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Drug Distributor and Medical System Supplier Companies Berkshire Hathaway May Acquire: Cardinal Health, Mckesson, Becton Dickinson and Company, Allergan

March 26, 2009 | About:
Ravi Nagarajan

On March 19, Bloomberg reported that Warren Buffett, Chairman and CEO of Berkshire Hathaway, is seeking to spend $5 billion to $20 billion on an acquisition. He prefers “simple” businesses with pretax profit exceeding $75 million, “consistent earnings power,” “good” returns on equity and little or no debt. Bloomberg went on and stated that there are 50 U.S. companies with that much market value and profit, a return on equity exceeding 10 percent and a debt-to- equity ratio less than 50 percent, according to Bloomberg’s own data.

GuruFocus dug into the list of companies and present information on company’s business, ownership of the Investment Gurus, and trade activity of insiders. The companies are grouped according to industries they operate in.

This part we treat four Drug Retailer and Medical System Supplier Companies: Cardinal Health Inc., Mckesson Corp., Becton Dickinson and Company, Allergan Inc.

Symbol

Company

P/E

P/S

P/B

Yield (%)

ROA (%)

ROE (%)

Operating Margin (%)

Debt to Equity (%)

CAH

Cardinal Health Inc.

8.80

0.10

1.40

1.70

5.54

17.19

1.41

0.48

MCK

McKesson Corp.

9

0.10

1.60

1.30

4.66

18.62

1.09

0.29

BDX

Becton Dickinson and Company

14.30

2.20

3.40

2

14.84

23.82

16.27

0.19

AGN

Allergan Inc.

18.70

3.40

3.70

0.40

11.74

19.94

17.85

0.41



Cardinal Health Inc. (CAH)

Cardinal Health Inc. is a provider of products and services to healthcare providers and manufacturers to help them improve the efficiency and quality of healthcare. These services and products include Pharmaceutical Distribution and Provider Services, Medical-Surgical Products and Services, Pharmaceutical Technologies and Services, and Automation and Information Services.

Cardinal Health Inc. has a market cap of $12.02 billion; its shares were traded at around $33.36 with a P/E ratio of 9 and P/S ratio of 0.1. The dividend yield of Cardinal Health Inc. stocks is 1.7%. Cardinal Health Inc. had an annual average earning growth of 10.7% over the past 10 years. GuruFocus rated Cardinal Health Inc. the business predictability rank of 3-star.

Cardinal Health Inc. is owned by 7 Gurus.

1 Guru Initiated Positions in CAH: David Dreman bought 6,245 shares in the quarter that ended on 12/31/2008, which is less than 0.01% of the $7.73 billion portfolio of Dreman Value Management.

3 Gurus Increased Positions in CAH: Wallace Weitz owns 165,000 shares as of 12/31/2008, an increase of 1000% from the previous quarter. This position accounts for 0.35% of the $1.61 billion portfolio of Weitz Wallace R & Co. Richard Pzena owns 37,975 shares as of 12/31/2008, an increase of 527.69% from the previous quarter. This position accounts for 0.02% of the $8.6 billion portfolio of Pzena Investment Management LLC. Richard Perry owns 693,513 shares as of 12/31/2008, an increase of 16.14% from the previous quarter. This position accounts for 3.51% of the $681 million portfolio of Perry Capital.

4 Gurus Kept Positions in CAH Unchanged or Slightly Adjusted: Richard Perry owns 693,513 shares as of 12/31/2008, which accounts for 3.51% of the $681 million portfolio of Perry Capital. Edward Owens owns 5,136,708 shares as of 12/31/2008, which accounts for 1.01% of the $17.62 billion portfolio of Vanguard Health Care Fund. Chris Davis owns 11,207,028 shares as of 12/31/2008, which accounts for 0.73% of the $52.56 billion portfolio of Davis Selected Advisers. Dodge & Cox owns 39,966,262 shares as of 12/31/2008, which accounts for 2.1% of the $65.51 billion portfolio of Dodge & Cox.

1 Guru Sold Out CAH: John Keeley sold out his holdings in the quarter that ended on 12/31/2008.

Mckesson Corp. (MCK)

McKesson Corporation a health care service and technology company delivering supply and information management solutions that reduce costs and improve quality for its health care customers. The Company is organized under two operating segments: Health Care Supply Management and Health Care Information Technology.

