Larry Robbins, founder of $7.5 billion Glenview Capital Management LLC, sits down with Stephanie Ruhle to discuss why he is betting on managed-care stocks and his thoughts on Obamacare and GMOs. They speak on Bloomberg Television’s “Bottom Line.”
Why Glenview’s Robbins Is Betting on HMOs, Monsanto
Larry Robbin’s strategy in volatile markets
CNBC’s David Faber asks Larry Robbins, Glenview portfolio manager & CEO, about his investment approach and the jobs of management at companies.
Transcript
but beyond the market? our approach is basically the same. but there’s a bifurcated market. part of the market was in a dripped-up phase, that interest rates were so low for so long, valuation didn’t seem to matter. in high growth areas. there was also a new nifty 50 created. caused people to think about when interest rates would move. there was follow-on effects. the top of stocks we play in that approach continues to be there. unlike 2014, where things — we think the story of 2014 and 2015 is we need stocks that lift up, from actions from management, from the board, engagement from shareholders which cause that stock price. in order to get an attractive return, it’s incumbent to lift that stock up. that means, what, beyond just running their business? of course that’s where it starts. those things don’t matter first and foremost until we do our chores. so of course the first thing is so beyond that. that then generate or have excess cash, the icing on the cake, if you will, will be how do they use that excess resources to drive value even further? well, people are familiar with convertible bonds, a bond return that has a warrant attached to give you more excitement, we’re looking for a fictional term called convertible equities, where there’s a basic equity investment that’s reasonable and attractive, but lots of optionality. so looking for businesses that could be a split or lot of cash on the balance sheet that’s not being allocated the way you would like or not as efficiently as you would like? give me some examples itches both of truss. we are a significant — hertz, but 70, 75% are the traditional car rental, and about a quarter of the business is in an equipment rental biggs, similar to you or i. shareholders earlier in the year were rumored to be — to have activist presence in the name, pushing the agenda. it doesn’t look like that was necessary. they did two good things proactively, announced the separation from the car rental and equipment rental business, and then importantly, rather than delivering, and taking cash and paying down debt at 2% after-tax rates, they decided to use their cash for share purchase or potential for future accrete i have been acquisition by maintaining as 2 1/2 to 3 1/2 ebitda leverage. by doing so, their future cash resources won’t just by hoarded or wasted, but reinvested at high rates of return. that’s. is not only splitting taken what already is a good business. there’s only three large players, turning it into a great
Larry Robbins: Real progress in health care
Discussing the skepticism surrounding the Affordable Care Act, with Larry Robbins, Glenview portfolio manager & CEO.
Transcript
remember, one of the two big policy goals was to extend insurance to those who were uninsured, in particular those who wanted the insurance. the cbo initially predicted that 6 million customers would get insurance through these exchanges, supply side became skeptical in the fourth quarter, of course, you know that the final tally was north of 8 million. at least half of those are believed to be people that did not have been insurance before, so it’s not just people dumping from a commercial provider to an exchange, it’s actually providing real insurance. the second thing is, according to a recent gallup poll, 17% of americans six months ago were uninsured. that number is all the way down to just over 13%, so real progress is being made in the overarching goal of providing health coverage to who is who didn’t have it. that’s germane to the for-profit hospital operators, as well as the whole health care industry. if people are using the system and simply don’t have an can’t to pay for it, that’s an implicit tax on the whole system, so most for-profit
