There are a lot of dividend growth investor (including me) own JNJ. I have it on my S&P 500 fund. So, no, I hate to see JNJ is on the hit list. But in case you miss it. JNJ was order to give $55 million for causing ovarian cancer.
In February, JNJ was order to pay $72M to the victim family.
That’s not all. JNJ is facing another 1200 lawsuits. Dang!!
So, what’s up?!!
It’s the talc baby powder made by JNJ. And you’ve seen it. I’ve used it. In fact, most all of us use it. There were numbers of study starting from 1970 to now linking JNJ baby powder to cancer, and the company were notified and know about the study and chose not to warning users.
So, hence, the results of 1200 lawsuits and counting. This year, there has been two cases against JNJ and won. Assuming ,they can get $55M a piece x 1200. That’s $66 Billion. Yikes! The company is worth $311.5B at the trading price of $112.94. That’s 22% of what the company is worth.
Not to mention if this is widespread, the company will be charge with regulations. If its anything like the financial sector, JNJ might be in deep [trouble].
What JNJ stock is doing right now?
Just another trading day, stock is barely down, before going back up to 2016 high. Business as usual. Maybe long-term investors just don’t care about these kind of issues and keep making their usual buys. I still have 70% of my money in the S&P and hopefully the company will ride it out.
What do other investors do?
The rich are the first ones to pull out in 2007-2008 – they are much better at timing the market. Dividend investors or retail, small-timers are the last to pull out.
What are the similar situations?
In 2009 BP had an oil rig explosion, resulting $20B in compensation, BP stocks were going for $60/share. It was quickly down to $32, but recovered to $50s in the following weeks.
Oil stocks were hot in 2009 as the pharmaceuticals in the last few years – explosive, in fact.
Are you riding it out? What stocks have you own in similar situation?