I recently received this question on Boston Scientific (BSX);
Dear John,
I bought BSX back when you noted the large insider buyer. Since than its down about $5.00/share to $16.30. What would be your thoughts at this point [ie., Hold, Sell, Buy more, etc.] I'm new to the investing/trading world and your blog and help are much appreciated.
Sorry about the 5 point decline, I was early on the stock as I was following the trail of the corporate insiders. Also, the stock was down 20 points from its 2004 high.
Basically, BSX got hit with news of a product recall associated with some implanted devices. This problem was inherited with the purchase of Guidant (GDT).
The company issued a letter addressing the problems related to the capacitors of its implanted devices. They further said they would replace the defective devices and take a 2Q charge.
There will be a lot of news about law suits related to the recall and how Guidant failed to notify physicians in a timely manor. The settlements associated with this problem will keep a lid on the stock for the next year or so. Given the magnitude of the decline in its share price, a company like JNJ or Medtronic may be willing to assume the risk of owning BSX at $25 or less.
