Warren Buffett Not Keen on J&J and its Defective Products

He is a billionaire who loves a good stock, but apparently Johnson & Johnson is not among them.

Berkshire Hathaway founder, Warren Buffett, decided to drop 34% of his stock in Johnson & Johnson (JNJ) during the fourth quarter of 2012, according to reports.

Oracle of Omaha, Warren Buffett

Buffett has been selling off JNJ since 2011, unhappy with the faulty products being put out that are injuring consumers.

In a letter to Berkshire shareholders, Buffet said he’s sold the majority of the 31.4 million shares of JNJ which were worth $2.1 billion and now holds less than $1 billion in JNJ stock.

Even a year ago Buffet was critical of the company, saying it “obviously messed up in a lot of ways in the last few years.”

And that is before four vaginal meshes were taken off the market last June for “financial reasons” not safety, though they are the subject of thousands of lawsuits. And it was before more than 10,000 metal hip lawsuits were filed from around the country.

Because of the large-scale recall of ASR metal hip devices, the stock has been downgraded to “underperform” according to a report in Inside Monkey.

And let’s not forget the company’s Fort Washington plant which was found contaminated and fell under U.S. Food and Drug Administration control where it remains.

Remember the 12 million bottles of Motrin recalled in December 2011? The 2,000 tubes of Aveeno Baby Calming Comfort Lotion tainted with bacteria? Most recently there was $7.76 million in punitive damage awarded to a South Dakota nurse as well as $3.34 million in compensatory damages for the Prolift vaginal mesh, just one of 30 products recalled since 2009.

Ironically, it is a South Dakota prison guard who is the plaintiff facing off with the DePuy division of Johnson & Johnson in the defective product ASR hip implant lawsuit in Los Angeles with thousands more to follow.

In its year-end report, J&J disclosed it is cooperating with two separate government investigations into whether it made false claims to government healthcare programs to sell two of its popular medical devices – surgical mesh and the metal ASR XL Hip Device. J&J is also cooperating with a 42-state investigation into false statements made in the marketing of surgical mesh products used for hernia repair and urogynecological surgery.

With the stock trading at a healthy number yet billions in potential damages ahead to vaginal mesh and metal hip injured patients, Buffet may be right – this is an excellent time to jump off the J&J ship.