Johnson & Johnson (JNJ)

He owns it partly for the defensive nature and partly for the business which leads to a focus on pharmaceuticals.

They spun off personal products, so JNJ is more a medical device company. They have huge cash from that spin-off, which could allow buying a medical device or biotech company. The talcum powder lawsuit is settling, too. They've raised their dividend for 54 years. 

It just had a major move up and whenever it does that, it sells. Pays a 3% dividend. 

Great story, he's held for a long time. Lots of growth ahead in pharma and medical devices, can make acquisitions. Very defensive. Well run. Talcum powder issues are behind them.

She's had to be patient. After spinoff of consumer division, now just pharma and medical devices. Pharma pipeline OK, needs to be replenished as with all pharma companies. Litigation overhang, hopefully resolved this year, would be a huge lift. Sticking with it for now. Attractive valuation.

Pretty defensive. AAA balance sheet. Very stable and attractive dividend, which grows. 

Talcum powder settlement offer going to plaintiffs' vote on July 26, needs 75% approval. If deal is accepted, overhang will be gone, and you have a chance to buy at cheapest valuation in 20 years at 13x PE. Now pure medical devices (huge demographic play) and pharma since the spinoff.

US drug stocks struggling, the sector has significantly weakened RSI. Can see this in JNJ chart, retesting 52-week lows, seeing lower highs. $144 is a pretty significant support level, and it's bounced off 4x already. If it bounces again, encouraging and strong support; taken out, could be really disappointing.

Healthcare is very tough to invest in, especially pharmaceuticals. Doesn't have the weight-loss drugs, underperformed. Diversified conglomerate, and competes with his holding in SYK. 

Spinoffs planned, could be interesting because you could pick the one with faster growth. Call back then and he can chat about it ;)

In line with his view of seasonality, and taking some money off the table, sell in May and go away. He's noticed that telecoms, pipelines, and healthcare are catching a bid. Why? They're solid, great balance sheets. 

A storied brand, spun off lower-margin businesses. Wonderful drugs, huge pipeline of new products, med tech. Reaffirmed earnings, he thinks they can grow at 5-10% clip. Not expensive at 14x. Great for this time of year. Great dividend yield of 3.3%.

High quality products that is well established. Tough market with many competitors who undercut prices. A good long term investment. Returns should average around 8%. Would recommend buying. 

They report this week. Listen to what they say about the recent spin-off. A defensive play with a strong balance sheet and pays a 3% dividend.

They report on Tuesday. He sold it and would avoid it. Has no expectations for it.

He gave up on JNJ (and made a small profit), because he was tired of being held hostage to legal decisions that had little to do with the greatness of this company. The legality concerned traces of asbestos in its baby powder that may have caused cancer in some customers. Twenty years ago, any whiff of an asbestos lawsuit would have triggered an instant sell. He forget how ugly such lawsuits could be. In the 1980s, a number of companies lost asbestos lawsuits. After researching the JNJ suit, he concluded that JNJ acted in good faith or didn't know about the asbestos or an accident at worst. Turns out that was a mis-judgement he made. A seemingly endless number of lawsuits were launch, and there was a $2 billion judgement against JNJ that stated that the company didn't take the plaintiff seriously enough. Then, JNJ paid $8.9 billion to the plaintiffs, which he thought was a brilliant strategy, but the 3rd-circuit court in Philadelphia hated this settlement. Meanwhile, JNJ reported a terrific quarter and spun-off its consumer products division successfully. He bought JNJ for its fundamentals, but he was actually betting on the thing that controlled the stock--the litigation. You never want to play that game. In the end, he was far too sanguine about JNJ's handling of the lawsuits. When a judge ruled that JNJ would not go bankrupt or blocked the company pursuing bankruptcy. That's when he sold.

They report Tuesday. If they announce any resolution in the talcum powder lawsuits, this stock will jump 10 points.

JNJ offered its shareholders the opportunity to exchange JNJ shares for shares in Kenvue. The exchange was voluntary, and the exchange ratio was 8.03. Since this was an exchange of shares rather than just a pure distribution of the spinoff, the price of JNJ shares should not be as effected, since the company received JNJ shares from its shareholders, and effectively removed them from circulation, similar to a buyback. In effect, this causes the existing shareholders to own a larger piece of JNJ. 

JNJ is near the same price where the spinout took place, and some of the price decline in JNJ can be attributed to the broader healthcare sector. If the healthcare sector continues to improve from here, we expect JNJ will also participate in this rally. 
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