Gates Foundation Dumps Most Pharma, Healthcare Stocks - InformationWeek
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8/16/2009
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Gates Foundation Dumps Most Pharma, Healthcare Stocks

In a "striking" sell-off that will "drastically reduce its exposure to health-related stocks," the Bill and Melissa Gates Foundation unloaded 30 million shares of stock last quarter in pharmaceuticals, biotechnology, and health-care companies. It's an odd move for a massive philanthropy that's made health care in developing countries one of its top priorities.

In a "striking" sell-off that will "drastically reduce its exposure to health-related stocks," the Bill and Melissa Gates Foundation unloaded 30 million shares of stock last quarter in pharmaceuticals, biotechnology, and health-care companies. It's an odd move for a massive philanthropy that's made health care in developing countries one of its top priorities.Regulatory documents show that in the quarter ended June 30, the Gates Foundation liquidated its huge holdings in the following companies, according to the Wall Street Journal:

*Schering-Plough, 14.9 million shares *Merck, 8.1 million shares *Wyeth, 3.7 million shares *Johnson & Johnson, 2.5 million shares *Eli Lilly, almost 1 million shares

Also liquidated were unspecified holdings in Allos Therapeutics, InterMune, Auxilium Pharmaceuticals, and Vertex Pharmaceuticals.

The Journal article, which said the foundation's asset value as of June 30 of $7.5 billion was down from about $8.5 billion reported at the end of March, highlighted the likelihood that the massive sell-off was tied to the widespread concern over the implications that President Obama's proposed government-run healthcare plan would have for the companies whose stocks the foundation sold off.

"The foundation's decision to drastically reduce its exposure to health-related stocks is striking, as many of its charity grants have been disbursed to address developing country health issues," The Journal wrote. "Its move comes against the background of anxiety among drugmakers and healthcare insurance firms about the potential impact of the Obama administration's proposed overhaul of the U.S. healthcare system, which could put pressure on prescription drug prices."

While it must be emphasized that the liquidations were not moves made personally by Gates himself and were instead executed by the huge and active foundation set up in the name of him and his wife, nothing in Bill Gates' history indicates that he's a hands-off manager. And that would be particularly true with such a massive and public realignment of holdings for the foundation.

So with the proviso that Gates himself didn't sell off all those shares as part of his personal portfolio, it's still very reasonable to ask: why is one of the world's wealthiest men, and one of the business world's most successful executives, anticipating that would cause the the foundation bearing the name of him and his wife to sell off more than 30 million shares of stock in some of the best-known pharmaceutical and health-care companies on the globe?

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