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Warren Buffett boosts bet on ailing drugmaker Teva

Oracle of Omaha buys almost 3 million more shares of generics behemoth after company says restructuring plan on schedule despite protests over layoffs last year

Teva Pharmaceutical Industries employees  protest in front of the Prime Minister's Office in Jerusalem against the company's plan to lay off hundreds of workers, December 17, 2017.(Yonatan Sindel/Flash90)
Teva Pharmaceutical Industries employees protest in front of the Prime Minister's Office in Jerusalem against the company's plan to lay off hundreds of workers, December 17, 2017.(Yonatan Sindel/Flash90)

OMAHA, Nebraska — Investor Warren Buffett’s company added to its stakes in Israeli drugmaker Teva Pharmaceuticals and Apple in the second quarter while tweaking several of its other stock investments.

Berkshire Hathaway Inc. filed an update on its US stock portfolio with the Securities and Exchange Commission on Tuesday.

The Teva investment was just disclosed earlier this year and has grown to 43.2 million shares from 40.5 million in the first quarter. The initial investment of $358 million raised eyebrows when it was first announced in February.

The decision to pump more money into Teva will likely be seen as a vote of confidence in the foundering drugmaker, at one-time Israel’s biggest company, which has looked to cut costs after falling some $40 billion in debt. A plan in December to streamline operations and cut 14,500 jobs worldwide, including hundreds locally, was met by days of protests in Israel and attempts by the government to intervene, though executives say the plan is moving ahead.

Warren Buffett (L) and Eitan Wertheimer (R), chairman of the Board of Iscar Metalworking companies, visit the Old City of Jerusalem, May 2013 (Photo credit: Pierre Terdjman / Flash90)

CEO Kare Schultz said in an earnings statement on August 2 that the restructuring was “on schedule.”

“We have already achieved a significant cost base reduction towards our target for the year and we continue to reduce our net debt,” he said.

Workers of the Teva company protest against a plan to lay off hundreds of employees, outside the TEVA Pharmaceutical Industries building in Jerusalem, December 17, 2017. (Noam Revkin Fenton/Flash90)

Teva, the world’s number one generic drugmaker, has been hit hard by price pressure and competition in its core generic business, the loss of patent protection on its blockbuster multiple sclerosis drug Copaxone, and a more than $30 billion debt load stemming from its acquisition of the generics business of Allergan.

Investors follow what Berkshire buys and sells closely because of Buffett’s successful track record. Berkshire officials don’t generally comment on these quarterly filings.

And the quarterly filings don’t make clear who made all the investments. Buffett handles the biggest investments in Berkshire’s portfolio, such as Coca-Cola, Apple and Wells Fargo. He has said that investments of less than $1 billion are likely to be the work of Berkshire’s two other investment managers.

Berkshire held nearly 252 million Apple shares at the end of June, up from 239.57 million in March.

Berkshire had said Monday that it reduced some of its investments in airline and banking companies, such as American Airlines and US Bancorp, because it seeks to own no more than 10 percent of any firm and those companies have been repurchasing stock.

Berkshire added to its investments in Southwest and Delta airlines while trimming its stakes in American and United Continental.

Berkshire said those decisions to reduce some of its holdings to under 10 percent don’t reflect how it feels about those companies.

Berkshire made several other moves during the quarter:

— Increased its Goldman Sachs investment to 13.3 million shares, from 11 million shares.

— Reduced its Charter Communications investment to 7.5 million shares from 8.2 million.

— Cut its Phillips 66 investment to 33.9 million shares from 45.7 million shares in March.

Besides investments, Berkshire owns more than 90 companies, including insurance, retail, manufacturing, railroad and candy companies.

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