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Warren Buffett Bought 4 Pharma Giants in Q3

By Brian Orelli, PhD – Nov 16, 2020 at 1:54PM

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The Oracle of Omaha and his team opened new positions in the underperforming sector.

Berkshire Hathaway (BRK.A -0.64%) (BRK.B -0.45%) filed its Form 13F with the Securities and Exchange Commission on Monday, which gave investors a look at what the Oracle of Omaha and his team of investors bought in the third quarter.

Among the list were four pharmaceutical companies: AbbVie (ABBV 1.06%), Merck (MRK -0.16%), Bristol Myers Squibb (BMY -0.39%), and Pfizer (PFE 0.43%). The first three were similarly sized purchase of around $1.8 billion. The Pfizer purchase was substantially smaller, with a market value around $136 million.

Warren Buffett

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Within the industry, there doesn't seem to be a theme among the four drugmakers.

Merck and Bristol Myers are heavily into oncology. Bristol Myers expanded its cancer treatments last year with the acquisition of Celgene. Merck is hanging its hat on Keytruda with plans to spin out its women's health and cardiovascular drugs, as well as some other brands into Organon & Co. next year.

AbbVie is looking to diversify away from its reliance on its megablockbuster Humira, which treats a variety of inflammatory disorders. The pharmaceutical company made a big move into dermatology with the acquisition of Allergan, the maker of Botox, which closed earlier this year.

Pfizer is currently most famous for its coronavirus vaccine, but the pharma giant is quite diversified. Like Merck, Pfizer is looking to get more focused by merging its Upjohn generic-drug business with Mylan in a new company called Viatris that's scheduled to start trading on Tuesday. Investors will have to wait for the next Form 13F to see what Buffett does with the shares of Viatris that all Pfizer shareholders received.

The pharmaceutical companies do have one thing in common: They're all trading off their all-time highs and have been for all of 2020, suggesting Buffet might be bargain shopping.

Brian Orelli, PhD has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares) and Bristol Myers Squibb and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short December 2020 $210 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

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