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| 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.
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