Send me real-time posts from this site at my email
Motley Fool

Warren Buffett's Berkshire Hathaway Dives Into Biotechnology

The legendary holding company run by Warren Buffett, Charlie Munger, and a growing team of younger tech-savvy asset managers recently unveiled its first biotechnology investment. The latest holdings disclosure form filed by Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) revealed a new nine-figure investment into one of the best-performing biotech stocks of all time, Biogen (NASDAQ: BIIB).

A small boat in well-charted water

Berkshire Hathaway is new to biotech investing, but Biogen's been delivering market-beating returns for decades. A successful line of multiple sclerosis (MS) drugs has pushed the stock 1,360% higher over the past 20 years.

Image source: The Motley Fool.

Berkshire isn't risking a great deal on its foray into the biotech investing, at least relative to the rest of its portfolio. At the end of 2019, Berkshire held shares of Biogen worth $192 million, which works out to around 0.8% of the holding company's overall portfolio.

Hoping for the best

At the moment, Biogen leans heavily on a line of MS products that have stagnated lately in response to fierce competition. In addition to MS pressure, the company's lead growth driver at the moment, Spinraza, is no longer the only treatment option available to a limited population of patients born with a rare neurodegenerative disorder.

Biogen's attempting to develop an experimental Alzheimer's disease treatment that appears to have a slim chance of approval from an increasingly lenient FDA later this year. If Biogen's Alzheimer's gamble doesn't work out, though, strong cash flows in the present will make it hard to lose money on this biotech bet. The stock has been trading at just 9.8 times this year's earnings expectations.

10 stocks we like better than Berkshire Hathaway (A shares)
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Berkshire Hathaway (A shares) wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of December 1, 2019

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares) and Biogen and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short March 2020 $225 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.


Popular posts

Welcome!!! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue