Just three years ago, billionaire hedge fund manager Larry Robbins fought tooth and nail for Community Health Systems' $7.6 billion takeover of Health Management Associates. Now he has lost faith in that massive hospital deal—and in the healthcare sector more broadly.
Glenview Capital Management, Robbins' New York City-based hedge fund, sold off all 11.59 million shares of CHS during the first quarter of this year, according to a regulatory filing posted last week. Glenview also ditched all 1.21 million shares of Universal Health Services, another hospital chain that operates dozens of acute-care and behavioral health facilities.
Glenview's stock retreat didn't end with CHS and UHS. The hedge fund, known for its high returns and emphasis on healthcare, lowered ownership stakes in 11 of 16 healthcare companies in the first quarter, according to the filing. That included Aetna, Anthem, Cigna Corp. and Humana—all of which are fighting to gain federal and state approval for their respective mergers.
Aetna is buying Humana in a deal valued at $37 billion, and Anthem's acquisition of Cigna is worth $53 billion, including debt. The withdrawal from those insurer stocks by one of the most powerful healthcare-focused hedge fund managers could signal anxiety over those deals not getting green-lighted.
The only healthcare companies in which Glenview increased ownership or kept its stakes the same were pharmaceutical giant AbbVie, hospital chains HCA and Tenet Healthcare Corp., inpatient rehab operator HealthSouth Corp. and post-acute-care provider Kindred Healthcare. Glenview recently took over two Tenet board seats.
Robbins and other Glenview managers did not respond to an interview request. The mass exits from CHS and UHS, as well as the reduced stakes in other healthcare companies, have “the smell of a panic-type of move,” said William Meade, co-founder of investor consulting firm Billionaire's Portfolio. Meade also used to work at a hedge fund.
“This really looks like a risk-management decision,” Meade said. “Robbins basically went through his book and tried to minimize risk.”