The Eaton Vance Worldwide Health Sciences Fund (Trades, Portfolio), which is part of investment firm Eaton Vance, released its second-quarter portfolio earlier this week, listing eight new holdings.
Managed by Jason Kritzer and Samantha Pandolfi, the Boston-based fund invests heavily in the health care space. The portfolio managers look around the world for securities that are not only reasonably priced, but which they believe will grow in value over time.
Based on these criteria, the fund’s top five new buys for the quarter were Illumina Inc. (ILMN, Financial), Bristol-Myers Squibb Co. (BMY, Financial), Celgene Corp. (CELG, Financial), Straumann Holding AG (XSWX:STMN, Financial) and Haemonetics Corp. (HAE, Financial).
Illumina
Having previously exited a position in Illumina in the first quarter of 2017, the fund entered a new 58,594-share holding, giving it 1.87% space in the equity portfolio. The stock traded for an average price of $312.99 per share during the quarter.
The San Diego-based biotech company, which specializes in the analysis of genetic variations and biological functions, has a $42.51 billion market cap; its shares were trading around $286.15 on Tuesday with a price-earnings ratio of 45.89, a price-book ratio of 9.81 and a price-sales ratio of 12.72.
The Peter Lynch chart shows the stock is trading above its fair value, suggesting it is overpriced.
GuruFocus rated Illumina’s financial strength 7 out of 10, driven by comfortable interest coverage and a robust Altman Z-Score of 11.99, which indicates the company is in good financial standing.
The company’s profitability and growth scored a 9 out of 10 rating. In addition to operating margin expansion, Illumina is supported by strong returns that outperform a majority of competitors, consistent earnings and revenue growth over the past decade and a moderate Piotroski F-Score of 4, which implies business conditions are stable. It also has a business predictability rank of a perfect five out of five stars. According to GuruFocus, companies with this rank typically see their stocks gain an average of 12.1% per annum over a 10-year period.
Of the gurus invested in Illumina, Frank Sands (Trades, Portfolio) has the largest stake with 2.53% of outstanding shares. Other top guru shareholders include Spiros Segalas (Trades, Portfolio), Andreas Halvorsen (Trades, Portfolio), PRIMECAP Management (Trades, Portfolio), the Vanguard Health Care Fund (Trades, Portfolio), Ron Baron (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Stanley Druckenmiller (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio) and Tom Gayner (Trades, Portfolio).
Bristol-Myers Squibb
After closing out of a Bristol-Myers Squibb holding in the fourth quarter of 2018, Eaton Vance opened a new 385,152-share position. The trade had an impact of 1.82% on the equity portfolio. Shares traded for an average price of $47.53 during the quarter.
The pharmaceutical company, which is headquartered in New York, has a market cap of $74.25 billion; it shares were trading around $45.19 on Tuesday with a price-earnings ratio of 11.93, a price-book ratio of 4.59 and a price-sales ratio of 3.10.
According to the Peter Lynch chart, the stock is undervalued.
Bristol-Myers Squibb’s financial strength was rated 6 out of 10 by GuruFocus. Although the company has issued approximately $18.2 billion in new long-term debt over the past three years, it is at a manageable level due to having adequate interest coverage. The Altman Z-Score of 3.55 also suggests the company is in good financial health.
The company’s profitability and growth scored an 8 out of 10 rating, driven by an expanding operating margin, strong returns that outperform a majority of industry peers, a moderate Piotroski F-Score of 6 and a one-star business predictability rank. GuruFocus says companies with this rank typically see their stocks gain an average of 1.1% per year.
With 3.12% of outstanding shares, Vanguard is Bristol-Myers’ largest guru shareholder. Dodge & Cox, PRIMECAP, Simons’ firm, Seth Klarman (Trades, Portfolio), the T Rowe Price Equity Income Fund (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Paul Singer (Trades, Portfolio), Pioneer, Kahn Brothers (Trades, Portfolio), Ray Dalio (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio) and Barrow, Hanley, Mewhinney & Strauss, as well as several other gurus, also have positions in the stock.
Celgene
After divesting of a position in Celgene in the first quarter, the fund established a new 172,645-share holding, expanding the equity portfolio 1.69%. During the quarter, the stock traded for an average price of $92.55 per share.
