Tao Value recently released its Q1 2020 Investor Letter, a copy of which you can download here. The fund posted a return of -12.96% for the quarter, outperforming their benchmark, the MSCI All Country World Index (ACWI) which returned -21.05% in the same quarter.
In the said letter, Tao Value highlighted a few stocks and Gilead Sciences Inc (NASDAQ:GILD) is one of them. Gilead is a biopharmaceutical company based in California. Year-to-date, GILD stock gained 19.8% and on May 5th it had a closing price of $79.14. Its market cap is of $98.1 billion. Here is what Tao Value said:
“Gilead Sciences. (ticker: GILD) is one of our long term “great business at reasonable price” holding since 2017 Q31 . It had a major acquisition of Kite Pharmaceutical (for its CAR-T therapy) since, but the end market of the subsequent commercial drug – Yescarta turned out to be much smaller than anticipated. The stock price went nowhere since. It came to the spotlight this past quarter as its old Ebola drug, Remdesivir, has the highest hope to be an effective therapeutic against COVID-19. As my original thesis laid out, what attracted me the most was the mission (part of the Tao factor) of this company. The management decision making during this pandemic displayed exactly what convinced me initially. E.g. on a leaked internal townhall meeting video in January (when COVID-19 affected primarily China only), one employee asked the CEO Daniel O’Day what the company thinks of Wuhan Institute of Virology applied a patent with China authority for using donated Remdesivir to treat COVID19 (which was rejected later). O’Day expressed no bitterness rather stated that Gilead will focus on doing what is right by putting the patient first. This “patient first” mission was resonated by later decisions like 1) voluntarily asking to rescind an FDA granted orphan drug designation for Remdesivir (giving up revenue), 2) ramping up production when still in experiment (potential wasted cost) & 3) gifting up to 1.5 million doses (giving up revenue). With such a mission and strong cash generating ability from existing HIV & HCV drugs, Gilead remains a very safe and promising asset in biotechnology industry.”
In Q4 2019, the number of bullish hedge fund positions on GILD stock increased by about 2% from the previous quarter (see the chart here).
Disclosure: None. This article is originally published at Insider Monkey.