McKesson Corp. has a market cap of $10.03 billion; its shares were traded at around $36.64 with a P/E ratio of 9 and P/S ratio of 0.1. The dividend yield of McKesson Corp. stocks is 1.3%. McKesson Corp. had an annual average earning growth of 15.1% over the past 10 years. GuruFocus rated McKesson Corp. the business predictability rank of 2-star.

McKesson Corp. is owned by 3 Gurus. 1 Guru Initiated Positions in MCK: Richard Perry bought 85,746 shares in the quarter that ended on 12/31/2008, which is 0.49% of the $681 million portfolio of Perry Capital.

2 Gurus Kept Positions in MCK Unchanged or Slightly Adjusted: Edward Owens owns 13,039,900 shares as of 12/31/2008, which accounts for 2.87% of the $17.62 billion portfolio of Vanguard Health Care Fund. John Keeley owns 19,800 shares as of 12/31/2008, which accounts for 0.01% of the $6 billion portfolio of Keeley Fund Management.

1 Guru Sold Out MCK: Richard Pzena sold out his holdings in the quarter that ended on 12/31/2008.

Becton Dickinson and Company (BDX)

Becton Dickinson and Co. is engaged principally in the manufacture and sale of a broad line of supplies devices and systems used by health care professionals medical research institutions and the general public. BD's operations consist of three worldwide business segments: Medical Systems Biosciences and Preanalytical Solutions.

Becton Dickinson and Company has a market cap of $15.89 billion; its shares were traded at around $66.27 with a P/E ratio of 14.3 and P/S ratio of 2.2. The dividend yield of Becton Dickinson and Company stocks is 2%. Becton Dickinson and Company had an annual average earning growth of 10.8% over the past 10 years. GuruFocus rated Becton Dickinson and Company the business predictability rank of 4-star.

Gurus' Positions with BDX

Becton Dickinson and Company is owned by 3 Gurus.

3 Gurus Kept Positions in BDX Unchanged or Slightly Adjusted: Edward Owens owns 5,300,000 shares as of 12/31/2008, which accounts for 2.06% of the $17.62 billion portfolio of Vanguard Health Care Fund. Dodge & Cox owns 93,952 shares as of 12/31/2008, which accounts for 0.01% of the $65.51 billion portfolio of Dodge & Cox. Ken Heebner owns 340,000 shares as of 12/31/2008, which accounts for 0.34% of the $6.87 billion portfolio of CAPITAL GROWTH MANAGEMENT LP.

Recent Trades of Becton Dickinson and Company by Directors and Officers: Sell: Sr. VP and General Counsel Jeffrey S Sherman sold 3,603 shares of BDX stock on 02/05/2009 at the average price of $73.94; the price of the stock has decreased by 10.37% since. Sell: Vice Chairman John R Considine sold 90,000 shares of BDX stock on 02/04/2009 at the average price of $73.92; the price of the stock has decreased by 10.35% since

Allergan Inc. (AGN)

Allergan Inc. is a provider of eye care and specialty pharmaceutical products with products in the eye care pharmaceutical ophthalmic surgical device over-the-counter contact lens care movement disorder and dermatological markets. Its worldwide consolidated revenues are principally generated by prescription and non-prescription pharmaceutical products in the areas of ophthalmology and skin care neurotoxins intraocular lenses and other ophthalmic surgical products and contact lens care products.

Allergan Inc. has a market cap of $15.07 billion; its shares were traded at around $49.48 with a P/E ratio of 19.3 and P/S ratio of 3.5. The dividend yield of Allergan Inc. stocks is 0.4%.

Gurus' Positions with AGN

Allergan Inc. is owned by 1 Gurus. 1 Guru Reduced Positions in AGN: Edward Owens owns 3,200,000 shares as of 12/31/2008, a decrease of 21.95% of from the previous quarter. This position accounts for 0.73% of the $17.62 billion portfolio of Vanguard Health Care Fund.

Recent Trades of Allergan Inc. by CEO: Buy: Chairman and CEO, Director David E I Pyott bought 25,000 shares of AGN stock on 11/06/2008 at the average price of $38.35; the price of the stock has increased by 29.02% since.

Recent Trades of Allergan Inc. by CFO: Sell: EVP, Fin & Bus. Dev., CFO Jeffrey L Edwards sold 2,500 shares of AGN stock on 02/18/2009 at the average price of $41.86; the price of the stock has increased by 18.2% since.


Rating: 2.7/5 (9 votes)

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