Larry Robbins, Glenview Capital Management (Bloomberg) |
Larry Robbins’s Glenview Capital Management has seemingly taken its first step toward reopening its hedge funds to new investment. In early 2014 the New York–based long-short equity firm closed its Glenview Opportunity funds to new money, explaining to clients in a letter, “We are sensitive to the balance between asset size, which funds our significant investment in team and allows us a greater share of voice as significant shareholders, and liquidity, which allows for more efficient entry and exit surrounding individual positions.”
In the first quarter of 2015, Glenview said it would close the flagship Glenview funds to net new money at the end of that year. Then, in the third quarter, Glenview Capital Partners Cayman — the offshore version of the firm’s flagship Glenview Capital Partners fund — lost 19.23 percent. It fell another 5.2 percent in the fourth quarter, finishing the year down nearly 19 percent, driven by big losses from its heavily weighted health care stocks.
To give investors a chance to double down on their portfolio, with the major positions having fallen way down in price, Glenview offered them to invest in a so-called sidecar — a new limited-life, long-only fund. On November 9 it wound up raising $2.5 billion for the vehicle, which does not charge fees.
In the first quarter of this year, Glenview Capital Partners Cayman lost another 12.15 percent. Now it seems the firm is starting to warm up to taking in new capital.
In its year-end letter to existing investors (which was dated March 31), the firm tells clients, “we will remain closed for the foreseeable future.”
However, it then points out that it has been asked to accept additional capital investments to replace any gross outflows. “Given the enhanced opportunity set, we will entertain such requests,” Glenview adds in the letter. The firm declined to comment for this story.
At year-end, Glenview had a total of $10.8 billion under management, including $6 billion in the Glenview Capital Partners funds, $2.3 billion in Glenview Opportunity, and $2.5 billion in the sidecar.
At the end of 2014, Glenview had $10.6 billion under management. This means that excluding the sidecar, assets in the two main funds had fallen nearly 22 percent, which mostly reflects the decline in value of the funds.
Entering 2016, Glenview’s top ten positions accounted for 63 percent of the firm’s capital. All of them are health care stocks except for Monsanto Co., the controversial agriculture company that has a biotechnology component.
Glenview’s ten largest shorts accounted for 14 percent of capital. But they represented a cross-section of industries, ranging from an industrial distributor to an IT services company to a REIT to two consumer companies.
In the letter, Robbins assures investors he and his team “remain confident” in their portfolio, approach and “ability to produce meaningfully positive investment performance.”
He stresses that Glenview’s long portfolio grew earnings at a double-digit rate, compared with 2 percent earnings contraction for the Standard & Poor’s 500 stock index. He also projects his portfolio will grow at twice the rate of the S&P 500 in 2016 “and have further meaningful outperformance in 2017.”
Despite this bullishness, Glenview stresses its investments are trading at just 13 times this year’s earnings and 11 times next year’s earnings. “Simply put, we believe the scoreboard is wrong, and we are actively working on fixing it,” Robbins asserts.
