The Insiders Fund, LP on Abbott Laboratories
Thesis
The Insiders Fund likes Abbott as a blue-chip healthcare company with an exceptionally long record of increasing dividends. Its device, diagnostics and nutrition businesses offer a broad product portfolio, and newly approved devices and tests expand that franchise. The acquisition of Exact Sciences provides additional cancer-screening capability that the manager believes complements Abbott’s existing offerings. The letter describes insider buying as a favored signal for this type of investment, although it separately reports no insider purchases in the quarter.
“The purchase of Exact Sciences provides them with a Grail-like MCED cancer diagnostic test for their robust product line.”
Key risks
- The acquisition of Exact Sciences brings integration and transaction-execution risk
- The fund reports insider selling following strong share performance rather than fresh buying
- The company has faced litigation involving infant formula