Merck Gets a Boost of 69% in AQR Capital’s Portfolio
Detailed Coverage of AQR Capital’s 13F Filing (Part 12 of 18)
AQR Capital’s holdings in Merck
AQR Capital boosted its holdings in Merck & Company (MRK), increasing the amount of shares held in the company from 4,422,394 in 3Q14 to 7,484,989 in 4Q14. This represented a 69% increase. MRK formed 0.9% of the fund’s fourth-quarter portfolio.
Overview of MRK
Merck delivers innovative solutions via its vaccines, biologic therapies, animal health products, and prescription medicines. The company markets these products both directly and via its joint ventures.
MRK manages its operations on the basis of products. The company’s Pharmaceutical segment includes human health vaccine and other drug products. The Animal Health segment carries out a range of operations from discovery to product marketing that targets animal producers and veterinarians.
On October 1, 2014, MRK divested its Consumer Care segment. The segment had focused on sun care, over-the-counter, and foot care products.
Merck represents 6.21% of the iShares US Healthcare ETF (IYH).
2014 acquisitions and divestitures
In 2014, MRK strengthened its hepatitis pipeline by purchasing Idenix Pharmaceuticals, enhanced its portfolio of antibiotics by acquiring Cubist, and bolstered its oncology projects by buying OncoEthix.
MRK divested its non-core assets, including certain ophthalmic products within the Asian and European markets. The company also sold its Consumer Care business to Bayer. This helped Merck to focus more on developing core resources and returning cash to shareholders.
Approval of new products in the US
In 2014, MRK obtained approval for the following products, among others:
Keytruda, a drug that treats advanced melanoma
Belsomra, a medication that treats insomnia
Gardasil 9, a vaccine for human papillomavirus
4Q14 sales
Merck’s global sales totaled $10.5 billion in 4Q14, which was a 7% decrease from the prior-year period. This included a negative impact of 3% from foreign exchange and 7% negative impact from divestitures and patent expiries.
Pharmaceutical sales decreased 4% to $1.65 billion, while Animal Health sales grew 2% to $885 million.
MRK has a price-to-earnings (or PE) ratio of 14x. Pfizer (PFE) and Johnson & Johnson (JNJ) have PE ratio values of 24.4x and 17.5x, respectively.
In the next part of this series, we will discuss AQR Capital’s decreased position in Halliburton (HAL).
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