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00:00Larry let's start with why you're here at a year like this when it is so tough to find a great idea. Put it on. Why walk in this room and share it with hundreds of people. Well first of all this year and every year I'm really proud of the work that Robin Hood does. I've been proud to be a board member Robin Hood for six years. But Robin Hood is in its twenty sixth year of operation and last year alone it invested one hundred and thirty two million dollars in programs to help New York City's those living under the poverty line in New York City to help educate them feed them clothe them and provide necessary services. And those people they need that assistance regardless of whether the market's doing well or poorly regardless of whether this conference happened to combat it convenient time or not convenient time. I'm also proud of the fact that when something extraordinary comes along like Hurricane Sandy did at the end of 2012 the Robin Hood leapt into action and distributed another 70 million dollars of aid more than 50 million in New York City alone. And so weak as an investment community come together to support a variety of these charity events in particular the Robin Hood event which is only in its second year but brings together such a unique collection of industry icons not just from the investment industry but from the industries with which we all invest in and not only can we share ideas but we can also share a common passion for the city which we live in . And for the philanthropic mission that we share. So I appreciate you wearing your Robin Hood green and black and then I've got my tie on as well so we're all decked out for the cause . Well seventy five hundred bucks buys a ticket to Robin Hood which means you have to deliver a big idea. What is it. Well the idea that we talked about earlier that day in the morning was the idea that birthrate in the United States which has been negative for about five years between 2007 and 2012 the number of babies born per year fell by eight percent. That birth rate is in fact cyclical and birth rate comes back in as many ways in which to invest in companies which will benefit from a positive birth rate. We gave four different examples. We talked about the hospital industry one of which we talked about was community health care which we have a large position in. We also talked about the veterinary business. We own BCA Inc ticker Woof. One second. Let's go back to the hospital you liked. You like the hospital business IBEX last year. Yes. Right now. How does that trade look. Where's the. Show me the way to put to express this view. Sure. So two years ago when we first talked about hospitals the big issue was with the core business stabilized and would health care reform or Obamacare. Would that in fact come into being and what would be the uplift in fact what we saw is in the second quarter of this year the first full quarter in which hospitals enjoyed the benefit of new exchange members. We saw EBA die and adjusted admissions meaningfully grow in the third quarter. All we've heard from so far is HCA who said their habitat grew at 14 percent. So we've seen that core trade the combination of good core growth plus reform to their benefit we also have seen this birth rate trade come through the hospitals so at the aforementioned HCA in the second quarter of 2014 they saw a 7 percent increase in their opening behind admissions from from insured insured commercial and exchange members 10 percent of all hospital volumes are actually centered around 0 Beguine and birth and deliveries and so we will see this birth rate cycle add a new leg of growth as we enter into an uplift and birth rate over the next three years . We'll see that add a new leg of growth as well as the hospital industry continues to enjoy consolidation Community Healthcare which we pitched today not only has a long track record of success as a public company for 14 years being acquirer of individual hospitals in their acquisition of Triad in 2007 was transformative but their acquisition one year ago of HMV we believe is on track to deliver the synergies promised the deleveraging will be rapid . And in fact they traded a one multiple point cheaper IBEX multiple than the industry because their financial leverage one multiple VEBA does 30 dollars per share on a fifty five dollars stock price. So in the success case which we expect the community to enjoy one we'll see above average equity returns because of the financial position to come help us understand if we're truly getting back to fundamentals Community Health is up 35 percent on the year let's say we believe this story. The trades working. How much of a hit did this company take last week during market volatility. Sure so several things happened last week. one Number is that of course there was well of course there was a drawdown because unfortunately some members of the hedge fund or trading community when there's bad news there risk discipline says to sell bad news right. We're simple people when stocks get cheaper to their fundamental value we buy them and when they get more expensive we sell them. So we're trading against those traders where we're investing I guess against those traders. But we saw that risk reduction happened but in addition because of the Ebola tragedy in the Dallas area people got very concerned for what does this mean for hospitals and hospital workers. So the hospital industry sold off disproportionately. This is an industry which does experience stocks experienced more volatility than frankly their underlying businesses do. There's another issue that's out there that could deliver forward volatility in the hospital industry. At the end of this month the Supreme Court may decide whether to hear or not hear a make may decide whether to hear or not hear a an objection to Obamacare relating to the subsidies about whether the federal government can give subsidies to states in which the state didn't establish the exchange. But the federal government did we think regardless whether the Supreme Court takes that case or not. There's four simple words established by the state that the federal government can simply define that will make the Supreme Court case meaningless. So you could see forward volatility in the hospital industry as well around the SCOTUS case around Supreme Court case. Investors need to keep their wits about them not worry about the daily trading and in fact if you find a good company at a good