Change is afoot at one of Tenet Healthcare's ( THC) largest shareholders, and that could mean bad news for an already struggling stock. For years, the deep-value managers at Pacific Financial Research have patiently waited for the ailing hospital chain to recover. Following an extended cold streak, however, some of those managers may soon leave Pacific Financial in the hands of a sister firm that has already given up on the hospital company. On Jan. 1, Pacific Financial -- owner of 52.6 million Tenet shares and manager of the ( CFIMX) Clipper Fund -- could fall under the control of Barrow, Hanley, Mewhinney & Strauss. Pacific Financial and Barrow Hanley have operated separately under the ownership of London's Old Mutual Asset Management, but the looming
departure of Pacific Financial's three top leaders has triggered a reorganization. Both Pacific Financial and Barrow Hanley employ a deep-value approach, seeking out cheap stocks that promise extraordinary returns to patient investors. But the firms rely on different techniques -- and hold clashing views on Tenet in particular. Pacific Financial began piling into Tenet's stock shortly after it plummeted in 2002, doubled down as conditions worsened in 2003, and continued to rank as the company's third-largest shareholder earlier this year. Barrow Hanley also bought a large chunk of Tenet stock for the ( VASVX) Vanguard Selected Value fund -- which it manages -- after the shares took a big hit. But the firm later lost hope in Tenet following a fire sale of assets that raised questions about the value of the company. "Last year, we were very excited about Tenet Healthcare Corp., which turned into one of the fund's worst performers," Barrow Hanley portfolio manager Mark Giambrone said in an interview published this year on the Vanguard Web site. "The book value and earnings estimates we had were incorrect -- and much lower than we thought -- and we sold the stock."