The Summit, New Jersey-based biotechnology company, which develops medicines for cancer and inflammatory disorders, has a $65.87 billion market cap; its shares were trading around $92.92 on Tuesday with a price-earnings ratio of 12.74, a price-book ratio of 6.49 and a price-sales ratio of 4.10.
Based on the Peter Lynch chart, the stock appears to be undervalued.
GuruFocus rated Celgene’s financial strength 5 out of 10. In addition to sufficient interest coverage, the company is supported by a high Altman Z-Score of 3.37, which indicates it is financially stable.
The company’s profitability and growth fared much better, scoring a 9 out of 10 rating on strong margins and returns that outperform a majority of competitors, a high Piotroski F-Score of 8, which suggests operating conditions are healthy, and a one-star business predictability rank.
David Abrams (Trades, Portfolio) is Celgene’s largest guru shareholder with 0.96% of outstanding shares. Other gurus invested in the stock include Simons’ firm, Klarman, John Paulson (Trades, Portfolio), Daniel Loeb (Trades, Portfolio), Jones, Pioneer, Greenblatt, David Rolfe (Trades, Portfolio), George Soros (Trades, Portfolio), Gabelli, Michael Price (Trades, Portfolio), Ronald Muhlenkamp (Trades, Portfolio), John Hussman (Trades, Portfolio), Prem Watsa (Trades, Portfolio), Murray Stahl (Trades, Portfolio), Grantham and Mairs and Power (Trades, Portfolio).
Straumann Holding
Eaton Vance invested in 8,454 shares of Straumann, dedicating 0.72% of the equity portfolio to the holding. The stock traded for an average per-share price of 821.45 Swiss francs ($840.43) during the quarter.
The Swiss manufacturer of dental equipment and supplies has a market cap of 12.41 billion Swiss francs; its shares closed at 784 francs on Monday with a price-earnings ratio of 45.63, a price-book ratio of 10.34 and a price-sales ratio of 9.13.
The Peter Lynch chart suggests the stock is overvalued.
Straumann’s financial strength was rated 8 out of 10 by GuruFocus. Although the company has issued 1.46 million francs in new long-term debt over the past three years, it is at a manageable level due to ample interest coverage. The robust Altman Z-Score of 14.24 also indicates the company is in good financial condition.
The company’s profitability and growth scored a 7 out of 10 rating, driven by operating margin expansion, strong returns that outperform industry peers and a moderate Piotroski F-Score of 4. Straumann also has a one-star business predictability rank.
The fund holds 0.05% of the company’s outstanding shares.
Haemonetics
The fund picked up 59,828 shares of Haemonetics, allocating 0.60% of the equity portfolio to the position. During the quarter, the stock traded for an average per-share price of $90.44.
The Braintree, Massachusetts-based company, which provides blood and plasma supplies and services, has a $6.58 billion market cap; its shares were trading around $130 on Tuesday with a price-earnings ratio of 122.26, a price-book ratio of 9.94 and a price-sales ratio of 6.99.
According to the Peter Lynch chart, the stock is overvalued.
GuruFocus rated Haemonetics’ financial strength 7 out of 10. In addition to having adequate interest coverage, the high Altman Z-Score of 7.63 suggests the company is in good financial health.
The company’s profitability and growth scored a 6 out of 10 rating, boosted by an expanding operating margin, a high Piotroski F-Score of 7 and a one-star business predictability rank.
With 4.66% of outstanding shares, Simons’ firm is the company’s largest guru shareholder. Cohen, Ken Fisher (Trades, Portfolio), Jones, Greenblatt and Pioneer also have positions in the stock.
Additional trades
During the quarter, Eaton Vance also established positions in Blueprint Medicines Corp. (BPMC, Financial), Agiliti Inc. (AGLY, Financial) and the iShares Global Healthcare Exchange-Traded Fund (IXJ, Financial).
The fund’s $961 million equity portfolio is composed of 61 stocks, a majority of which are drug manufacturers.
According to its fact sheet, the fund outperformed its benchmark in 2018 with a return of 5.98%. The MSCI World Health Care Index posted a 2.51% return.
Disclosure: No positions.
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