Berkshire Hathaway Inc. (BRK/A) sold shares in GlaxoSmithKline Plc (GSK) and Sanofi as Warren Buffett ’s company joined investors who have soured on the European drugmakers since their stocks reached highs in May.
Berkshire Hathaway Inc. (BRK/A) sold shares
in GlaxoSmithKline Plc (GSK) and Sanofi as Warren Buffett’s company
joined investors who have soured on the European drugmakers
since their stocks reached highs in May.
“Berkshire isn’t the first large investor to rotate out of
pharma since the sector peaked in the second quarter,” said
Mark Clark, an analyst at Deutsche Bank in London.
The company reduced its investment in Glaxo by
77 percent by selling 1.13 million American depositary receipts
and cut its stake in Paris-based Sanofi by 157,800 ADRs as of
Sept. 30, Berkshire said in a regulatory filing late yesterday.
It added to a stake in DaVita HealthCare Partners Inc., a
Denver-based kidney dialysis provider.
Glaxo’s shares have declined about 10 percent since
reaching an 11 1/2-year high in London on May 28. Sanofi has
retreated 8 percent after the stock hit a record high the
Glaxo’s slide comes amid a bribery probe in China that
began in July, and after U.S. regulators proposed a simpler path
for rivals seeking to copy the U.K. company’s best-selling
respiratory drug Advair.
Sanofi’s profit has fallen for five consecutive quarters
amid development setbacks for new medicines to replace revenue
lost to generic competition for blockbusters such as the Plavix
blood thinner. Chinese (SAN) sales have slowed as a result of a
government investigation of the industry, and Sanofi took 201
million euros ($271 million) in charges in the second quarter
because of inventory mismanagement in Brazil.
DaVita (DVA), the second-largest dialysis provider in the U.S.,
has also slid in recent months, though the stock has gained
about 40 percent since the company announced in May 2012 that
it would buy HealthCare Partners in a deal valued at more than
DaVita’s growth in treatments and a recurring revenue
stream made the dialysis provider an attractive buy for
Berkshire, according to Kevin Ellich, an analyst at Piper
Berkshire, based in Omaha, Nebraska, began building a stake
in DaVita in 2011 and now owns more than 16 percent of the
company, according to data compiled by Bloomberg. Berkshire
added 1.5 million shares of DaVita as of Sept. 30 and 3.7
million more in November, it said yesterday. Berkshire’s largest
new holding was in Exxon Mobil Corp.
Buffett’s bet may not pay off in the short term, at least
by one measure. Among analysts who make 12-month price
predictions for Glaxo and Sanofi and share their findings with
Bloomberg, the average forecast is for each to rise more than 7
percent. The average prediction for DaVita is 4.7 percent.
Peter Grauer, the chairman of Bloomberg LP, the parent
company of Bloomberg News, has served on DaVita’s board since
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