Warren Buffet’s Latest Moves Reflect Biopharma Market Woes

Warren Buffet_Edt_Kent Sievers

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My, how times and the stock market have changed. Two years ago, Warren Buffet’s Berkshire Hathaway made significant investments in Pfizer, Merck, Bristol Myers Squibb and AbbVie. But now, the billionaire continues to back away from those investments due to the battering of the bear market.

Known as one of the world's most savvy investors, Buffet began backing away from life sciences-related stocks last year when Berkshire Hathaway sold off its investments in Merck. At the same time, the company pared down its investments in AbbVie and BMS, BioSpace reported.

And now, Buffet’s company has walked away from its stake in both AbbVie and BMS. In Berkshire Hathaway’s 13F filing with the U.S. Securities and Exchange Commission, reported by forexlive, Buffet oversaw the exit of the firm’s holdings in the two large biopharmas. According to the filing, Berkshire Hathaway sold 3.03 million shares of AbbVie valued at $410.7 million, as well as 5.2 million shares of BMS that are valued at $324.4 million.

Over the past month, shares of AbbVie have fallen about 3.6% to $153.70. However, year to date, the Chicago-based company’s stock is significantly higher than where it began in January at $135.42 per share. At this time last year, AbbVie’s stock was selling for $117.21 per share.

The value of BMS has also been fairly steady throughout the stock market’s rough experience this year. Since the beginning of 2022, BMS stock has increased 26.07%, from $61.88 per share to today’s price of $77.96. Although the last month has been brutal for pharma stocks, BMS has managed to weather the storm.

Buffet also took a stake in Biogen ahead of the controversial approval of Alzheimer’s drug Aduhelm. Prior to that approval, in 2019, Berkshire Hathaway bought 648,447 shares of Biogen valued at $192.4 million. Last year, following all of the issues surrounding the rollout of Aduhelm, the investment firm cashed out its shares, about the same time it began to back away from other pharma investments, Business Insider reported. Over the past 12 months, Biogen’s stock has lost more than half its value since hitting a peak price of $414.71 per share in June 2021. Today, the stock is selling at about $200 per share.  

The year 2022 has been rough for the stock market. According to CNN, the Nasdaq is down nearly 25% since the start of the year, and the S&P 500 has fallen16% over the past six weeks. The S&P Pharmaceuticals Select Industry Index is down more than 11% year to date. That’s a slide that began more than one year ago.

As of last week, the SPDR S&P Biotech exchange-traded fund was down 39%, according to Barron’s. Citing Jefferies analyst Michael Yee, there are more than 120 biotech stocks trading for less than the cash they hold, Barron’s reported.

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