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Vanguard Health Care Fund’s Top Third Quarter Holdings
Posted by: Monica Wolfe (IP Logged)
Date: October 31, 2013 05:05PM

Over the duration of the third quarter the Vanguard Health Care Fund purchased added four new stocks to its holdings. The fund now holds on to 92 stocks valued at $29.5 billion. The following companies are Vanguard's top five portfolio holdings.

Merck & Co (MRK)

Vanguard Health Care Fund’s largest position goes to Merck & Co where the fund holds on to 35,919,648 shares. This position represents 5.8% of the fund’s portfolio and 1.23% of the company’s shares outstanding.

The fund has not altered their stake in the company since the first quarter of 2013.

Vanguard Health Care’s historical holding history:



Merck & Co is a global health care company that delivers health solutions through its prescription medicines, vaccines, biologic therapies, animal health and consumer care products, which it markets directly and through its joint ventures.

Merck & Co’s historical revenue and net income:



The analysis on Merck & Co reports that the company’s revenue has been in decline over the past year, it has issued $10.1 billion of debt over the past three years and its dividend yield is sitting near a 5-year low.

The company recently released its third quarter financials which reported:

· Non-GAAP of $0.92 and GAAP EPS of $0.38.
· Worldwide sales were $11 billion, down 4% due to patent expires
· Narrowed full-year range to a non-GAAP EPS of $3.48 to $3.52 and GAAP EPS to $1.61 to $1.79.

The Peter Lynch Chart suggests that Merck & Co is currently overvalued:



Merck & Co has a market cap of $132.39 billion. Its shares are currently trading at around $45.24 with a P/E ratio of 27.20, a P/S ratio of 3.10 and a P/B ratio of 2.80. Merck currently holds a dividend yield of 3.80%. The company had an annual average earnings growth of 1.80% over the past ten years.

UnitedHealth Group (UNH)

Vanguard’s second largest position is in UnitedHealth Group where they hold on to 19,001,100 shares of the company’s stock. Their position represents 4.6% of fund’s total portfolio and 1.87% of the company’s shares outstanding.

During the past quarter Vanguard reduced their position -4.81% by selling 959,100 shares. They sold these shares in the third quarter price range of $65.27 to $75.18, with an estimated average quarterly price of $71.57. Since then the price per share has dropped about -4.3%.

Vanguard’s historical holding history:



UnitedHealth is a health and well-being company that helps people live healthier lives and help make health care work better. The company is helping individual's access quality care at an affordable cost; simplifying health care administration and delivery; strengthening the physician/patient relationship; and empowering physicians, health care professionals, consumers, and employers in the health system with actionable data to make better, more informed decisions.

UnitedHealth’s historical revenue and net income:



The analysis on UnitedHealth reports that the company’s price is nearing a 10-year high, its dividend yield is at a 10-year high and it has shown predictable revenue and earnings growth.

UnitedHealth recently announced a $8.9 million investment in partnership with U.S. Bank which will bring affordable housing to Dayton, Ohio. The company invested $8.9 million of the $12.8 million total for affordable-housing community which will be called Germantown Village.

The company’s third quarter financials reported:

· Revenue of $30.6 billion, up 12% from last year.
· Served 275,000 more people over this quarter and 4.35 million more year-over-year.
· Net earnings of $1.53 per share.
· Cash flow from operations of $3.4 billion.
· Estimated that the annual revenues will reach $122 billion.

The Peter Lynch Chart suggests that the company is currently undervalued:



UnitedHealth has a market cap of $69.15 billion. Its shares are currently trading at around $68.01 with a P/E ratio of 12.90, a P/S ratio of 0.60 and a P/B ratio of 2.20. The company had an annual average earnings growth of 16.30%over the past ten years.

GuruFocus rated UnitedHealth the business predictability rank of 3.5-star.

Amgen (AMGN)

The fund’s third largest position is in the biotechnology company Amgen. Vanguard holds on to 10,758,455 shares of Amgen, representing 4.1% of the fund’s total portfolio and 1.43% of the company’s shares outstanding.

The fund did not alter their position in Amgen over the third quarter.

Vanguard Health Care Fund’s historical holding history:



Amgen is a biotechnology medicines company. It discovers, develops, manufactures and delivers human therapeutics. Its medicines help patients fight against cancer, kidney disease, rheumatoid arthritis (RA), bone disease and other serious illnesses.

Amgen’s historical revenue and net income:



The analysis on Amgen reports that the company’s operating margin is expanding and that it’s price is sitting at a 10-year high.

The company’s third quarter financials highlighted:

· Revenue increased 10% to $4.7 billion.
· Adjusted EPS increased 16% to $1.94.
· GAAP EPS was $1.79, compared to $1.41 last year.
· GAAP net income was $1.368 billion compared to $1.107 billion last year.

· Generated approximately $1.6 billion of free cash flow.

