Long-term value investor Bill Nygren says investors should consider buying shares of the pharmaceutical giant at a discount. “Merck is attractive on a standalone basis, and it has very good portfolio characteristics,” said Nygren, who bought shares of the company in the third quarter. “We’re heavy on financials, heavy on durables — our portfolios tend to be a little bit procyclical, and Merck helps offset some of that risk,” he said in an interview. MRK’s stock price so far this year Merck’s stock price has underperformed this year On the market, it fell more than 5%. Some of the problems stem from slowing sales of its human papillomavirus vaccine, known as Gavin, in China. Nygren began looking at the stock earlier this year and met with management and Merck CEO Rob Davis, whom he described as “extraordinarily good” at understanding the language of finance and science. The company held off on buying shares until the stock price fell over the summer – Merck’s shares were down about 8% in the third quarter – and valuations improved. Nygren pointed to Merck’s existing drug portfolio as another reason to buy the name. The expansion of its cancer treatment Keytruda franchise could also bode well for the stock price. Nygren sees value in a number of AI implementers beyond big pharma, beyond mainstay giant Alphabet. This includes Capital One, which is leveraging AI in its underwriting process, and Charter Communications, which is implementing AI in call centers to reduce costs and improve customer experience, he said. COF Mountain Shares Year-To-Date Year to date, Charter shares are up nearly 4%, while Capital One is up 43%. “We’re going to see examples where when you say the word artificial intelligence, no one thinks of traditional companies, but they end up being some of the bigger beneficiaries,” Nygren said.
