Edward Owens has worked in investment management for over 30 years. He has managed the Vanguard Health Care Fund (VGHCX) since its inception in May 1984. The Fund has achieved annualized returns of 18.53% during Owens?tenure. For the 10 years ending January 31, 2007, the Vanguard Health Care Fund averaged a 16.2% annual returned compared to only 8.7% for the S&P Health Sector Index. Owens received a B.A. from the University of Virginia, and an M.B.A from Harvard Business School. Mr. Owens invests primarily in health care companies. His strategy is characterized by a long-term focus and careful attention to valuations. His Vanguard Health Care Fund is co-managed by partner Wellington Management Company—who has advised the fund since 1984.
In Vanguard’s released interview, Owen spoke about health care stock’s performance in the last year: “Health care stocks have under-performed for over the past five years, going into the turmoil of last September. Immediately after, healthcare significantly out-performed for about four months, on the level of 20 or 30 percentage points, truly a huge amount—showing the defensive nature of healthcare. And subsequent to the bear market rally or the reduced risk aversion in the last couple months has begun to under perform again.” Wellington Analyst Jean Hynes explained, “At this point, we do believe that health care reforms are high.”
How is the portfolio positioned for health care reform? Owens answered, “The two sub-sectors of health care that have been hurt the most by concerns about how our new system would work are the big pharmaceutical companies and the manage care companies. Since our view of the likely complete outcome of this debate is not as onerous as maybe the consensus is. We have been adding to those two most beaten down sectors: big pharma and health care management companies. Health care companies are generally affected more or less the same way by these changes, and so our process of seeking the best values among these companies does not change that much by the fact we have a macro issue overhanging the sector.”
He said that health care has lagged because “one, there are defensive stocks and the market was in a significant bull market period. But also, a number of the biggest companies—the major pharmaceutical companies were entering into a period where new product approvals were slowing because of a conservative FDA, and a number of very large patent expirations are recognized by the market.”
What are your views on the current mergers? Owens: “One way to characterize these major acquisitions is that they are major attempts to address the 2012 & 2013 patent issues. In each case, the Pfizer/Wyeth, and the Merck/Schering Plough mergers make significant strides enabling companies to come through these difficult years with growth or at the least modest declines. I think that these two mergers may have even learned from problems of earlier mergers, and may have a better chance of maintaining robust research throughout the period of consolidation and training.” You can track his current buys (as of February 2010) in this article: Some of his new buys include Coventry (COV) & Genentech (DNA). He sold out of Colgate Palmolive (CL) and Kimberly&Clark (KMB).
The Vanguard Health Care Fund Investor Shares (VGHCX) has $20.4 billion in its portfolio with 78 companies. 37.5% is in net assets of top ten largest holdings, and 24.1% is in foreign holdings. Top Holdings (published in vanguard) in this fund include: 1. Merck & Co, 2. Forest Lab, 3. Pfizer, 4. Abbott, 5. Eli Lilly, 6. AstraZeneca, 7. Mckesson, 8. Roch Hldg Genu, 9. UnitedHealth Group, and 10. Sanofi-Aventis.
Source: Vanguard.com
TOP HOLDINGS OF EDWARD OWENS in
$18.2 billion portfolio of Vanguard Health Care Fund.
Source: gurufocus.com (AstraZeneca plans to buy Novexel for $350 mln)
Generic drug maker Forest Laboratories, Inc. has a market cap of $9.17 billion; its shares were traded at around $30.38 with a P/E ratio of 8.8 and P/S ratio of 2.4. Forest Laboratories Inc. had an annual average earning growth of 30.7% over the past 10 years. GuruFocus rated Forest Laboratories Inc. the business predictability rank of 2-star.
The drug maker appointed Dr. Peter J. Zemetbaum to its board of directors of 9 members. Forest Lab reports 12% growth in 3Q sales on rising Alzheimer drug Namenda. The company earned $210.2 million or $0.69 a share, compared to $188 million or $0.62 a share a year ago.
