AQR Capital Ups Stake in Johnson and Johnson
Detailed Coverage of AQR Capital’s 13F Filing (Part 8 of 18)
AQR Capital’s holdings in Johnson & Johnson
AQR Capital added to its holdings in Johnson and Johnson (JNJ) by increasing the number of shares held in the company by 28% from 3,490,742 in 3Q14 to 4,462,226 shares in 4Q14. JNJ formed 0.97% of the fund’s fourth-quarter portfolio.
Overview of Johnson & Johnson
Johnson and Johnson researches, develops, sells, and manufactures an array of healthcare products. The company carries out its business via more than 270 companies around the world.
JNJ operates in three business segments:
Consumer
Pharmaceutical
Medical Devices and Diagnostic
The Consumer segment provides the general public with a range of products.
The Pharmaceutical segment offers healthcare products via medical professionals, wholesalers, and retailers for prescription use. These products relate to the areas of neurology, pain management, antipsychotics, anti-infectives, and vaccines, among others.
The Medical Devices and Diagnostic segment provides products to hospitals, physicians, nurses, and clinics. These products treat cardiovascular disease, neurological disorders, and orthopedic problems.
JNJ is part of the Health Care Select Sector SPDF Fund (XLV) with an exposure of 10.22%. The company also forms part of the iShares US Healthcare ETF (IYH) with a weightage of 10.06%.
4Q14 results
Johnson and Johnson reported sales of $18.3 billion for for the fourth quarter, showing a 0.6% decrease over 4Q13 figures. There was a 3.9% increase in operational results with a 4.5% negative impact from currency. Domestic sales grew by 7.4%. International sales fell 6.7%, reflecting an impact of 7.9% from unfavorable movements in currency and operational growth amounting to 1.2%.
The Pharmaceutical segment, which reported a 22.7% increase in US sales, mainly drove fourth-quarter revenue growth for JNJ. This segment benefited from a strong increase in the immunology market and an enhanced market share for Stelara, which treats psoriatic arthritis. Additionally, strong sales for Olysio—which treats chronic hepatitis C—and the recently-introduced cancer drug Imbruvica boosted the performance of this segment.
The debt-to-equity ratio for Johnson & Johnson is 0.2x. This is lower than the 0.4x value for both Merck (MRK) and Pfizer (PFE).
Surgical robotics partnership with Google
According to a recent announcement, JNJ and Google (GOOG) are pooling their expertise and intellectual property to create an “innovative robotic-assisted surgical platform capable of integrating advanced technologies with the goal of improving healthcare delivery in the operating room.” Surgery assisted by robots is “minimally invasive” and offers surgeons greater accuracy and control during the process of the surgery itself. Robotic-assisted surgery also benefits patients by lowering trauma and accelerating healing post-surgery.
The next part of this series will discuss AQR Capital’s raised position in Gilead Sciences (GILD).
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