Is Buffett Right about Teva? — Market Mad House

One of Warren Buffett’s oddest stock holdings is the Israeli/American drug maker Teva Pharmaceutical Industries Ltd (NYSE: TEVA).

Teva is cheap; trading at $13.30 a share on 20 February 2020. However, Teva’s revenue growth, and gross profit are shrinking.

Teva’s quarterly gross profit fell from $1.977 billion on 30 September 2018 to $1.829 billion a year later. Between September 2018 and September 2019, Teva suffered four quarters of revenue growth shrinkage.

For example, Teva’s revenue growth shrank by 5.85% in the quarter ending on 30 September 2019, Stockrow estimates. Likewise, Teva’s revenue growth shrank by 7.74% in the previous quarter.

Consequently, Teva’s quarterly revenues fell from $4.529 billion on 30 September 2018 to $4.264 billion on 30 September 2019. Thus, Teva’s business is shrinking.

How Much Teva does Buffett own?

Berkshire Hathaway (NYSE: BRK.B) owned 43.249 million shares of Teva (NYSE: TEVA) in 3rd Quarter 2019, Kiplinger estimates. Therefore, Teva made up 0.14% of Berkshire’s portfolio in Third Quarter 2019.

I think Buffett owns Teva because of its business. To explain, Teva’s main business is the manufacture and marketing of generic drugs. There is a huge market for…