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As an impact investment fund, our overall goal is to generate both sustainable social impact and financial returns, with the longer-term aspiration to catalyze more impact investors and entrepreneurs.

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All the financial returns to the fund are recycled and reinvested into new companies and opportunities to further expand the impact and reach.

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Our investment thesis is focused on early growth-stage companies with impact business models aligned with our mission, through debt or equity investments across a range of healthcare sectors and geographies.

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Creating a world where the color of your skin is not a determinant of your access, quality of care or health outcomes.

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In addition to our core investment fund, J&J Impact Ventures is active as a broader platform to support impact entrepreneurs and advance impact investing in healthcare.

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Analyzing Johnson & Johnson’s Growth Strategy: How The Pharma Giant Is Going Digital

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jnj investment thesis

Investment Thesis Map

We mined Johnson & Johnson’s acquisitions, investments, and partnerships to discern the company's strategic priorities.

Johnson & Johnson (J&J) is the most valuable pharmaceutical company in the world, with a $452B valuation. Over the last 2 years, J&J has forged dozens of strategic business partnerships, invested in over 50 different companies, launched a number of partnerships, and made a handful of acquisitions.

Where is this data coming from?

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Many of these relationships have served to complement J&J’s core offerings across consumer products, orthopedics ( Ethicon ), and pharmaceuticals ( Janssen ). For example, over the past 2 years, J&J has announced investments in 3 consumer health companies – including Thirty Madison . It has also made a number of investments and partnerships in digital surgery — notably, it acquired Verb Surgical in December 2019. Additionally, Janssen, J&J’s pharmaceutical subsidiary, has partnered with AI and quantum computing startups, like Qu&Co , to improve drug R&D.  

Using CB Insights data, we uncovered the 6 most important strategic priorities highlighted by J&J’s recent acquisitions, investments, and partnerships. We then categorized companies by their business relationships with J&J across these priorities.

  • Consumer health
  • Diagnostics
  • Digital therapeutics
  • Drug discovery
  • Real-world data
  • Surgical support

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Johnson & Johnson JNJ

Company report, johnson & johnson earnings: growth outlook slowing after solid 2023, but pipeline holds upside.

Johnson & Johnson reported fourth-quarter results largely in line with our projections, and we are holding firm to our $164 fair value estimate. The stock looks slightly undervalued, as the market is likely not fully appreciating the firm’s long-term potential with pipeline products that also reinforce J&J’s wide moat.

Price vs Fair Value

Bulls say, bears say.

The majority of J&J's near-term patent losses are for products that are hard to manufacture, which should reduce the intensity of generic competition.
J&J's late-stage drug pipeline is relatively weak for the size of the company, which could create long-term headwinds for growth.

Johnson & Johnson's Application for Tecvayli Gets FDA Approval

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What Is an Investment Thesis?

  • Understanding the Thesis

Special Considerations

  • What's Included?

The Bottom Line

  • Portfolio Management

Investment Thesis: An Argument in Support of Investing Decisions

jnj investment thesis

Charlene Rhinehart is a CPA , CFE, chair of an Illinois CPA Society committee, and has a degree in accounting and finance from DePaul University.

jnj investment thesis

The term investment thesis refers to a reasoned argument for a particular investment strategy, backed up by research and analysis. Investment theses are commonly prepared by (and for) individual investors and businesses. These formal written documents may be prepared by analysts or other financial professionals for presentation to their clients.

Key Takeaways

  • An investment thesis is a written document that recommends a new investment, based on research and analysis of its potential for profit.
  • Individual investors can use this technique to investigate and select investments that meet their goals.
  • Financial professionals use the investment thesis to pitch their ideas.

Understanding the Investment Thesis

As noted above, an investment thesis is a written document that provides information about a potential investment. It is a research- and analysis-based proposal that is usually drafted by an investment or financial professional to provide insight into investments and to pitch investment ideas. In some cases, the investor will draft their own investment thesis, as is the case with venture capitalists and private equity firms.

This thesis can be used as a strategic decision-making tool. Investors and companies can use a thesis to decide whether or not to pursue a particular investment, such as a stock or acquiring another company. Or it can be used as a way to look back and analyze why a particular decision was made in the first place—and whether it was the right one. Putting things in writing can have a huge impact on the direction of a potential investment.

