Teva Pharma: Generics Leader Turning Around Under New CEO

Arvind Mallik and Jonathon Fite of KMF Investments presented their in-depth thesis on Teva Pharma (US: TEVA) at Wide-Moat Investing Summit 2019.

Thesis summary:

Teva Pharma is a global leader in generic and specialty medicines. Teva has developed and produced medicines for more than a century and maintains a portfolio of 35,000+ products in nearly every therapeutic area. More than 200 million people around the world take a Teva medicine every day. A world dominator in its category, Teva has scale moats in its generics business, and an R&D/patent moat in its specialty and biopharmaceutical product lines. The pharmaceutical industry, in spite of attractive non-cyclicality and secular growth, is out of favor due to pricing pressures and legal exposures. Trading at just 4x owner earnings, Teva is in “deep value” territory and could offer strong returns as its skilled new CEO continues his turnaround efforts. Last year’s purchase of Teva shares by Berkshire Hathway, and more recent insider buying of $1 million in shares by Teva’s chairman adds to Arvind and Jonathon’s conviction in the investment thesis.

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About the instructors:

Arvind Mallik is a Managing Partner of KMF Investments, a pure Pay-for-Performance Private Investment Partnership based in Denton, Texas. KMF seeks long-term capital appreciation by investing in companies whose intrinsic value is significantly higher than the market price. Over its ten years of operations, KMF has found opportunities in world dominating franchises, hard assets below replacement costs, businesses at large discounts to liquidation value, and firms with beneficial exposure to rising interest rates. Prior to founding KMF Investments, Mr. Mallik was a Senior Manager in the Strategy practice of Accenture. At Accenture, he helped global companies formulate and execute strategies to enter new markets, develop innovative new services and solutions, and reduce their operating costs to improve shareholder returns. Mr. Mallik obtained a BS in Chemical Engineering and BS in Bioengineering from UC Berkeley, and an MS in Chemical Engineering from MIT. He graduated with highest honors from both institutions.

Jonathon Fite is a Managing Partner of KMF Investments, a pure Pay-for-Performance Private Investment Partnership based in Denton, Texas.KMF seeks long-term capital appreciation by investing in companies whose intrinsic value is significantly higher than the market price. Over its ten years of operations, KMF has found opportunities in world dominating franchises, hard assets below replacement costs, businesses at large discounts to liquidation value, and firms with beneficial exposure to rising interest rates.Prior to founding KMF Investments, Mr. Fite was a Senior Manager in the Strategy practice of Accenture, where he helped companies improve shareholders returns. He is also an Adjunct Professor for the College of Business at the University of North Texas. Mr. Fite graduated with honors from the University of Arkansas with a BS and MS in Industrial Engineering.