We recently compiled a list of the Larry Robbins’ 10 Best Stocks to Buy Now. In this article, we are going to take a look at where Element Solutions Inc. (NYSE:ESI) stands against the other Larry Robbins-approved stocks.
Glenview Capital Management, founded in 2000, manages approximately $5.6 billion in discretionary assets for six clients, according to their Form ADV from March 2024. The firm’s chief executive, Larry Robbins, is a well-known hedge fund manager and philanthropist. Robbins graduated with honors from the University of Pennsylvania’s prestigious Jerome Fisher Program in Management and Technology in 1992, earning dual degrees in economics and engineering. He became a Certified Public Accountant in Illinois in 1991.
After graduating, Larry Robbins began his career at Gleacher & Company, a mergers and advisory boutique in New York. After three years there, he joined Leon Cooperman’s firm, Omega Advisors, where he spent six years as an analyst and partner on the US equity long/short team. In 2000, Robbins left Omega to establish Glenview Capital Management, naming the firm after the suburban Chicago area where he grew up playing hockey.
Robbins gained significant recognition in 2012 by successfully betting on hospital companies, anticipating they would benefit from Obamacare. Unlike many hedge fund managers, Robbins is known for holding onto stocks for long periods and avoiding the use of stop-losses.
Obamacare Bet Pays Off for Larry Robbins, Named Hedge Fund Manager of the Year in 2013
Larry Robbins has capitalized on two major trends: the implementation of Obamacare in 2013 and the surge in the U.S. stock market. His bold investment strategy, which heavily relied on these developments, has paid off significantly. In 2013, Robbins made a substantial bet on healthcare stocks, believing that the Affordable Care Act (Obamacare) would drive profits for companies in the healthcare sector. This bet positioned him as one of the top-performing hedge fund managers of 2013. Glenview’s main hedge fund achieved a remarkable 37% return in the first ten months of 2013, outpacing the S&P 500’s 25% rise. This follows a 24% return in 2012, marking a strong recovery after a difficult 2011 when the fund lost 11%.
Unlike many other hedge fund managers, Robbins didn’t adopt a defensive stance during the period of stock market growth in 2013, fueled by monetary stimulus and slow economic progress. Instead, he leveraged Glenview’s portfolio, which reached $10.9 billion by June 2013. Robbins confidently told CNBC that the market still offered exceptional opportunities for long-term investors, signaling his continued confidence in his aggressive approach.
A significant portion of Glenview’s success came from Robbins’ investments in healthcare companies that he believed would benefit from Obamacare. By mid-2013, nearly half of Glenview’s stock portfolio consisted of healthcare-related stocks. Starting in early 2012, Robbins invested heavily in hospital chains, expecting that the expansion of health insurance coverage would lead to increased profits from emergency room visits. Robbins’ healthcare investments extended beyond hospitals.
Additionally, Glenview invested in insurance companies such as Cigna and Humana, with Robbins dismissing initial investor fears that Obamacare would harm insurers. He also took stakes in companies like McKesson, a drug wholesaler, and Hospira, a producer of generic drugs sold to hospitals. Through these strategic moves, Robbins turned Obamacare into a significant driver of Glenview’s success.
Glenview Capital’s Diversified Strategy Pays Off, Ends 2023 with 17% Gain
Larry Robbins’s hedge fund, Glenview Capital Partners, saw a strong finish to 2023 with a 17.35% gain, despite being down 1.5% as late as October. The fund had performed well in the first half of the year, up nearly 14%, but faced volatility as the year progressed. The broader stock market surged in late October after Federal Reserve Chairman Jerome Powell hinted at potential interest rate cuts in 2024, which helped boost Glenview’s returns.
Glenview’s more concentrated fund, Glenview Opportunity, ended the year with an 11.7% gain, while the smaller Glenview Healthcare Partners fund jumped 23.8%, according to an investor report. For years, Glenview was heavily focused on healthcare stocks, but that concentration has shifted recently. By the end of the third quarter of 2023, only four of its top ten holdings were healthcare-related.
Our Methodology
In this article, we analyzed Glenview Capital’s top 10 stock holdings from the second quarter of 2024 and listed them here. We also included the number of other hedge funds that were invested in these companies, as of Q2 2024. The stocks are ranked in ascending order of Glenview Capital’s stake in them, as of June 30, 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Element Solutions Inc. (NYSE:ESI)
Total Number of Shares Owned: 6,326,903
Total Value of Shares Owned: $171,585,609
Number of Hedge Fund Investors: 42
In its Q2 2024 earnings report, Element Solutions Inc. (NYSE:ESI) announced revenues of $315 million, which marks a 12% increase from the same period last year. Additionally, Element Solutions Inc. (NYSE:ESI) reported adjusted earnings per share (EPS) of $0.36, surpassing analyst expectations and demonstrating effective operational strategies and cost management.
A key factor driving Element Solutions Inc. (NYSE:ESI)’ growth is its diverse range of specialty chemical products that serve important industries like electronics, automotive, and industrial manufacturing. The increasing demand for advanced materials and sustainable solutions positions Element Solutions Inc. (NYSE:ESI) well to expand its market share. In particular, Element Solutions Inc. (NYSE:ESI) is poised to benefit from trends in the electronics sector, where the push for miniaturization and enhanced performance is increasing the need for innovative chemical solutions.
Recently, Element Solutions Inc. (NYSE:ESI) announced the acquisition of a specialty chemicals company, which enhances its capabilities in the electronics market. This strategic acquisition not only broadens Element Solutions Inc. (NYSE:ESI)’s product lineup but also strengthens its competitive position in a rapidly growing sector. Moreover, Element Solutions Inc. (NYSE:ESI) continues to invest in research and development, focusing on eco-friendly products that meet the rising demand for sustainability in manufacturing processes.
Analysts are optimistic about Element Solutions Inc. (NYSE:ESI)’ future, with many raising their price targets after the strong Q2 earnings report. Element Solutions Inc. (NYSE:ESI)’s guidance for the remainder of the year indicates ongoing growth, driven by its innovative products and expanding market presence.
Overall ESI ranks 8th on our list of the best stocks to buy according to Larry Robbins. While we acknowledge the potential of ESI as an investment, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ESI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.