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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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July 13, 2010

Hmmm: The Gates Foundation Bails

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Posted by Derek

According to this piece, the Gates Foundation unloaded basically all of its pharma and biotech stock holdings during the second quarter. Merck/Schering-Plough, J&J, Lilly, through Vertex and all the way to InterMune, Allos, and Auxilium - they held millions of shares of these, and it's all gone.

I presume that this is some sort of sector-rotation move by the foundation's investment advisors. But they certainly seem to have rotated good and proper - according to the article, the only life-science investment left is Seattle Genetics. It's certainly not a ringing vote of confidence in the financial prospects of the industry, at any rate. . .

Comments (4) + TrackBacks (0) | Category: Business and Markets


1. darwin on July 13, 2010 7:51 AM writes...

Foundation has a lot of money at stake for lawyers. Maybe less about sector investing and more about tactical maneuvers to avoid some sort of potential liability or perceived conflicts of interest?

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2. bbooooooya on July 13, 2010 8:29 AM writes...

Wouldn't read too much into a fund pulling out of a sector. People will always like investing in biotech (who doesn't like new drugs?).

The rotation out by Gates found. is more likely explained by a PM/analyst leaving (which happens oftetn).

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3. anon on July 16, 2010 9:59 PM writes...

If Gates had any brains he wouldn't have left Ballmer in charge of his old company. At least Bill could lie convincingly about the quality of future releases.

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4. Jonadab the Unsightly One on July 20, 2010 7:10 AM writes...

> Wouldn't read too much into
> a fund pulling out of a sector.

I agree with this, assuming we're talking about one fund, or even funds under the control of one organization. They could have all kinds of reasons for deciding on a move like this, and they're not likely going to be sharing them. They hired a new analyst, or an old one retired. One of their analysts got all excited about some other sector, and they decided to pull funds from somewhere else, and the lot fell to pharma. One of their senior analysts got tired of waiting for the sector to produce like one of the other analysts kept assuring him it was going to do any minute now. A minor shift in the economic forecast caused the fund managers to decide they needed to adjust the risk profile either up (higher potential payoff) or down (less risk) for a certain segment of their funds. Who knows? It could be anything, and it doesn't necessarily mean anything.

If you see several completely independent funds pulling out of the same sector around the same time, however, then that could be meaningful.

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