Friday, October 9, 2015

Dan Loeb Increases Support of Healthcare Sector

Baxter International website - saving and sustaining lives
Dan Loeb's Third Point has increased its investment in Baxter.
Dan Loeb’s Third Point has announced an increase in its investment in Baxter International Inc., a medical equipment and supplies company. Though Baxter’s stock has dropped 15.48% over the past year, Loeb’s Third Point now ones an additional 11.97 million shares at an average price of $32.69—so obviously Loeb sees the company is going somewhere. In fact, just the announcement of Loeb’s increased involvement with Baxter sent the stock price on a rise to the tune of 1.3%. That’s likely a good sign for the consumer.

Dan Loeb is somebody who knows a good deal when he sees one. Known for aggressively restructuring the companies that come under his influence, Third Point’s investment in Baxter is a good sign that it’s about to rise farther in stock price and in the marketplace.

Baxter’s homepage touts the company as one that is “saving and sustaining lives” around the world. Inspiring stories like that of Yin Le, who was forced to leave school after she was diagnosed with end stage renal disease (ESRD) as a fifth grader. But through peritoneal dialysis (PD) therapy, she was able to treat the disease – and get back to life as a kid. Baxter provided the equipment that allowed Yin to treat her disease from home and continue living her life.

“I was so excited that I was finally able to have lunch at school,” she said. “I surprised my friends when I showed up in the cafeteria for the first time, and in that moment, I was filled with happiness.”

It’s a good sign that big companies such as Third Point are working hard to promote health care services—naturally, the more funding the sector gets, the more likely people are to receive the services and goods they need to stay happy and healthy.

And now that Third Point owns a total of 53.85 million of Baxter’s shares, the board of the company has plans to expand to 12 directors. Additionally, Third Point partner Munib Islam has been appointed to Baxter’s board of directors. He believes that Baxter now has the chance to focus on improving profit margins as well as increasing its market share.

Loeb, expert investor that he is, operates under a fairly simple business philosophy: he believes in having “talented management teams, strong and growing free cash flows, and a proven track record of smart capital allocation that drives significant increases of intrinsic value per share,” a philosophy he will no doubt bring to Baxter.

Third Point has had an active hand in the health care sector lately. The health sector now comprises 12% of the company’s equity portfolio. Now, if more companies who could afford to do so actually invested in healthcare, the stronger the sector—and all of us—would be.