| Larry Robbins, Glenview Capital Management (Bloomberg) |
Investors apparently think it is smart to bet on Larry Robbins when he is down.
The New York-based founder of Glenview Capital Management quickly raised $1.5 billion for his so-called sidecar — a new, limited-life, long-only fund.
The hedge fund firm, which announced the fundraising in an October 26 letter to investors, raised the money by November 9, its first closing day, when it started investing the money. It is not publicly known whether Glenview met its self-imposed $2 billion cap by the next closing day, scheduled for December 1.
In any case, the quick raising of $1.5 billion is clearly a big vote of confidence for Robbins and his team, who were prepared to move forward with the sidecar if they had taken in as little as $100 million.
Glenview has thrived and sunk with a heavy bet on health care stocks, posting big losses in September in its two main hedge fund strategies. The losses prompted the firm to create the new fund only for existing investors in its two main funds. It is also not charging any fees for the new fund.
The Glenview Capital flagship funds lost 13.5 percent in September and were down about the same amount for the year. They are closing to new capital at year-end. The smaller and more concentrated Glenview Opportunity funds lost more than 20 percent in September and are down a similar amount for the year.
The firm has extended its losses so far this quarter but at a slower pace. Through November, Glenview Capital is down 17 percent for the year. It is not known how Glenview Opportunity is faring.
In the October letter to investors announcing the new sidecar, Robbins stated: “The last 90 days have been exceedingly disappointing and frustrating. I’ve failed to protect your capital, and mine, from a significant drawdown, despite a flat market.”
At the end of the second quarter, nine of Glenview’s 11 largest long holdings were healthcare stocks. At the end of the third quarter, ten of its 11 largest longs were healthcare-related.
As of the end of the September period, Glenview had slightly increased its stake in its largest holding, healthcare provider Humana. It also boosted its stake by 21 percent in Monsanto Co., making the agriculture and biotech company its second-largest position, up from No. 4 the previous quarter. This put Monsanto ahead of Glenview’s next two positions, both of which were reduced in size: biotech company Thermo Fisher Scientific and drugmaker AbbVie. Glenview also boosted its stake in insurance giant Cigna by nearly two thirds.
Interestingly, just two of the eight new positions Glenview established in the third quarter were health care-related, although none of the eight are significant stakes.
On the other hand, only one of 11 stocks it totally sold out of was health care-related.
One stock conspicuously missing from its portfolio over the past few quarters, given Glenview’s healthcare orientation, is Valeant Pharmaceuticals International, the controversial drugmaker that has taken a beating this year. However, given Valeant’s surge this month, it would have served Glenview well to have owned it had it bottom-fished.
Of course, there is no way to know if Glenview did in fact buy the stock since the end of the third quarter unless the firm accumulated at least 5 percent of the total.
