March 25, 2016

Open borders good for Novartis

A couple of weeks ago, the Swiss people voted for keeping their borders open. For investors, that’s a good sign because shutting down our borders would have resulted in higher prices, less demand, greater unemployment rates and lower returns for shareholders. Now Obermatt CEO Dr. Hermann J. Stern feels confident to invest in Switzerland, whereas he had been hesitant in recent months when it appeared like the Swiss didn’t want to allow the influx of productive foreigners.

Companies like Novartis, who depend on large markets of highly skilled workers, will especially benefit from open Swiss borders. Now is a good time to buy Novartis, which also appeared on Obermatt’s Top 10 European Women’s Friendly stock list.

The Novartis stock has great value in regards to profits, sales, dividends, and invested capital, as the latest Obermatt ranking reveals. This is mainly due to mediocre performance over the past couple of years that was caused by expensive acquisitions made by Daniel Vasella, which eroded shareholder value and seemed less driven by business reason and more by vanity. Both the Wall Street Journal and Bloomberg expressed relief from an investor’s point of view when the Vasella era ended.

Now, we have a company that, while still lacking an impressive drug pipeline, has a great brand and, more importantly, great people. They have a much better chance of getting Novartis back on track. This is why Dr. Stern has decided that he will invest the first 5,000 Swiss francs of his second season portfolio in Novartis. Remember, we always invest our money slowly over time with the motto: "Slowly in, slowly out, that’s what safe investing is all about". For us, this means that we will invest the amount of 100,000 Swiss francs over a period of three to six months.

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