Jeremy Grantham Adds to Stakes in Pharmaceutical Stocks

Guru reduces holdings in Amazon, American Express

Nov 18, 2015

Jeremy Grantham (Trades, Portfolio) has built a reputation over the years by identifying speculative “bubbles” as they were happening and guiding clients away from them. His third-quarter transactions suggest that the reverse may be happening in pharmaceuticals.

Grantham’s most significant transaction in the third quarter was the addition of 6,467,840 shares to his stake in Valeant Pharmaceuticals International Inc. (VRX, Financial), a Canadian pharmaceutical company, for an average price of $233.19 per share. The transaction had a 4.01% impact on Grantham’s portfolio.

Valeant has a market cap of $25.15 billion and an enterprise value of $60.44 billion. It has a P/E of 47.3, a forward P/E of 4.5, a P/B of 4 and a P/S of 2.5. GuruFocus has given Valeant a Financial Strength rating of 6/10 and a Profitability and Growth rating of 9/10.

Valeant sold for $72.91 per share Wednesday afternoon.

Grantham also added 818,655 shares to his existing stake in Allergan PLC (AGN, Financial), a pharmaceutical company with offices in Dublin and New Jersey, for an average price of $307.17 per share. The deal had a 0.77% impact on Grantham’s portfolio.

Allergan has a market cap of $121.49 billion and an enterprise value of $165.01 billion. It has a P/E of 39.1, a forward P/E of 18, a P/B of 1.7 and a P/S of 5.3. GuruFocus has given Allergan a Financial Strength rating of 6/10 and a Profitability and Growth rating of 8/10.

Wednesday afternoon Allergan sold for $308.89 per share.

Grantham acquired a 3,884,492-share stake in Charter Communications Inc. (CHTR, Financial), a Stamford, Conn.-based cable telecommunications company, for an average price of $182.33 per share. The transaction had a 2.37% impact on Grantham’s portfolio.

Charter Communications has a market cap of $20.96 billion and an enterprise value of $54.24 billion. It has a forward P/E of 256.4, a P/B of 352.4 and a P/S of 2.2. GuruFocus has given Charter a Financial Strength rating of 6/10 and a Profitability and Growth rating of 6/10.

Warren Buffett (Trades, Portfolio), Steve Mandel (Trades, Portfolio), John Griffin (Trades, Portfolio), First Eagle Investment (Trades, Portfolio), RS Investment Management (Trades, Portfolio), Chase Coleman (Trades, Portfolio), Diamond Hill Capital (Trades, Portfolio), Larry Robbins (Trades, Portfolio), Steven Cohen (Trades, Portfolio), George Soros (Trades, Portfolio) and Mario Gabelli (Trades, Portfolio) have shares of Charter Communications in their portfolios.

Charter sold for $186.72 Wednesday afternoon.

Grantham also invested in a 1,396,354-share stake in Home Depot Inc. (HD, Financial), a Cobb County, Ga.-based home improvement retailer, for an average price of $115.68 per share. The deal had a 0.56% impact on Grantham’s portfolio.

Home Depot has a market cap of $161.75 billion and an enterprise value of $176.18 billion. It has a P/E of 24.6, a forward P/E of 23.8, a P/B of 18.7 and a P/S of 2.0. GuruFocus has given Home Depot a Financial Strength rating of 8/10 and a Profitability and Growth rating of 8/10.

Wednesday afternoon Home Depot sold for $125.95 per share.

Grantham reduced his stake in Express Scripts Holding Co. (ESRX, Financial), a St. Louis-based health care company, by nearly 57%, selling 6,062,839 shares for an average price of $87.1 per share. The transaction had a -1.74% impact on Grantham’s portfolio.

Express Scripts has a market cap of $57.58 billion and an enterprise value of $72.84 billion. It has a P/E of 26.3, a forward P/E of 14.1, a P/B of 3.5 and a P/S of 0.6. GuruFocus has given Express Scripts a Financial Strength rating of 7/10 and a Profitability and Growth rating of 8/10.

Express Scripts sold for $85.25 per share Wednesday afternoon.

Grantham sold 829,506 shares – slightly more than one-third of his stake – of Amazon.com Inc. (AMZN, Financial), a Seattle-based ecommerce company, for an average price of $505.62 per share. The deal had a -1.16% impact on Grantham’s portfolio.

Amazon has a market cap of $308.12 billion and an enterprise value of $301.94 billion. It has a P/E of 939, a forward P/E of 87, a P/B of 24.8 and a P/S of 3.1. GuruFocus has given Amazon a Financial Strength rating of 6/10 and a Profitability and Growth rating of 7/10.

Wednesday afternoon Amazon sold for $658.78 per share.

Grantham sold nearly 99% of his stake in American Express Co. (AXP, Financial), a New York-based banking and financial services company. Grantham sold 4,642,470 shares for an average price of $76.94 per share. The transaction had a -1.16% impact on Grantham’s portfolio.

American Express has a market cap of $70.37 billion and an enterprise value of $102.25 billion. It has a P/E of 12.9, a forward P/E of 12.9, a P/B of 3.3 and a P/S of 2.2. GuruFocus has given American Express a Financial Strength rating of 4/10 and a Profitability and Growth rating of 7/10.

American Express sold for $71.72 per share Wednesday afternoon.

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