Other major backers of Boston Scientific Corp. (NYSE:BSX) may be standing pat or cutting their stakes, but Dodge & Cox is increasing its bet on the medical device maker, increasing its stake by 43.6 percent.
The Boston-based mutual fund firm now owns nearly 120 million shares, or 7.9 percent, of its neighbor in Natick, according to a filing with the federal Securities & Exchange Commission.
Other major investors include Primecap Management Inc. of Pasadena, Calif., which owns about 4.7 percent of BSX (70.9 million shares) and BlackRock Inc., at 4.9 percent (75.1 million shares). Dodge & Cox spokesman Steven Gorski said the firm doesn’t comment on its investment choices.
The firm may be looking to hedge its bet on BSX, given its too-long list of woes dating back to a disastrous, $27 billion buyout of Guidant Corp. in 2006. But Dodge & Cox may instead be taking its cues from Boston Scientific’s fourth-quarter results, which beat Wall Street estimates (BSX still posted a $656 million net loss for full-year 2010, but the trend is good). Or the company could be putting its chips on CEO Ray Elliott’s willingness to, in his words, "bite the bullet" to turn Boston Scientific around.
According to an annual report (PDF) issued to Dodge & Cox shareholders, BSX was down 16 percent last year. That suggests that Dodge & Cox is all too aware of the problems over in Natick. Still, given that that particular fund returned 12.2 percent last year, according to the report, it’s less likely that the folks at Dodge & Cox are slow learners.
