Warren Buffet dumps IBM for a Pharmaceutical company
Well known investor and business magnate, Warren Buffet is increasingly showing his interest towards the health care sector and he is making a big bet on it. According to recent reports, Buffet’s company, Berkshire Hathaway just acquired a stake in Teva Pharmaceutical. The stake is reported to be worth $358 million. Teva Pharmaceutical is an Israeli company that manufactures general purpose drugs. In the United States alone, this company fills nearly 1 in 6 of all the generic prescriptions. After the market closed, Teva Pharma’s stock increased almost 7 percent. Warren Buffett’s stake in the company, is part of his efforts to mend the health care industry in the United States. In January this year, JP Morgan Chase, Amazon and Berkshire Hathaway announced that they will jointly make a company that will provide better health insurance to their employees as well as their families. Speaking about the rising health care costs, Buffett recently said that he wants to reform the health care industry by providing better health care facilities at a lower cost.
Health care spending is a big expense for people and businesses. The national health spending, which incorporates spending by private sector, state and federal governments, has increased from only 5 percent of the economy in 1960 to 18 percent just two years ago. By 2025, it is estimated to increase to nearly 20 percent. On the other hand, industry experts believe that tech giant Amazon will enter the prescription drug business soon. Meanwhile, over the last 3 months, Berkshire has also discarded most of its IBM stock. Reports state that the company has sold approximately 35 million shares of IBM in the last 3 month. Only 2 million shares are now left with Berkshire. However, this didn’t affect the IBM stock. This is because investors were well aware of the fact the Buffett will discard it.
In May last year, Buffett said that he had gotten rid of most of his IBM shares. Speaking to CNBC in May, he said that he does not value IBM stock as he used to do 6 years ago.