Glenview's 'Obamacare' Bet Matches Paulson's Wireless Windfall
NEW YORK (TheStreet) - Some industries are simply poised to consolidate and there's money to be made on those prospects, whether it's banking in the 1990s, railroads in the 2000s or the current healthcare and wireless sectors.
When a recent bout of healthcare and wireless merger mania runs its course, Glenview Capital Management and Paulson & Co. are poised to emerge as the two hedge funds that best identified consolidation trends in both industries, and profited to the tune of billions of dollars.
Expecting a wave of consolidation as hospitals, outpatient facilities, healthcare providers and pharmacy benefit managers merge, Glenview has made the sector its biggest bet in a stock portfolio that exceeds $10 billion, according to Bloomberg data.
The fund's two top holdings are leveraged to the healthcare sector. Seven of the Larry Robbins-run Glenview top-10 holdings are in the healthcare space, which is expected to grow dramatically in the wake of ACA, commonly known as 'Obamacare.'
Glenview's second-largest holding, hospital network Health Management Associates
Instead, Health Management Associates may play into the hedge fund's expressed post-'Obamacare' expectation of healthcare industry consolidation. Glenview's stakes in McKesson
In 'Obamacare,' healthcare insurance coverage is expected to dramatically expand and impact states such as Texas that lag the nation in overall coverage. For hospital chains, the increase in coverage may mean an expansion into new markets, while it could also lead to a reduction in bad debt expense.
The legislation has sent ripples across the healthcare industry. Some estimate that between 16 million to 20 million new Americans will be eligible to enroll in Medicaid through 'Obamacare,' a change that's already prompted the merger of WellPoint
Pharmacy benefit managers such as Express Scripts
Glenview is positioned for further consolidation of the healthcare sector, as 'Obamacare' kicks in and impacts sector-wide earnings and strategy.
The fund's bet is most similar to one put on by John Paulson-run Paulson & Co. in the consolidating wireless industry, as also-ran carriers such as Sprint