Taro Pharmaceutical: A Bargain May Be Beckoning

Brandes Investment Partners is one of the largest asset management companies in the U.S. with $120 billion in assets under management. Founded in 1974, its approach is to make value-based investments only. From time to time, it publishes its "100 year Vision" and it is renowned for its success in acquiring assets when they are at a weak juncture and then supporting them on the road back to success. The website “Guru Focus” lists Taro Pharmaceutical Industries Ltd. (TAROF.PK) in its bargains page as one such possible bargain. Since at the end of February, one of Brandes' funds has picked up 2.96 million Taro shares on the open market at $9.10 each.

As Brandes' reputation speaks for itself, Guru Focus wonders whether it would be worth buying Taro at $7 a share. I find difficult to believe that Brandes' managers did not make a few inquiries before investing $28 million in Taro shares, and anyone familiar with Taro and its management would have been wary of investing such a sum at that price. I actually have an explanation for their decision - they probably invested under the their "100 year philosophy," because the company's management will eventually be replaced at some point, won't it?

Disclosure: The author invests in various equities and may have a personal holding in the stock of companies named.

TAROF.PK 1-yr chart:

Published originally by Globes [online], Israel business news - www.globes.co.il
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006. Republished on Seeking Alpha with full permission.