price. Simply trade against the market. All right we got to go through more of your ideas here in the birth rate trade Realogy Holdings. I'm betting that people are going to buy more houses. Well in part yet this is the sharing economy millennials. They don't want to own a house. They don't want to own a car look. They want to share. It's the sharing economy in part because of need rather than because of desire. Right. A lot of things that I want now that I didn't want then because when I was 20 to 25 years old I was living with three people in a two bedroom apartment because that was the reality of my situation. The millennials have had a tough go of it. If you graduated college in 1999 you had hopes dreams and aspiration of either being an Internet entrepreneur or investing in NASDAQ and you went through a bunch of different crises in the early part of the decade. Then the Great Recession in 2008 and those things that normally happen between the ages of 25 and 35 got deferred such as childbirth such as pet ownership and such as home ownership and so we've seen a deferment in household formation. We're not predicting that the housing market will continue to increase in price 6 7 8 percent like it has over the next few years. We think price appreciation will go back to normal low single digits. But what you will see is housing formation will accelerate because now look at the employment statistics people have jobs and eventually they're going to want to move out from Mom and Dad's basement and into it. So people are being born. They need to buy a house you like what. Why. Because I'm out of my dog because they're not real American geniuses. This is this guy with the white picket fence. Yeah. The real American dream . But we've seen it. What we saw is that in the 2008 2010 period there was a contraction in the vet hospital and the vet lab business by a couple of percent consistent with where the economy was. And then for the last three years we've seen a fairly tepid recovery but just like those other two factors when people feel confident about their lives their futures they move out of mom and dad's basement. They can either buy a ring for their for their for their girlfriend they can buy a dog and put off the marriage thing or they can start to have kids together and we're seeing I don't want to get engaged. We have a lot of people in their late 20s early 30s who work at our firm and our pet ownership is slightly exceeding their better use the size of my small sample size. And he bought me a dog instead. I would kick him out. Well you know obviously I club needs to work on our social etiquette and social skills rather than our dating skills but what we've seen is if you look at statistics in the last three quarters because they preannounced better sequential revenue growth in the third quarter we're seen as an acceleration in those trends and so the industry data actually the anecdotes support the analytics that we're seeing acceleration back to trend. The Vet Care business in general is a mid single digit top line business. The other thing that's interesting about VCA antique or woof is they only have one and a half turns of leverage. Their primary competitor was just LBO for 13 times he does seven turns of leverage. Well that means that they can go out and borrow a lot of money in the context of cheap interest rates. They can buy back a significant amount of their stock so they can go out and buy other than their hospitals or veterinary labs to significantly add to their already strong core earnings growth. And so we see a capital structure story there. We see a millennial story there with with pet ownership and then a nice defensive growth company and a company which by the way was an LBO in 2000 2001 with five times leverage under the same management team. So we're not saying that they should LBO the business we're saying is that they can move to a more rational capital structure and management already has they already announced in the last couple months a 400 million dollar buyback or 11 percent of the company they announced an expanded credit line. So this isn't a theory one simply has to watch the actions of management in the board who recognizing the environment have already taken steps to improve value for our long term share. All right. The last leg in this millennial madness. You like Fidelity National Financial Life. Yeah. This one's a little bit more complicated to try to do in two minutes because this has been already out . It's been an almost three card monte F and F group was the conglomerate they spun off FISA about eight or nine years ago . We own that successfully FISA split into LP us and FDA has two businesses. Enough enough had seller's remorse and said You know what. That part of that business lender processing systems we want to buy that back and they recently bought a Dax they spun off something else called less than a fee for all the investments they made in 2007 that may not have been a great idea. They're good businesses but the market doesn't like them only non core businesses. So when we add it all up today we have a core business which is mostly what they've started with right and their core title business will do better in the future because they've had this refinancing headwind of course refile they've been down and a rising interest rate environment. Well what rising interest rates anymore so there's no more refight headwind they should position if there's more high housing turnover and management through this entirely complicated sleight of hand has delivered double digit returns to shareholders on average over the last decade through a very bad housing cycle and we think they're poised to have a better cycle with the same skilled management. So we see better returns for the future. Larry you just took my doors off. I can't up for him. He's just got that last night in two minutes. Absolutely extraordinary .

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Glenview’s Larry Robbins Bets on Millennials Growing Up

Oct. 21 (Bloomberg) -- Larry Robbins, head of the $9.8 billion Glenview Capital Management LLC, talks about investment strategy as he bets that millennials will finally be able to move out from their parents' homes and start their own families six years after the financial crisis. He speaks with Stephanie Ruhle on the sidelines of the Robin Hood Investors Conference in New York. They speak on Bloomberg Television's "Market Makers." (Source: Bloomberg)

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