Amgen also recently declared a fourth quarter dividend of $0.47 per share. This dividend will be paid on Dec. 6 to shareholders of the record as of the close of business on Nov. 14, 2013.

The largest guru shareholders of Amgen:

1. PRIMECAP Management: 37,348,991 shares, representing 4.96% of the company’s shares outstanding and 5.3% of the fund’s total portfolio.
2. Vanguard Health Care Fund: 10,758,455 shares, representing 1.43% of the company’s shares outstanding and 4.1% of their total portfolio.
3. Jeremy Grantham: 2,066,387 shares, representing 0.27% of the company’s shares outstanding and 0.53% of his total portfolio.

The Peter Lynch Chart suggests that the company is currently overvalued:



Amgen has a market cap of $88.05 billion. Its shares are currently trading at around $116.88 with a P/E ratio of 19.60, a P/S ratio of 5.20 and a P/B ratio of 4.20. The company had an annual average earnings growth of 11.60% over the past ten years.

Forest Laboratories (FRX)

Vanguard’s fourth largest holding is in Forest Laboratories where the fund holds on to a total of 26,666,866 shares of the company’s stock. Vanguard’s position represents 3.9% of their total portfolio and 9.93% of the company’s shares outstanding.

Vanguard did not make any changes to their holdings over the past quarter.

The fund’s historical holding history:



Forest Laboratories develops, manufactures and sells branded forms of ethical drug products most of which require a physician's prescription.

Forest Laboratories’ historical revenue and net income:



The analysis on Forest Laboratories reports that the company has no debt, its revenue has been in decline over the past three years and its price is sitting at a 5-year high.

Largest guru shareholders of Forest Laboratories:

1. Carl Icahn: 30,662,005 shares, representing 11.42% of the company’s shares outstanding and 5.8% of his total portfolio.
2. Vanguard Health Care: 26,666,866 shares, representing 9.93% of the company’s shares outstanding and 3.9% of their total portfolio.
3. Bill Nygren: 4,950,000 shares, representing 1.84% of the company’s shares outstanding and 2.2% of his total portfolio.

The company recently released its second quarter 2014 results which reported:

· Diluted EPS of $0.26, up from $0.08 per share last year.
· Net sales for the quarter grew 17.3% to $811.4 million, up from $692 million last year.
· Reported net income was $70 million, up from $20.8 million last year.

Also over the past quarter the company named a new President and CEO. Forest Laboratories named former CEO of Bausch + Lomb Brenton Saunders as the company’s new leader. Saunders took on his new role on Oct. 1, 2013.

Forest Laboratories has a market cap of $12.52 billion. Its shares are currently trading at around $46.64 with a P/S ratio of 4.00 and a P/B ratio of 2.20.

Roche Holding AG (XSWX:ROG)

Vanguard’s fifth largest position is in the Swiss company Roche Holding. The fund holds on to 4,159,833 shares of the company’s stock representing 3.8% of their total portfolio and 0.48% of the company’s shares outstanding.

Vanguard has not changed their position in Roche Holdings since the first quarter of 2013.

Vanguard’s holding history as of the close of the third quarter:



Roche Holdings is a pharmaceutical and diagnostics company. It researches and produces medicines in oncology, infectious diseases, immunology, metabolism and neuroscience. Roche also participates in in vitro diagnostics, tissue-based cancer diagnostics and diabetes management.

Roche Holdings’ historical revenue and net income:



The analysis on Roche Holding AG reports that the company’s revenue has been in decline over the past three years, its dividend yield is near a 5-year low and its price is near a 10-year high.

The top guru shareholders of Roche Holdings:

1. PRIMECAP Management: 10,513,329 shares, representing 1.22% of the company’s shares outstanding and 3.7% of their total portfolio.
2. Vanguard Health Care Fund: 4,159,833 shares, representing 0.48% of the company’s shares outstanding and 3.8% of their total assets managed.
3. Tweedy Browne Global: 984,000 shares, representing 0.11% of the company’s shares outstanding and 4.7% of their total portfolio.

The company recently posted the sales results for the company’s 2013 first nine months which reported:

· Group sales up 6% to CHF34.9 billion.
· Pharmaceutical sales up 7% at CHF27.2 billion.
· Diagnostic sales rose 4% to CHF7.7 billion.
· The company’s full-outlook was confirmed.

Most recent the company received FDA approval for their new “subcutaneous formulation” of ACTEMRA for use in adult patients living with rheumatoid arthritis. To read more about this approval, click here.

The Peter Lynch Chart suggests that the company is currently overvalued:



Check out Vanguard Health Care Fund’s complete third quarter portfolio here.

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Guru Discussed: Vanguard Health Care Fund: Current Portfolio, Stock Picks
Stocks Discussed: MRK, UNH, AMGN, FRX, XSWX:ROG,
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