Edward Owens owns 30,133,000 shares as of 9/30/2009, which accounts for 4.88% of the $18.2 billion portfolio of Vanguard Health Care Fund.
Health care manager UnitedHealth Group Inc. has a market cap of $39.57 billion; its shares were traded at around $34.05 with a P/E ratio of 10.5 and P/S ratio of 0.4. The dividend yield of Unitedhealth Group Inc. stocks is 0.1%. Unitedhealth Group Inc. had an annual average earning growth of 30.4% over the past 10 years. GuruFocus rated Unitedhealth Group Inc. the business predictability rank of 4-star.
Wednesday, UnitedHealth donated $14.3 million to nonprofit charity, Children’s Institute Inc. to aid in building a campus facility. Fourth quarter, the company earned $944 million or $0.81 compared to same period a year ago $726 million or $0.60. 2009’s 4Q profit increased 30% on insurance fees, compared to 2008’s lawsuit charge-off.
Edward Owens owns 19,485,100 shares as of 9/30/2009, which accounts for 2.68% of the $18.2 billion portfolio of Vanguard Health Care Fund.
Coventry Health Care, Inc. is a managed health care company that has a market cap of $3.52 billion; its shares were traded at around $23.77 with a P/E ratio of 11.6 and P/S ratio of 0.3. Coventry Health Care Inc. had an annual average earning growth of 43.3% over the past 10 years. GuruFocus rated Coventry Health Care Inc. the business predictability rank of 4-star.
This week, Coventry acquired Preferred Health Systems from Via Christi Health for undisclosed amount. PHS manages Kansas, Wichita’s HMO, which has over 60 thousand members, and other HMOs in the U.S.
Edward Owens owns 9,057,500 shares as of 9/30/2009, which accounts for 0.99% of the $18.2 billion portfolio of Vanguard Health Care Fund.
Cerner Corp. provides information & technology service to health care industry. The Kansas city-based company has a market cap of $6.44 billion; its shares were traded at around $78.89 with a P/E ratio of 36 and P/S ratio of 3.9. Cerner Corp. had an annual average earning growth of 29.5% over the past 10 years. GuruFocus rated Cerner Corp. the business predictability rank of 3.5-star.
Cerner plans to buy IMC Health Care, a health center in Jacksonville, Florida. December, company recently won a 5-year court dispute with Visicu Inc on patent rights regarding a vitals monitoring device. January, Tenet Healthcare Corp and Universal Health Services Inc have agreed for Cerner to provide electronic records service to its hospitals—in Universal’s 24 hospitals, and Tenet’s 47 hospitals. Cerner is cooperating with OnGoal LLC & Kansas City Wizard’s soccer team to develop $400 million stadium project.
Edward Owens owns 3,250,000 shares as of 9/30/2009, which accounts for 1.34% of the $18.2 billion portfolio of Vanguard Health Care Fund.
DaVita Inc. is one of the largest providers of high-quality dialysis and related services for patients suffering from chronic kidney failure, also known as end stage renal disease. The company has a market cap of $6.29 billion; its shares were traded at around $61.5 with a P/E ratio of 15.6 and P/S ratio of 1.1. Davita Inc. had an annual average earning growth of 24.1% over the past 10 years. GuruFocus rated Davita Inc. the business predictability rank of 4.5-star.
The company appointed Dr. John Moran as vice president of clinical affairs & home therapies, and Scott Drake (also CEO of Covidien) their senior vice president of operations. Davita plans to move its headquarters to Denver, Colorado. DaVita invested $1 million in Industrial Bank to increase kidney disease awareness.
Edward Owens owns 304,600 shares as of 9/30/2009, which accounts for 0.09% of the $18.2 billion portfolio of Vanguard Health Care Fund.
Sources:
Vanguard
Health Fund Description
In Vanguard’s released interview, Owen spoke about health care stock’s performance in the last year: “Health care stocks have under-performed for over the past five years, going into the turmoil of last September. Immediately after, healthcare significantly out-performed for about four months, on the level of 20 or 30 percentage points, truly a huge amount—showing the defensive nature of healthcare. And subsequent to the bear market rally or the reduced risk aversion in the last couple months has begun to under perform again.” Wellington Analyst Jean Hynes explained, “At this point, we do believe that health care reforms are high.”
