“Be fearful when others are greedy and greedy when others are fearful”.
That quote by Warren Buffett is being put through its paces these days, with panicked investors bringing the S&P 500 down eighteen per cent, year to date.
So what is the Oracle of Omaha actually doing? Buying “like there is no tomorrow”, according to Kiplinger, including a big increase in his HP position.
And while not all famous investor billionaires think alike, Hong Kong billionaire and philanthropist Li Ka-Shing is also adding to his position. In this case, in Canadian digital healthcare stock WELL Health Technologies (WELL Health Technologies Stock Quote, Chart, News, Analysts, TSX:WELL).
Before announcing record Q1 results Wednesday, WELL announced it had completed a $30-million bought deal offering, with the lead order coming from Mr. Shing. The amount of the order was not made public, but adds to the significant stake (he owned 11 per cent of WELL Health in 2019) the billionaire owned of the company prior to Wednesday.
“Well’s earnings and cash flow continues to grow, and our business continues to mature as we complete the optimization and integration of businesses acquired in 2021,” CEO said Hamed Shahbazi said of the development. “The proceeds from this financing will allow us to remain opportunistic through the remainder of the year and continue allocating capital in a highly accretive manner particularly as attractive opportunities present themselves in weaker market conditions. We are deeply appreciative to Mr. Li Ka-shing and one of the world’s leading sovereign wealth funds for their support of this financing initiative.”
So what is Shing doubling down on? For one, a company that is expanding rapidly.
WELL’s Q1 revenue of $126.5 million was up 395 per cent over the $25.6 million it posted in the same period last year.
And Shahbazi’s first thought in Wednesday’s press release touched on what a lot of observers were wondering about. Sure the company can make big acquisitions, but can it grow them once they are brought in house?
“First quarter 2022 was an exceptional quarter which exemplified our organic growth potential,” he said. “We are very pleased with our Q1 results in which we surpassed half a billion in annualized run-rate revenue. We managed to achieve approximately 15% YoY organic growth in the first quarter which demonstrates a 50% acceleration from our previous quarters’ organic growth rate; all this despite the effects of seasonality that normally exists in the first quarter in our US based specialist business.”
Estimated to be worth $30-billion, Li Ka-Shing’s empire encompasses real estate, manufacturing, the A.S. Watson Group, (which owns Watsons, the largest health care and beauty care chain in Asia), Canada’s Husky Energy, and investments in American tech stalwarts Facebook and Spotify.
Disclosure: Cantech Letter’s Nick Waddell and Jayson MacLean own shares of WELL Health Technologies and the company is an annual sponsor of Cantech Letter.