At the end of last week, the Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) share fell below $30 for the first time in a decade. The company's current market cap is $30.5 billion.
The Teva share price reached a peak in July 2015, after the company announced its acquisition of Actavis, Allergan's generic division, and its abandonment of its effort to take over Mylan N.V. (Nasdaq: MYL; TASE: MYL). The Teva share was traded at over $70 at the time, meaning that it has lost over 50% of its value since then.
The Teva share price started declining even before the Actavis deal was completed, arousing questions about the deal at the time and anxiety about the high price for the deal (nearly $40 billion). The deal was completed in the summer of 2016.
The return on the Teva share this year has been negative 17.6%, compared with a decline of less than 1% I the price of Mylan, Teva's competitor. The capital market is waiting for information about the appointment of a new CEO to replace Erez Vigodman, who was dumped three months ago.
At the same time, sources inform "Globes" that the hedge fund of billionaire John Paulson has substantially reduced its holdings in Teva. The holdings of funds and institutional investors in companies traded on Wall Street are reported by 45 days following the end of each quarter. As of the end of the first quarter, the hedge fund, Paulson & Co., held 11 million Teva shares, with a current market value of $328 million. During the quarter, the fund sold 31% of its Teva stake - about 4.9 million shares.
Some see an opportunity in Teva
A large proportion of Paulson & Co.'s portfolio is in healthcare shares, but it reduced its holdings in other companies in this sector in the first quarter. For example, it sold 16.2% of its holdings in Mylan, 17.2% of its holdings in Allergan, and 5% of its holdings in Shire. Two years ago, when Teva tried to take over Mylan, Paulson's fund bought Mylan shares in order to support the Teva deal (according to reports at the time).
Another concern that has reduced its Teva holding is Fidelity Funds group (FMR), one of the largest shareholders in Teva. Fidelity held a 6.5% stake in Teva in mid-February - 66 million shares, while at the end of the first quarter, its holding was only 37 million shares, with a current market value of $1.1 billion.
On the other hand, some see an opportunity in Teva. Another major shareholder in the company, as of mid-February (when it published it detailed report for 2016) is Capital Research and Management Company. At that time, it held a 5.9% holding in Teva - 59 million shares, while at the end of the quarter, its holding had increased to 67 million shares, with a market value of $2 billion.
Published by Globes [online], Israel Business News - www.globes-online.com - on May 21, 2017
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