Tuesday, March 04, 2008

Buffet and GSK

Interesting article on Buffet and his GSK investment.
This article notes that well-respected investor Warren Buffett recently bought a 1.5-million-share stake in struggling drug company GlaxoSmithKline(GSK). With the company dealing with a seemingly endless list of obstacles – slumping price action, expiring patents, declining sales of Avandia, and a weak 2008 outlook – the author points out that "investors betting with Warren better have his patience." The litany of near-term challenges facing the stock are carefully enumerated by the author, including regulatory delays and a rather clogged product pipeline.

Grant the whole Pharma sector is facing rough times in the short term, but the long term outlook is good. Warren Buffet is rarely wrong ("Rule Number One: Don’t lose money. Rule Number Two: Never forget Rule Number One.").

And if you look at the dividend and share buy back GSK stock looks good.

I own GSK stock and work in the industry.