Let's say an investor purchases a stock based on the investment thesis that the stock is undervalued . The thesis states that the investor plans to hold the stock for three years, during which its price will rise to reflect its true worth. At that point, the stock will be sold at a profit. A year later, the stock market crashes, and the investor's pick crashes with it. The investor recalls the investment thesis, relies on the integrity of its conclusions, and continues to hold the stock.

That is a sound strategy unless some event that is totally unexpected and entirely absent from the investment thesis occurs. Examples of these might include the 2007-2008 financial crisis or the Brexit vote that forced the United Kingdom out of the European Union (EU) in 2016. These were highly unexpected events, and they might affect someone's investment thesis.

If you think your investment thesis holds up, stick with it through thick and thin.

An investment thesis is generally formally documented, but there are no universal standards for the contents. Some require fast action and are not elaborate compositions. When a thesis concerns a big trend, such as a global macro perspective, the investment thesis may be well documented and might even include a fair amount of promotional materials for presentation to potential investing partners.

Portfolio management is now a science-based discipline, not unlike engineering or medicine. As in those fields, breakthroughs in basic theory, technology, and market structures continuously translate into improvements in products and in professional practices. The investment thesis has been strengthened with qualitative and quantitative methods that are now widely accepted.

As with any thesis, an idea may surface but it is methodical research that takes it from an abstract concept to a recommendation for action. In the world of investments, the thesis serves as a game plan.

What's Included in an Investment Thesis?

Although there's no industry standard, there are usually some common components to this document. Remember, an investment thesis is generally a proposal that is based on research and analysis. As such, it is meant to be a guide about the viability of a particular investment.

Most investment theses include (but aren't limited to) the following information:

  • The investment in question
  • The investment goal(s)
  • Viability of the investment, including any trends that support the investment
  • Potential downsides and risks that may be associated with the investment
  • Costs and potential returns as well as any losses that may result

Some theses also try to answer some key questions, including:

  • Does the investment align with the intended goal(s)?
  • What could go wrong?
  • What do the financial statements say?
  • What is the growth potential of this investment?

Putting everything in writing can help investors make more informed decisions. For instance, a company's management team can use a thesis to decide whether or not to pursue the acquisition of a rival. The thesis may highlight whether the target's vision aligns with the acquirer or it may identify opportunities for growth in the market.

Keep in mind that the complexity of an investment thesis depends on the type of investor involved and the nature of the investment. So the investment thesis for a corporation looking to acquire a rival may be more in-depth and complicated compared to that of an individual investor who wants to develop an investment portfolio.

Examples of an Investment Thesis

Portfolio managers and investment companies often post information about their investment theses on their websites. The following are just two examples.

Morgan Stanley

Morgan Stanley ( MS ) is one of the world's leading financial services firms. It offers investment management services, investment banking, securities, and wealth management services. According to the company, it has five steps that make up its investment process, including idea generation, quality assessment, valuation, risk management , and portfolio construction.

When it comes to developing its investment thesis, the company tries to answer three questions as part of its quality assessment step:

  • "Is the company a disruptor or is it insulated from disruptive change? 
  • Does the company demonstrate financial strength with high returns on invested capital, high margins, strong cash conversion, low capital intensity and low leverage? 
  • Are there environmental or social externalities not borne by the company, or governance and accounting risks that may alter the investment thesis?"

Connetic Ventures

Connetic Adventures is a venture capital firm that invests in early-stage companies. The company uses data to develop its investment thesis, which is made up of three pillars. According to its blog, there were three pillars or principles that contributed to Connetic's venture capital investment strategy. These included diversification, value, and follow-on—each of which comes with a pro and con.

Why Is an Investment Thesis Important?

An investment thesis is a written proposal or research-based analysis of why investors or companies should pursue an investment. In some cases, it may also serve as a historical guide as to whether the investment was a good move or not. Whatever the reason, an investment thesis allows investors to make better, more informed decisions about whether to put their money into a specific investment. This written document provides insight into what the investment is, the goals of the investment, any associated costs, the potential for returns, as well as any possible risks and losses that may result.

Who Should Have an Investment Thesis?

An investment thesis is important for anyone who wants to invest their money. Individual investors can use a thesis to decide whether to purchase stock in a particular company and what strategy they should use, whether it's a buy-and-hold strategy or one where they only have the stock for a short period of time. A company can craft its own investment thesis to help weigh out whether an acquisition or growth strategy is worthwhile.

