turn to the overall market, historically with low interest rates, the market trades at a higher multiple until real inflation goes above 4% he says.

Video 1 on the Affordable Care Act & healthcare in general:


Video 2 on for-profit hospitals (HMA, CYH, THC, HCA etc):


Video 3 on market valuation:

Larry Robbins Rare Interview on HMA, Tenet & What He Thinks About This Market

Larry Robbins' hedge fund Glenview Capital is having another big year.  This is on the heels of stellar 2012 performance as well.  Robbins made a rare media appearance on CNBC to talk about how he's looking to replace 8 board members at Health Management Associates (HMA).


Robbins on HMA

Given that Robbins has essentially gone activist here (he calls it "suggestivist"), it should come as no surprise that he's made such an appearance to drum up shareholder support for his plan.  After all, Glenview owns around 14% of the company.

While Robbins acknowledges that consolidation is a potential outcome for HMA, he notes that the company needs to line-up a better management team and become an excellent standalone company regardless.  He says,

"The companies that did well not only for our long-term portfolio, but for the long-term portfolio of all their owners, are the companies that not only took advantage of that consolidation transaction but drove their company forward with strong operations and strong use of cash flow in an opportunistic format.  The hospitals are no different, yes there were 7 large public hospital chains with yesterday's news that Tenet will buy Vanguard there are now 6, and there are absolutely key benefits not only strategic, but financial to consolidation between one or more large hospital operators.  We are absolutely open minded that that is one way to drive value, but that is not exclusive of the other way to drive value which is a very strong management team and a very strong path to independence, regardless if we (as HMA) become a division of a larger company or whether HMA goes forth on its own right."


Robbins on THC & the Stock Market Overall

In the interview, Robbins also touched on one of his other large hospital plays, Tenet Healthcare (THC).  He likes their deal for Vanguard and notes the company has made prudent decisions.

THC has been a big winner for Glenview over the past year but we highlighted how Glenview's trimmed their THC position recently.

The hedge fund manager also addressed his view on the market overall: "We are not taking risk-off, we believe this is still a very above average opportunity set for long-term investors and frankly as an industry, we all need to remind ourselves to think and act like owners."

Embedded below is the video of Robbins' CNBC appearance:




For more on this hedge fund, be sure to check out Glenview's presentation on HMA that was released today.

Glenview Capital's Presentation Revitalize HMA - The Case For Change

Earlier today we posted up a rare interview with Glenview Capital's Larry Robbins.  Today his hedge fund released a letter to HMA shareholders as well as a presentation entitled "Revitalize HMA - The Case For Change" as he attempts to replace 8 board members at Health Management Associates (HMA).


Glenview's Letter To HMA Shareholders

Embedded below:





Glenview's Presentation: Revitalize HMA

Embedded below:





Be sure to also watch Robbins' interview as he rarely appears in the media.

Glenview Capital Seeks Removal of Health Management Associates "Poison Pill"

Larry Robbins' hedge fund Glenview Capital yesterday filed an amended 13D with the SEC on shares of Health Management Associates (HMA).  Their position size remains unchanged.  However, we recently highlighted how Glenview sought Hart-Scott-Rodino clearance to buy more HMA.

Glenview's latest amended 13D asks for the company to remove its poison pill.  Glenview writes,

"As previously disclosed by the Issuer, the Issuer adopted a “poison pill” rights plan that limits any shareholder and its affiliates and associates from acquiring beneficial ownership of more than 15% of the Shares of the Issuer.  The Reporting Persons urge the Issuer to redeem the poison pill, or at a minimum, amend the poison pill to increase the percentage of stock a person would be permitted to own without triggering the poison pill to a 25% threshold."

Robbins' fund is also evaluating potentially planning or proposing changes to the company's Board of Directors.  They intend to meet with potential nominees and other interested parties (HMA management, other shareholders, etc) regarding this matter.

The saga plays on.

Glenview Capital Sought Hart-Scott-Rodino Clearance To Buy More Health Management; Issues Press Release

Earlier this month, we highlighted how Larry Robbins' hedge fund firm Glenview Capital added to its Health Management Associates (HMA) stake and filed a 13D with the SEC.  Yesterday, Glenview filed an amended 13D and included a press release seeking to clarify its holdings in HMA given that they sought Hart-Scott-Rodino clearance to buy more shares.  The full press release is below:


"Statement of Clarification by Glenview Capital, 14.6% Shareholder of Health Management Associates, Inc. 