How is the portfolio positioned for health care reform? Owens answered, “The two sub-sectors of health care that have been hurt the most by concerns about how our new system would work are the big pharmaceutical companies and the manage care companies. Since our view of the likely complete outcome of this debate is not as onerous as maybe the consensus is. We have been adding to those two most beaten down sectors: big pharma and health care management companies. Health care companies are generally affected more or less the same way by these changes, and so our process of seeking the best values among these companies does not change that much by the fact we have a macro issue overhanging the sector.”
He said that health care has lagged because “one, there are defensive stocks and the market was in a significant bull market period. But also, a number of the biggest companies—the major pharmaceutical companies were entering into a period where new product approvals were slowing because of a conservative FDA, and a number of very large patent expirations are recognized by the market.”
What are your views on the current mergers? Owens: “One way to characterize these major acquisitions is that they are major attempts to address the 2012 & 2013 patent issues. In each case, the Pfizer/Wyeth, and the Merck/Schering Plough mergers make significant strides enabling companies to come through these difficult years with growth or at the least modest declines. I think that these two mergers may have even learned from problems of earlier mergers, and may have a better chance of maintaining robust research throughout the period of consolidation and training.” You can track his current buys (as of February 2010) in this article: Some of his new buys include Coventry (COV) & Genentech (DNA). He sold out of Colgate Palmolive (CL) and Kimberly&Clark (KMB).
The Vanguard Health Care Fund Investor Shares (VGHCX) has $20.4 billion in its portfolio with 78 companies. 37.5% is in net assets of top ten largest holdings, and 24.1% is in foreign holdings. Top Holdings (published in vanguard) in this fund include: 1. Merck & Co, 2. Forest Lab, 3. Pfizer, 4. Abbott, 5. Eli Lilly, 6. AstraZeneca, 7. Mckesson, 8. Roch Hldg Genu, 9. UnitedHealth Group, and 10. Sanofi-Aventis.
| Breakdown of Vanguard Health Care Fund Investor Shares (VGHCX) | |||
| Percent of Fund | |||
| as of 12/2009 | as of 12/2008 | Year to Year TREND | |
| Pharmaceuticals | 54.60% | 62.10% | Substantial TRIM |
| Managed Health Care | 11% | 8.80% | add |
| Health Care Equipment | 8.60% | 7.30% | add |
| Biotechnology | 8.30% | 9% | TRIM |
| Health Care Distributers | 5.40% | 4.30% | add |
| Health Care Services | 3.30% | 2.90% | add |
| Consumer Staples | 3.00% | 1.60% | add |
| TOTAL | 94.20% | 96.00% | |
TOP HOLDINGS OF EDWARD OWENS in
$18.2 billion portfolio of Vanguard Health Care Fund.
| Company | Weightings | Shares | ||
| 1 | ScheringPlough Corp | (SGP) | 8.22% | 52,941,700 |
| 2 | Forest Laboratories Inc | (FRX, Financial) | 4.88% | 30,133,000 |
| 3 | McKesson Corp | (MCK) | 3.76% | 11,489,900 |
| 4 | AstraZeneca PLC | (AZN) | 3.67% | 14,881,500 |
| 5 | Abbott Laboratories | (ABT) | 3.62% | 13,300,000 |
Forest Laboratories Inc. (FRX)
Generic drug maker Forest Laboratories, Inc. has a market cap of $9.17 billion; its shares were traded at around $30.38 with a P/E ratio of 8.8 and P/S ratio of 2.4. Forest Laboratories Inc. had an annual average earning growth of 30.7% over the past 10 years. GuruFocus rated Forest Laboratories Inc. the business predictability rank of 2-star.
The drug maker appointed Dr. Peter J. Zemetbaum to its board of directors of 9 members. Forest Lab reports 12% growth in 3Q sales on rising Alzheimer drug Namenda. The company earned $210.2 million or $0.69 a share, compared to $188 million or $0.62 a share a year ago.
