Watching an 80-foot wave break at Nazaré, Portugal. (via YouTube).
Tidal Waves And Floodgates
Last August, the Financial Times warned that a "tidal wave" of opioid-related lawsuits was headed for Johnson & Johnson (JNJ) and some of its competitors (paywalled here). JNJ's Q1 10-Q acknowledged that more than 300 opioid cases had been transferred into a Multi District Litigation in the Southern District of Ohio, as I noted back in May. Now JNJ has been hit with a $4.69 billion judgment in a class action lawsuit by women who claimed their ovarian cancer was caused by Johnson & Johnson's talcum powder, and Bloomberg warns that judgment may "open floodgates" to more lawsuits. In light of that, I've posted a couple of updated hedges for JNJ shareholders below, followed by a discussion of ideas for longs considering exiting. First, let's consider two perspectives on the talcum powder settlement.