NEW YORK, NY (May 28, 2013) – Glenview Capital Management LLC, issued the following statement of clarification regarding its holdings in Health Management Associates, Inc. (NYSE: HMA):                

“Investment funds advised by our firm, Glenview Capital Management, LLC (“Glenview”), presently hold approximately 37.8 million shares of Health Management Associates, Inc. (“HMA”), or approximately 14.6% of the Company. In our thirteenth year of operation as an investment partnership, we at Glenview are proud of not only our investment track record but of our track record of dealing directly, respectfully and privately with senior management and, as appropriate, members of the Board of Directors. We have never filed a public letter to a company or its shareholders and our strong preference is to avoid doing so in the future.  

However, we feel the 8-K issued by HMA in conjunction with the Board’s decision to enact a shareholder rights plan, commonly referred to as a poison pill, may cause confusion regarding our intentions and may lead to undue volatility in the stock price. As such, we offer the following points of clarification so that fellow shareholders may have a more complete understanding of the situation prior to the resumption of trading in HMA shares:  

i) As a result of developments regarding HMA, Glenview converted its Schedule   13G filing to a 13D on May 6, 2013.  

ii) Consistent with our 13D filing, we sought clearance, under the Hart-Scott-Rodino Antitrust Improvements Act (“HSR”), as required by law in order to be in a position to acquire even one additional share of HMA.  

iii) Under HSR requirements, each investment fund within our fund family is required to make its own HSR filing.  Each fund may file to acquire up to a maximum of $141.8 million, $709.1 million or a greater amount in HMA voting shares.  Due to the size of our funds, and the proximity of their present ownership stake to the thresholds, three funds filed for the higher authorization size of up to $709.1 million and one filed for authorization of up to $141.8 million, thus adding up to $2.2 billion of stock. 

iv) Notwithstanding the simple math of adding up these maximum threshold amounts, such an investment size is both beyond our present intention and beyond our present resources available for any single position.  Such a filing was required to facilitate even a modest increase in our present holdings.  In plain English, we have no present intention or future plan to buy either $2.2 billion of stock or 75% of HMA.  

v) Finally, in HMA’s description of the adoption of the poison pill, they indicate that such a rights plan will “help promote the fair and equal treatment of all stockholders of the Corporation (not just Glenview)…”  As perhaps this statement could lead to misinterpretation, we wish to clarify that Glenview has made no proposals, either to HMA or to any of its holdings over a thirteen year period, which are to the exclusive benefit of Glenview.  On the contrary, every discussion we have engaged in, including any recommendations we have made, represent suggestions that we believe materially improve value creation for all long-term shareholders.   

It is out of respect for our fellow HMA shareholders that we have made an exception to our long-standing practice of avoiding such open written communications, and we hope that this insight helps all market participants make intelligent decisions about their own investment positions in the Company.  We look forward to continuing our discussions with HMA in private and will use the governance tools available (which for us always starts with respectful and constructive dialogue) to pursue our common objectives of long-term value creation.”


For more recent activity from this hedge fund, we also detailed how Glenview trimmed their Tenet Healthcare stake.

Glenview Capital Adds To Health Management Associates Position

Larry Robbins' hedge fund Glenview Capital just filed a 13D with the SEC regarding shares of Health Management Associates (HMA).  Per the filing, Glenview has revealed a 14.56% ownership stake in HMA with 37,757,583 shares.

This marks an increase in the number of shares owned by 7.7% since the end of 2012.  The 13D was filed due to portfolio activity on May 6th.  This is the second subsequent purchase by Robbins' hedge fund as we detailed the last time Glenview added to its HMA stake.
 
Glenview's Bet on Hospitals

Glenview has had a huge year thus far as noted in our summary of 2013 hedge fund performance numbers.  Robbins has bet a lot on hospitals including HMA, Tenet Healthcare (THC), and HCA (HCA).  And recently, Glenview bought more Lifepoint Hospitals as well.

Robbins originally pitched going long hospitals back in May of last year and has profited handsomely from this call.

Per Google Finance, Health Management Associates "operates general acute care hospitals and other health care facilities in non-urban communities."

