Frank Sands' Sands Capital Management boosted its stake in Edwards Lifesciences (EW, Financial) in the fourth quarter by adding 9,598,997 shares.
Edwards Lifesciences got started when Miles “Lowell” Edwards had the idea at the age of 60 to mechanize the human heart. Edwards had an engineering background in hydraulics and fuel pump operations. He presented the concept to Dr. Albert Starr, a young surgeon at the University of Oregon Medical School, who thought the idea was too complex. Instead, Starr encouraged Edwards to focus first on developing an artificial heart valve, for which there was an immediate need.
After two years the first Starr-Edwards mitral valve was designed, developed, tested and successfully placed in a patient. People around the world were astonished by the surgery's success. The company Edwards Laboratories formed shortly after its success was later purchased by American Hospital Supply Corporation and became American Edwards Laboratories.
In 1985 the company was sold to Baxter International Inc.; in 2000 the company was spun off as an independent publicly held corporation and began trading on the New York Stock Exchange.
Edwards Lifesciences has a market cap of $18.27 billion, an enterprise value of $17.56 billion, a P/E ratio of 37.83 and a quick ratio of 3.59. The company currently employs 9,800 employees worldwide, the majority of whom are located in the U.S., the Dominican Republic, Singapore and Puerto Rico.
Edwards Lifesciences' gross profits have been steadily increasing year by year since 2006 when they were $663.4 million. In 2015 the company's gross profits were $1.876 billion, an average increase of 12% over the previous nine years, a great sign. Sands Capital likes to invest in companies with good profits and cash flow.
Sands graduated from Dickinson College with a B.A. in economics in 1960 and later received his M.B.A. from the University of Virginia at Darden School of Business. Sands began his investment career as a research analyst working for Loomis, Sayles & Company where he worked from 1969 to 1972.
Sands then left the company to pursue an opportunity with David L. Babson & Company,Ă‚ where he was hired as the director of research. Sands worked there for 11 years before accepting a job at Eppler, Guerin & Turner, where he continued to improve his knowledge and leadership capabilities. Sands was then hired by The Capital Management Group, Folger Nolan Fleming Douglas Inc., as the chief investment officer. Sands ran the company for six years before he decided to leave to found his own investment firm Sands Capital in 1992.
Sands Capital Management is an investment firm that uses a bottom-up independent, research-driven, value-based investment approach when it looks to invest in businesses. Sands Capital Management uses six criteria when it filters through businesses in which it's looking to invest. The company's investment philosophies are listed below as follows;
- Businesses with sustainable above-average earnings growth.
- Businesses with a leadership position and promising business space.
- Businesses that are widening the competitive moats.
- Businesses that have a clear mission and a value-added focus.
- Businesses that have excellent Financial Strength. Sands Capital wants to own businesses with very little debt that are organic, generate a lot of cash flow and are thus self-funded.
- Sands Capital wants to own companies with rational valuation relative to the market and their growth prospects.
Sands Capital Management currently owns 53 stocks with a total valuation of $38.8 billion.
Sands Capital also likes to invest in companies with great management. Edwards Lifesciences' CEO is Michael A. Mussallem. Mussallem has been the CEO of the company since 2000 when Edwards Lifesciences spun off from Baxter International. Mussallem held a variety of positions at Baxter from 1979 until 2000 with increasing responsibility in engineering, product development and general management.
Mussallem serves on the boards and executive committees of the Advanced Medical Technology Association (AdvaMed) and the Healthcare Leadership Council. He is an advisory board member for the Leonard D. Schaeffer Center for Health Policy & Economics at the University of Southern California and a trustee of the University of California, Irvine Foundation. Mussallem received a bachelor's degree in chemical engineering and also an honorary doctorate degree from the Rose-Hulman Institute of Technology in Terre Haute, Indiana.
Edwards Lifesciences believes it is a leading global competitor in each of its product lines. The company owns more than 2,700 issued U.S. patents, pending U.S. patent applications, issued foreign patents and pending foreign patent applications. Edwards Lifesciences has been working to improve the Transcatheter Heart Valve Therapy segment of its business. The company launched the Edwards SAPIEN 3 valve in Europe in January 2014 and the Edwards SAPIEN XT valve in Japan in October 2013. In June 2015, Edwards Lifesciences received approval from the FDA for the Edwards SAPIENĂ‚ 3 valve with the Commander Delivery System for the treatment of high-risk patients. The expansion of the Transcatheter Heart Valve Therapy segment of the company's business is a good sign.
On July 3, 2015, Edwards Lifesciences entered into an agreement and plan of merger to acquire CardiAQ for an aggregate cash purchase price of $350 million, subject to certain adjustments, plus an additional $50 million if European regulatory approval is obtained within 48 months of the acquisition closing date. The company closed the purchase in August 2015 with available cash on hand in the U.S.
According to GuruFocus, Edwards Lifesciences has a Profitability and Growth ranking of 8/10. The company also has excellent financial strength with a 9/10 Financial Strength rating.
Onewarning sign that most investors might already know is that Edwards Lifesciences has never paid dividends on capital stock and has no intention of paying dividends in the future.
Edwards Lifesciences is a profitable investment for the following reasons
- The company has excellent financial strength.
- The company is building a moat around itself through expansion of its products and services internationally.
- The company is run by a vigilant leader.
- The company's profits have been increasing by an average of 12% annually over the previous nine years.
- The company is doing something for the greater good of humanity.
- Many gurus have been purchasing or adding to their current positions in Edward Lifesciences Corp in the fourth quarter of 2015 including John Hussman (Trades, Portfolio), Vanguard Health Care Fund (Trades, Portfolio), Jim Simons (Trades, Portfolio), Louis Moore Bacon (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio), Ron Baron, and RS Investment Management (Trades, Portfolio).
Cheers to your investment success.
