Monday, August 13, 2018
Dear Bayer shareholders, what are you thinking?
If you do "life sciences" you muck around with living things and that has litigation risks.
On twitter recently I sought out discussion on risks of Bayer stock and litigation was the key one.
Today Bayer stock is down 12 percent on a California court case where a dying plaintiff claimed that roundup caused his cancer and a jury agreed.
The damages were set at $289 million.
Having watched lots of legal stuff in American stocks I would be surprised if this were not rounded down at least 90 percent on appeal, and if the agglomeration of future cases didn't cost a lot of money.
But whatever. Here is a list of the biggest class actions in US history. None break $10 billion except the global tobacco settlement.
The biggest aggregate claim I can remember is fen-phen which wound up costing about $13 billion.
All of these are spread over many years. And are tax deductible to boot.
Today Bayer's market cap dropped $14 billion, bigger than the biggest set of (non-tobacco) legal losses in history.
This seems disproportionate to me - but then I own Bayer stock. And I am puzzled.
So I am asking the people trading it in Germany - why are you so pessimistic about this?
I genuinely want to know.
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