Larry Robbins' Glenview Capital Boosts Health Management Associates Stake

Highlighting some relevant SEC filings from over the holidays, we wanted to flag a series of Form 4's and an amended 13G filed by Larry Robbins' hedge fund firm Glenview Capital on Health Management Associates (HMA). 

Per the filings, Glenview has revealed over a 13% stake in HMA with 34,059,503 shares.  Around two weeks ago, Glenview purchased 5,430,227 HMA shares at prices between $9 and $9.19.  This marks almost a 33% increase in their position size since the end of the third quarter.

While those share prices are weighted averages from the SEC filings, HMA is largely still trading around those levels now.


Glenview Continues To Bet On Hospitals

Hospitals and healthcare plays have been a big theme in Glenview's portfolio and Robbins has done extremely well with some of these positions (in particular Tenet Healthcare).  Robbins originally pitched going long hospitals back in May and Glenview was also recently out adding to its position in Community Health Systems.

Earlier this month, HMA was profiled on an episode of CBS' show "60 Minutes," which called into question the company's admission policies.  HMA defended itself ahead of the investigative journalism piece that aired.

Per Google Finance, Health Management Associates "operates general acute care hospitals and other health care facilities in non-urban communities."

Larry Robbins' Ira Sohn Presentation: Long THC, HMA, HCA, LPNT; Short ITC

We're posting up notes from the Ira Sohn Conference.  Glenview Capital's Larry Robbins gave a presentation on going long/short various equities.

"How to cope with the market's electile dysfunction."
Disclaimer: do your own work.
Stresses now: Economy, liquidity, DC, legal review of Obamacare.
New highs: treasuries, utilities, defense.

He says long hospitals/life sciences, short treasuries/Utilities/defense.  We recently posted up why Robbins likes Life Technologies (LIFE) as well.

Long: Tenet Healthcare (THC), Health Management Associates (HMA), HCA (HCA), & LifePoint Hospitals LPNT

EBITDA has grown every year for hospitals, 9% CAGR, 1% admission growth, 3% pricing, 2% leverage, new hospitals 3%. "Affordable Care Act" is now 2409 pages, has 2 key legal questions: is the individual mandate constitutional? If not, is the rest of the ACA law, or is it all thrown out? If all thrown out, it's good for hospitals because some cuts come out.

Hospitals benefit from medicaid eligibility, reduces bad debt expense. At 6x eps, thinks worth it in any option. Worst case, no reform, 21% CAGR on eps, Medicaid expansion implies 28%, plus individual mandate over 30%. Half of hospitals are non-profit, just get by.

We flagged when Glenview bought more HMA in April as well as when Glenview started its stake in THC back in March.

For profit hospitals- can the government unilaterally take their profits from reimbursements? Not likely. P/E averages are 8.1x for the sector.


Short ITC Holdings (ITC)

Short this utility. Transmission company. FERC regulated. 60/40 equity/debt. Allowed 11% ROE, FERC allows 13.2%, so customers are overpaying by $260M to $550M.

No accounting issues, just getting a "sweetheart deal" that the regulators won't let this go on forever. If you cut their ROE by 194 bp, earnings get hit by 18%. Consensus EPS is $4.00, could really be $2.00, NI down by 20%, and share count up 60%.


P.S. - Don't miss other presentations from David Einhorn, John Paulson, Bill Ackman & more: notes from Ira Sohn Conference 2012.

Glenview Capital Buys More Health Management Associates (HMA)

Larry Robbins' hedge fund firm Glenview Capital filed a new 13G with the SEC regarding its position in Health Management Associates (HMA). Per the filing, they now own a 5% stake in the company with 12,824,276 shares.

This is an increase of 148% in their position size since the end of 2011 and the new filing was made due to activity on April 13th. This isn't the only health-related play Glenview's been buying as of late. They also started a position in Tenet Healthcare.

Per Google Finance, Health Management Associates is "by and through its subsidiaries operates general acute care hospitals and other health care facilities in non-urban communities. As of December 31, 2011, the Company operated 66 hospitals with a total of 10,330 licensed beds in Alabama, Arkansas, Florida, Georgia, Kentucky, Mississippi, Missouri, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Washington and West Virginia."

In other portfolio activity from this hedge fund, we've highlighted how Glenview boosted its stake in Mueller Water Products.