Teva Pharmaceutical Industries Ltd.'s (NYSE: TEVA; TASE: TEVA) share price jumped 8.9% to $10.20 in New York last Friday, the first time in six months that it has been over $10. The company's market cap in New York is now $11.4 billion. In trading on the Tel Aviv Stock Exchange today, the company's share price is up 5.9%.
The impetus was a judgment rendered by a court in Oklahoma that reduced the fine levied against Johnson & Johnson in the opioids proceeding, following an error in calculation. The fine was lowered by $107 million to $465 million. The share prices of the other companies involved in the proceeding all surged, Teva among them. Several months ago, Teva paid $85 million in a compromise settlement with the state of Oklahoma in the opioids case.
Momentum in Teva's share price has been positive in recent days, something not seen over the past year. The share price has risen 25.9% since the company published its third quarter reports ten days ago.
One investor with reason to celebrate is Warren Buffett, whose Berkshire Hathaway holds 4% of Teva's shares. The recent rises in the share price has to some extent reduced Berkshire Hathaway's paper loss on its investment, although it is still over $300 million.
Berkshire Hathaway became a shareholder in Teva in the fourth quarter of 2017, at the time that Kare Schultz became Teva's CEO and presented his aggressive streamlining plan for the company. Berkshire Hathaway increased its holdings in Teva during the first two quarters in 2018.
When it first became known that Berkshire Hathaway had bought shares in Teva, the capital market responded enthusiastically, and the company's share price spurted. Shortly afterwards, however, Buffett poured cold water on the excitement, telling US network CNBC that one of his deputies in Berkshire Hathaway had made the decision to invest in Teva, and would later decide whether to sell the investment in the future. Even after that, however, Teva's share price responded positively when it became known that Berkshire Hathaway had doubled its holdings in Teva.
Berkshire Hathaway is not obligated to disclose the prices at which it bought shares in Teva, but if we assume that it bought at the average price in each quarter in which it bought shares, i.e. at $15-20.80 each, then it has spent $756 million on its investment in Teva. The current value of its holdings in Teva is $441 million.
Published by Globes, Israel business news - en.globes.co.il - on November 17, 2019
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