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Larry Robbins Plunges Into Dan Loeb's Cigna, Buys 3 in 4th Quarter

- By James Li

Larry Robbins (Trades, Portfolio), founder of Glenview Capital Management, disclosed last week that he increased his bet in new Daniel Loeb (Trades, Portfolio) holding Cigna Corp. (CI) and established three new holdings during fourth-quarter 2018: Baxter Corp. (BAX), Humana Inc. (HUM) and Livent Corp. (LTHM).

Managing a portfolio of 50 stocks, Robbins focuses on delivering attractive returns through an intense focus on fundamental research and individual security selection. According to current portfolio statistics, Robbins' long equity portfolio contains 53.12% weight in the health care sector.



Robbins added 1,738,013 shares of Cigna for an average price of $208.27, expanding the position 177.24% and his equity portfolio 3.20%.


Bloomfield, Connecticut-based Cigna provides medical, dental, disability, life and accident insurance products. The company said on Feb. 1 that it had completed its Express Scripts acquisition in December 2018 and generated revenues of $49 billion for the year, driven by continued growth in Cigna's targeted customer segments.


GuruFocus ranks Cigna's profitability 4 out of 10: Although net profit margins are outperforming 74% of global competitors, Cigna's return on assets and three-year revenue growth rate are underperforming over 52% of global companies that offer health care plans.


Other gurus following into Loeb's Cigna include Dodge & Cox, Richard Pzena (Trades, Portfolio) and Pioneer Investments (Trades, Portfolio).


Robbins invested in 877,001 shares of Baxter, Loeb's largest holding as of quarter-end. Shares of the Deerfield, Illinois-based medical equipment company averaged $66.90 during the quarter; the fund manager increased his equity portfolio 0.56% with this transaction.


Baxter manufactures various renal and hospital products, which include infusion systems and biosurgery products. The company said on Jan. 31 that revenues for the December 2018 quarter were approximately $2.8 billion, up approximately 2% from the prior-year quarter, driven by growth in the company's renal care and pharmaceutical businesses. Despite this, revenues have declined approximately 1% per year over the past three years, a rate that underperforms 69% of global competitors.



GuruFocus ranks Baxter's profitability 6 out of 10: Even though gross profit margins have declined over the past five years, Baxter's operating margin is still outperforming 68% of global competitors.



Robbins invested in 185,195 shares of Humana for an average price of $315.97, giving the position 0.51% equity portfolio weight.


Humana offers insurance products and wellness services through its three business segments: retail, employer group and health care services. The Louisville, Kentucky-based company said on Feb. 6 that full-year 2018 earnings were $12.16 per share, outperforming management expectations. Strong growth in Medicare Advantage membership contributed to the positive earnings results.



Robbins invested in 1,519,910 shares of Livent, a producer of lithium. Shares averaged $16.28 during the quarter; the fund manager increased his equity portfolio 0.20% with this transaction.

GuruFocus ranks Livent's financial strength 8 out of 10 on several good signs, which include robust interest coverage and debt ratios that are outperforming 81% of global competitors. Additionally, the company's Altman Z-score of 8.43 suggests low financial distress.

Disclosure: No positions.

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This article first appeared on GuruFocus.