LARRY ROBBINS is the Founder, and CEO of Glenview Capital Management, a $4 billion hedge fund.
Last year spoke about healthcare segments. Healthcare is 40% of current portfolio, and he thinks that there is much asset mis-pricing.
12:38: Robbins likes Tenet Healthcare Corporation (NYSE:THC), Tenet Healthcare Corporation (NYSE:HMNA), HCA Holdings Inc (NYSE:HCA) and LifePoint Hospitals, Inc. (NASDAQ:LPNT) which are four for-profit hospitals. These are trading at 7x earnings because the market hates them now.
12:39: These companies are over capitalized, have good cash flow, and EBITDA has grown 9% CAGR since 2004.
12:40: The affordable health care act in 30 seconds: lower income people will be able to get medicaid. Hospitals will also get more money from the Government.
12:41: Everyone must buy health insurance. The provisions will encourage people to get insurance and people will be encouraged to go to the hospital.
12:43: 50% of the hospital beds are empty at for-profits. Non for-profits are rightly called that name.
12:44: Medicare rates will still go up increasing hospital profits.
12:45: These companies have a tremendous amount of leverage. Their excess cash would allow them to rebuy every single share.
12:46: The market is scared of what the supreme court will do. But no matter what it should not effect the hospitals. Infact, it should increase 10% in EBITDA.
12:47: ITC Holdings Corp. (NYSE:ITC) is another stock he likes. They are energy company and are regulated by states.
12:48: Utilities are allowed 11.1% return on equity, ITC is allowed 13.2% ROE, and they have more equity.
12:49: ITC was not interested when Robbins called them up in talking. He thinks it is a great franchise, the bad case is that the regulators wont allow them to be profitable.
12:50: Regulators have noticed their high margins.
12:51: FERC is starting to take action on the company, but he is not concerned.