Edward Owens owns 30,133,000 shares as of 9/30/2009, which accounts for 4.88% of the $18.2 billion portfolio of Vanguard Health Care Fund.
UnitedHealth Group Inc. (UNH, Financial)
Health care manager UnitedHealth Group Inc. has a market cap of $39.57 billion; its shares were traded at around $34.05 with a P/E ratio of 10.5 and P/S ratio of 0.4. The dividend yield of Unitedhealth Group Inc. stocks is 0.1%. Unitedhealth Group Inc. had an annual average earning growth of 30.4% over the past 10 years. GuruFocus rated Unitedhealth Group Inc. the business predictability rank of 4-star.
Wednesday, UnitedHealth donated $14.3 million to nonprofit charity, Children’s Institute Inc. to aid in building a campus facility. Fourth quarter, the company earned $944 million or $0.81 compared to same period a year ago $726 million or $0.60. 2009’s 4Q profit increased 30% on insurance fees, compared to 2008’s lawsuit charge-off.
Edward Owens owns 19,485,100 shares as of 9/30/2009, which accounts for 2.68% of the $18.2 billion portfolio of Vanguard Health Care Fund.
Coventry Health Care Inc. (CVH, Financial)
Coventry Health Care, Inc. is a managed health care company that has a market cap of $3.52 billion; its shares were traded at around $23.77 with a P/E ratio of 11.6 and P/S ratio of 0.3. Coventry Health Care Inc. had an annual average earning growth of 43.3% over the past 10 years. GuruFocus rated Coventry Health Care Inc. the business predictability rank of 4-star.
This week, Coventry acquired Preferred Health Systems from Via Christi Health for undisclosed amount. PHS manages Kansas, Wichita’s HMO, which has over 60 thousand members, and other HMOs in the U.S.
Edward Owens owns 9,057,500 shares as of 9/30/2009, which accounts for 0.99% of the $18.2 billion portfolio of Vanguard Health Care Fund.
Cerner Corp. (CERN, Financial)
Cerner Corp. provides information & technology service to health care industry. The Kansas city-based company has a market cap of $6.44 billion; its shares were traded at around $78.89 with a P/E ratio of 36 and P/S ratio of 3.9. Cerner Corp. had an annual average earning growth of 29.5% over the past 10 years. GuruFocus rated Cerner Corp. the business predictability rank of 3.5-star.
Cerner plans to buy IMC Health Care, a health center in Jacksonville, Florida. December, company recently won a 5-year court dispute with Visicu Inc on patent rights regarding a vitals monitoring device. January, Tenet Healthcare Corp and Universal Health Services Inc have agreed for Cerner to provide electronic records service to its hospitals—in Universal’s 24 hospitals, and Tenet’s 47 hospitals. Cerner is cooperating with OnGoal LLC & Kansas City Wizard’s soccer team to develop $400 million stadium project.
Edward Owens owns 3,250,000 shares as of 9/30/2009, which accounts for 1.34% of the $18.2 billion portfolio of Vanguard Health Care Fund.
Davita Inc. (DVA, Financial)
DaVita Inc. is one of the largest providers of high-quality dialysis and related services for patients suffering from chronic kidney failure, also known as end stage renal disease. The company has a market cap of $6.29 billion; its shares were traded at around $61.5 with a P/E ratio of 15.6 and P/S ratio of 1.1. Davita Inc. had an annual average earning growth of 24.1% over the past 10 years. GuruFocus rated Davita Inc. the business predictability rank of 4.5-star.
The company appointed Dr. John Moran as vice president of clinical affairs & home therapies, and Scott Drake (also CEO of Covidien) their senior vice president of operations. Davita plans to move its headquarters to Denver, Colorado. DaVita invested $1 million in Industrial Bank to increase kidney disease awareness.
Edward Owens owns 304,600 shares as of 9/30/2009, which accounts for 0.09% of the $18.2 billion portfolio of Vanguard Health Care Fund.
Sources:
Vanguard
Health Fund Description
