, manager of Vanguard's $22.4 billion Health Care Fund (
), will retire at the end of the year, after outperforming every
U.S. equity mutual fund since his fund's inception in 1984.
Owens' fund returned 16 percent annually since 1984, compared to
the S&P 500's 11 percent annual return over the same period,
according to Bloomberg. The third quarter continued Owen's trend
of making few changes to his health care portfolio. The value
investor bought one new stock, Aglient Technologies Inc. (
) and made small increases to existing holdings, the largest of
which are Teva Pharmaceuticals Industries (
) and Green Mountain Coffee Roasters (
"Owens said as growth in the health-care business has slowed, the
opportunities once available to value investors such as himself,
have diminished," Bloomberg said of the fund.
Agilent Technologies (
Owens purchased 500,000 shares of Agilent Technologies for $38
per share on average in the third quarter. The holding comprised
0.087 percent of his portfolio at quarter-end.
Agilent Technologies produces the measurement industry's broadest
range of tools and expertise for electronic and bio-analytical
measurement. With 20,000 employees, the company serves
scientists, researchers and engineers in more than 100 countries.
It began as a spin-off of Hewlett-Packard (
) in 1999.
In Agilent's third quarter results released Aug. 15, 2012, it
reported that it fell short of its revenue and earnings per share
) guidance due to "an environment of much slower growth resulting
in deals taking longer to close and customers delaying their
order deliveries," Aglilent's president and CEO, Bill Sullivan,
Revenue was $1.72 billion, reflecting a 2 percent increase from
revenue of $1.69 billion a year prior. Net income was $243
million, or $0.69 per share, which was a decline from net income
of $330 million, or $0.92 per share, a year prior.
Weaker aerospace and defense, industrial, petrochemical, academic
and government demand negatively impacted sales in the quarter.
Government research and environmental markets declined on
government budgetary concerns and lower government spending. The
company experienced growth in revenues in communications - driven
by wireless manufacturing - life sciences and the pharmaceutical
Total orders in the quarter declined 1 percent from the same
period the previous year, with 3 percent of growth coming from
its May acquisition of Dako, a cancer diagnostic company, the
largest acquisition in Agilent's history.
At quarter-end, Aglient had $950 million in cash on its balance
sheet, which was an increase from the $860 in cash it had on its
balance sheet a year prior. Long-term liabilities and debt stood
at $1.8 billion, which was down from $3 billion a year prior.
On a longer-term basis, Agilent has six good signs in its
fundamentals from GuruFocus: A Piotroski F-Score of 7 -
indicating a very healthy situation - an expanding operating
margin, a share price close to a one-year low, a P/E ratio close
to a two-year low, a P/B ratio close to a three-year low and a
P/S ratio close to a one-year low.
Teva Pharmaceuticals Industries (
Owens made a 24.1 percent increase to his holding of Teva
Pharmaceuticals, adding 1.7 million shares for $40 per share on
average. The purchase marked the fourth time he has increased his
Teva holding since he established it in the second quarter of
2011. His new total of owned shares at quarter-end was 8.75
million, equivalent to 1.6 percent of his portfolio.
Teva develops, produces and markets generic and proprietary
branded drugs and has the largest product portfolio in the
industry, with about 180 applications pending at the FDA. Its
stock has increased 2 percent year to date.
The company released its third quarter results on Nov. 1, 2012.
Its net revenue increased 14 percent year over year to $5 billion
from $4.3. Its net loss was $79 million, or $0.09 per share,
which was a decline from net income of $916 million, or $1.03 per
share, the previous year. The decline was due to a $670 million
provision for a loss contingency to pending patent litigation and
impairment of $481 million, primarily related to in-process
Revenues in the U.S. increased 33 percent year over year, driven
by its October 2011 acquisition of global biopharmaceutical
company Cephalon and strong branded and generic revenues.
European sales increased 1 percent due to Cephalon medicines and
revenue from its leading medicine, Copaxone, after its take-back
of marketing and distribution rights.
GuruFocus gives Teva three severe warning signs: Its operating
margin has been in five-year decline at an average rate of 2.5
percent, its cash flow from operations has diverged severely from
its net income which suggests it has activities affecting its
cash flows, and its assets have grown faster than its revenue
over the last three years, indicating the business' efficiency
may be in decline.
It also has three good signs: consistent per-share revenue
growth, a three-year low P/E ratio and a one-year low P/B ratio.
TEVA data byGuruFocus.com
Green Mountain Coffee Roasters (
Owens' third-largest increase was 12.75 percent, or 140,000 new
shares to his Green Mountain Coffee Roasters holding, for $23 per
share on average. The position was just initiated last quarter,
with 1.1 million shares which he purchased for $31 on average.
His total holding size at quarter end stood at 1.24 million
shares, a 0.13 percent representation in his portfolio.
Green Mountain, Owens' only food and beverage stock, is a
specialty coffee maker that David Einhorn famously shorted and
whose stock has fallen 41 percent year to date.
In addition to blasting the company in a presentation at the 2011
and 2012 Value Investors conference, Einhorn commented on GMCR in
his recent third quarter letter, listing a number of allegations
In the company's third quarter results released Aug. 1, 2012, it
announced that net sales increased 21 percent, GAAP net income
increased 30 percent and diluted GAAP income per share increased
The company's CEO, Lawrence J. Blanford, expects growth to slow
as it becomes larger, though over the long term he expects an
annual sales growth rate in the range of 15 percent to 20 percent
and annual earnings growth in the mid-teens.
GMCR announced a $500 million share repurchase over the next two
years on the strength of its free cash flow growth ability.
GuruFocus reports four severe warning signs for GMCR, for
long-term declining gross margin, cash flow diverging from net
income, asset growth higher than revenue growth and building-up
It also has two good signs: consistent per-share revenue growth
and expanding operating margin.
GMCR data byGuruFocus.com
For more stocks held by Owens, see his portfolio. Also check out
the undervalued stocks, top growth companies and high yield
stocks of Edward Owens.About GuruFocus: GuruFocus.com tracks the
stocks picks and portfolio holdings of the world's best
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