RJH writes...

I once heard someone insult an undeserving victim that, if he had a dog as ugly, he'd shave its butt and teach it to walk backwards. Many holders of equity in big cap pharmaceutical companies may be having similar sentiments about their investments in the sector: Merck and Pfizer price charts look as though the two are in a race to zero.

Big pharma has been a whipping boy for some time. Any negative news is amplified such is the fear of (especially) litigation but also failed drug-trials, holes in the pipelines, and generic competition. But in the case of some firms, sentiment is outweighing fundamentals - how much longer will this go on?

I'm not calling a bottom generally. But pharma in the UK (don't have the US data handy) has returned over 19% a year since 1965. So the bigger picture demands that investors ask if this long term trend really has been broken by the recent atrocious period of underperformance (honourable exceptions noted).

Often cash-flow rich and brilliantly managed, currently at rarely seen valuations and defensive in times of uncertainty, the contrarian in me says no.

Not a disinterested commentator, RJH twice has bought Astrazeneca plc shares in the last 5 weeks.

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