HALO - Would Halozyme Make a Good Warren Buffett Stock?
As the patron saint of value investors, Warren Buffett's strategies for picking stocks -- and his preferences for holding them for the long term -- are so well-known that they're practically cliches. But don't let your familiarity with his approach trick you into thinking that it's stale. Buffett's reputation is well-earned, and there's a lot to learn from how he evaluates stocks. Because of that, I find that it's a good exercise to attempt to analyze stocks that I might want to buy from his perspective.
So what might the Oracle of Omaha think about Halozyme Therapeutics (NASDAQ: HALO) , a biotech company that makes a drug delivery system that can cut the time required for intravenous infusions from hours to minutes? Biotechs aren't exactly his favorites, given that their earnings are highly unreliable and gated behind years of risky capital-intensive development effort funded by debt, all which he eschews for businesses with safer and cheaper revenue flows. But, this stock might be special because it doesn't undertake risky drug development on its own. Instead, Halozyme rents the right to use its delivery technology to pharmas and biotechs that make drugs for infusion. Many of the traditional objections that Buffett might have to investing in it therefore aren't applicable -- but would that be enough to prompt him to buy?
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Would Halozyme Make a Good Warren Buffett Stock?