It closed yesterday at $110.68. This is 27% above its 52-week low of $87.14 set in the last two weeks. Perhaps the rumors are wishful thinking on the part of some, and a few whispers somewhere in the murkiest alleyways of Wall Street created a story in some editor or promoters mind.
CNBC reported on its blog site the non-story commenting that "The sharp rise has taken place amid persistent takeover rumors involving Johnson & Johnson." JNJ closed yesterday at $58.11 and as you might expect has been relatively stable amid the calamity that has been the global stock market over the last 18 months.
I have been thinking about the acquisition issue for years since my investment company bought in at $7.70, as I have disclosed many times. One nightly business report had gone as far as to suggest an acquisition price of $150 per share. I wish I knew why someone would report such a thing without quoting a source. This is even worse than some Washington correspondent looking into the camera and saying "a reliable source said" -- don't you just hate that? Now we basically have "an unreliable source said!".
I have no idea where the truth lies and I have a vested interest in both companies which I have held for over a decade. I have also been adding to my ISRG position recently in my personal portfolio buying a few more shares at $110.00 on Wednesday to be fully transparent.
If I have a say, I would vote not to sellout any time soon. Intuitive has a relative monopoly and over the next few years is likely to have a superior growth curve to that of Johnson and Johnson. I would not accept a price of $150 a share, although on the surface of it the premium seems healthy given the state of the economy. JNJ has a distribution agreement with ISRG and it would be understandable if they wanted to purchase the company at a fraction of its $360 high set in 2007. Just because the idea has merit does not make it true either.
I am buying the stock because I think it is a good investment for the long haul for reasons I have enumerated many times. ISRG was among my 2009 recomendations, see Chasing Value: 9 picks for 2009 -- APC, GE, ISRG, WFC and more although it is down from the start of the year. If you do your homework (another opinion: An Intuitively Obvious Buy) you might find you like the stock and the company too, but don't buy into rumors. More often than not that will lead to disappointment.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of ISRG and JNJ.