In this article, we discuss the 5 healthcare stocks to buy according to billionaire D E Shaw. If you want to read our detailed analysis of Shaw’s history, investment philosophy, and hedge fund performance, go directly to the 10 Healthcare Stocks to Buy According to Billionaire D E Shaw.
5. Baxter International Inc. (NYSE:BAX)
D E Shaw Stake Value: $190,724,000
Percentage of D E Shaw’s 13F Portfolio: 0.17%
Number of Hedge Fund Holders: 42
Baxter International Inc. (NYSE:BAX), headquartered in Deerfield, Illinois, is an American international health care corporation. The company’s main emphasis is on kidney illness and other chronic and urgent medical diseases. D E Shaw started building its position in Baxter International Inc. (NYSE:BAX) in the fourth quarter of 2010 and currently holds over 2.37 million shares in the company, valued at $190.72 million. The company represents 0.17% of the hedge fund’s 13F portfolio.
In November, Baxter International Inc. (NYSE:BAX) declared a quarterly dividend of $0.28 per share, in line with the previous. In October, Piper Sandler analyst Matt O’Brien initiated coverage of Baxter International Inc. (NYSE:BAX), rating the stock as “Neutral,” and gave a price target of $82.
Baxter International Inc. (NYSE:BAX) was in 42 hedge fund portfolios in the third quarter of 2021.
In its third-quarter 2021 investor letter, Cooper Investors, an investment management firm, mentioned Baxter International Inc. (NYSE:BAX). Here is what the fund said:
“During the quarter we exited our position in Baxter, having originally bought in 2017 as a Low Risk Turnaround with clear Stalwart attributes. In essence, the core businesses were highly durable, providing life sustaining or saving medical products such as IV medication or pumps and dialysis machines.
They had been mismanaged prior to the company spinning off its biopharmaceutical business in 2015 which had generated most of the Baxter’s operating profit. With a new CEO in Joe Almeida, who came with a successful track record leading another medical device company (Covidien) we identified three sources of value latency for the new standalone Baxter.
Firstly, optimising the cost structure. Baxter were successful here – they were able to effectively double operating margins from low single digits to mid-to-high teens over a relatively short four-year period. Secondly, accelerating sales growth through a more focused R&D effort. This is inherently more difficult than cost optimisation and on this front success has been muted with only moderate impact to revenues from new product introductions. Finally, capital deployment through Baxter’s significantly under-levered balance sheet. Several smaller bolt-on acquisitions were nicely complementary to the existing portfolio, but in early September the company announced the acquisition of Hil-Rom Holdings, a medical device company with leading positions in bed systems and patient monitoring. The deal is significant at US$12.5bn in size, and exhausts all balance sheet latency in one fell swoop. …” (Click here to see the full text)
