Buffett keeps his stake in Teva


Exactly one year ago, Teva Pharmaceutical Industries Ltd.'s share price. (NYSE: TEVA, TASE: TEVA) jumped after learning that Berkshire Hathway, controlled by legendary investor Warren Buffett, had become a shareholder in the pharmaceutical company. Although Buffett told CNBC two weeks later that he was not involved in the investment, it was reported in the following quarter that Buffett's business had doubled its investment in Teva and that the share price had increased again.

Berkshire Hathaway has slightly increased its holdings in Teva in the second quarter of 2018, but two quarters have passed since and the fund's holdings have not changed. Late last week, a quarterly report on Berkshire Hathaway's holdings in listed companies was sent to the US Securities and Exchange Commission (SEC) stating that the fund still held 43.2 million shares Teva's current value of $ 778 million. Berkshire Hathaway lost $ 265 million on paper on its stake in Teva during the fourth quarter of 2018.

In general, it appears that Berkshire Hathaway made a paper profit from his investment in Teva shares, although his earnings are relatively small. The fund does not have to declare at what price it bought the shares it owns, but if the average Teva share price for each quarter in which Berkshire Hathaway bought shares of Teva is obtained, a total investment of $ 760 million is obtained, that is the current value of the shares.

At the same time, equity investments in Teva related to two other investment issues were reported last week. Capital Research, Teva's largest shareholder with a 14.9 percent stake, has sold a portion of its shares in recent months, reducing its stake to 12 percent, to a current value of $ 2.2 billion. A new party with an interest in Teva is the EuroPacific Growth Fund, an American fund that invests in equities over the long term. By the end of 2018, the participation of EuroPacific in Teva had risen to 5.1%.

Moody's keeps its bond rating for Teva

The rating agency Moody's, which notes Teva's debt (which had risen to $ 28.9 billion by the end of 2018), gave further news regarding Teva last week. Moody's economists said they had conducted a periodic review of Teva's debt and that they had not changed their Ba2 rating – a bond rating.

"The rating reflects Teva's large size in the generic market and the core drug market, as well as its status as the world's largest generic maker," write Moody's economists. "Debt repayment and cost reduction efforts contribute to the stabilization of the business, while the company undergoes a steady erosion of its profits due to competition with Copaxone by the generic versions of the drug in the States. US $ 5.6 (debt-to-EBITDA ratio) in 2019, before declining gradually to 4.5 in 2020. "

Moody & # 39; s indicates that there is a risk that Teva will be forced, over the next few years, to spend unplanned sums in protracted court proceedings, including on issues related to opioid products.

Posted by Globes, Economic News in Israel – www.globes.co.il – 17 February 2019

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