How Do You Create an Investment Thesis?

It's important to put your investment thesis in writing. Seeing your proposal in print can help you make a better decision. When you're writing your investment thesis, be sure to be clear and concise. Make sure you do your research and include any facts and figures that can help you make your decision. Be sure to include your goals, the potential for upside, and any risks that you may come across. Try to ask and answer some key questions, including whether the investment meets your investment goals and what could go wrong if you go ahead with the deal.

It's always important to have a plan, especially when it comes to investing. After all, you are putting your money at risk. Having an investment thesis can help you make more informed decisions about whether a potential investment is worth your while. Make sure you put your thesis in writing and answer some key questions about your goals, costs, and potential outcomes. Having a concrete proposal in place can spell the difference between earning returns and losing all your money. And that's if your thesis supports the investment in the first place.

Harvard Business School. " Writing a Credible Investment Thesis ."

Lanturn. " What is an Investment Thesis and 3 Tips to Make One ."

Morgan Stanley. " Global Opportunity ."

Medium. " The Data That Built Our Fund's Investment Thesis ."

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Benzinga

Tesla Bull Admits He's 'Been Wrong' On EV Giant For 3 Years, Calls This His 'Greatest Research Mistake'

A Tesla Inc. (NASDAQ:TSLA) bull on Wednesday took stock of his investment thesis for the electric vehicle giant’s stock as it remains  stuck in a lackluster trading range.

What Happened:  “I’ve been wrong on $TSLA for three years now,” said Future Fund’s  Gary Black , adding that the stock has been his “worst-performing long” during the period when Tesla fell 19% compared to a 32% gain for the Nasdaq 100 Index.

Future Fund has Tesla as the third-highest holding of its  Future Fund Active ETF  (NYSE:FFND).

Black conceded that he was wrong about volume trajectory. Tesla’s volume growth has slowed despite its massive price cuts and electric-vehicle credits, he said. The company estimated 15% year-over-year volume growth for 2024, down from the 38% growth seen in 2023, he noted.

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“Where I've been massively wrong is not anticipating that TSLA would start a price war, which has caused TSLA 2024 and 2025 earnings power to collapse (-45% over past 12 months),” the Tesla investor said.

“This has been my greatest research mistake,” Black said. The rumored $25,000 Model 2, which he believed could satisfy the affordability issue, has been pushed back to late 2025 at least, he said.

“So price cuts to drive volumes were in hindsight inevitable,” he said.

See Also:  Everything You Need To Know About Tesla Stock

Spot On FSD Prediction:  But Black credited himself for being right on the full-self driving software. “That it would not get to L4 for many years after Elon predicted FSD would drive itself and so I always assumed zero value for Robotaxi in my valuation,” he said.

Despite FSD improving significantly as a driver-assist tool, its take rates languished in the low teens, the fund manager said. The technology, the analyst said, currently added 14 cents per share to the estimated earnings per share for 2024.

Still Bullish:  Black said he still thinks he will be vindicated on his Tesla price target of $290. He premised his optimism on his expectations that the other EV makers would either give up or cut back on their EV investments. He, however, cautioned against further price cuts.

“Further TSLA price cuts would crush my investment thesis that auto gross margins bottomed at 16.3% in 3Q and are now headed upward as TSLA mgmt learns that they got little from last year's price cuts.”

“When I make a bad trade as I have with $TSLA, I have only myself to blame. The  shorts have done little to cause $TSLA price to decline;  the damage to the stock has been largely self-inflicted which I should have foreseen.”

To get to his $290 price target, the Tesla management should learn to use marketing tools other than price, Black said. Despite the current fundamental problems, the fund manager remains firmly bullish on the stock. “But I am optimistic and remain a $TSLA bull,” he said.

Check out more of Benzinga’s Future Of Mobility coverage by  following this link .

Read Next: Walmart’s Solid Quarter Proves Tesla ‘Uberbulls’ Wrong? Fund Manager Explains Why High-Interest Rates, Dissatisfied Customers Aren’t Hurting EV Maker

Photo via Shutterstock

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

This article Tesla Bull Admits He's 'Been Wrong' On EV Giant For 3 Years, Calls This His 'Greatest Research Mistake' originally appeared on Benzinga.com .

Tesla Bull Admits He's 'Been Wrong' On EV Giant For 3 Years, Calls This His 'Greatest Research Mistake'

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