In an interview with the Financial Times published over the weekend, Pfizer's
Is this something that investors really need? Must be a really slow news day.
For months now, Kindler's been saying that he'd like to make the best investments possible for the company. For instance, last March, Kindler said, "Purchasing growth for us, it has to make sense both from a value and a risk perspective and we will evaluate the tradeoffs carefully, while staying opportunistic." And investors should expect nothing less. Whether the purchase is a relatively large company like Gilead Sciences
Investors can't control how Pfizer spends its cash, but they've got to give Kindler and his team props for showing restraint in not making a purchase so far. If I had $26 billion burning a hole in my pocket I'd be itching to make a purchase. But Pfizer has showed restraint by, for instance, not jumping into a bidding war with Bristol-Myers Squibb
Based on Kindler's statements, I expect it'll do the same with other potential purchases. In fact, doing nothing has been a pretty good strategy so far as many companies are looking a lot more attractive after last year's downturn.
If you're going to invest in Pfizer -- and I think that's a decent bet at this point -- then you've got to have faith that management is going to invest the company's cash wisely. It doesn't matter whether the purchase is big or small; what's important is that the purchase makes financial sense. If Pfizer can't find companies that will boost revenue and earnings more than the interest it derives from keeping the cash in the bank, Pfizer should return the money in the form of a higher dividend or stock buyback.
More Foolishness:
- The first thing you should do this year.
- Do you still own this garbage?
- Now's the time to double down on dividend stocks.
