Dear Bayer shareholders, what are you thinking?

Bayer is a life-sciences company. It sell drugs with litigation risks (especially Xarelto), it genetically modifies seeds (which I guess has litigation risks). It sells herbicides and pesticides all of which have litigation risks.

If you do “life sciences” you muck around with living things and that has litigation risks.

On twitter recently I sought out discussion on risks of Bayer stock and litigation was the key one.

Today Bayer stock is down 12 percent on a California court case where a dying plaintiff claimed that roundup caused his cancer and a jury agreed.

The damages were set at $289 million.

Having watched lots of legal stuff in American stocks I would be surprised if this were not rounded down at least 90 percent on appeal, and if the agglomeration of future cases didn’t cost a lot of money.

But whatever. Here is a list of the biggest class actions in US history. None break $10 billion except the global tobacco settlement.

The biggest aggregate claim I can remember is fen-phen which wound up costing about $13 billion.

All of these are spread over many years. And are tax deductible to boot.

Today Bayer’s market cap dropped $14 billion, bigger than the biggest set of (non-tobacco) legal losses in history.

This seems disproportionate to me – but then I own Bayer stock. And I am puzzled.

So I am asking the people trading it in Germany – why are you so pessimistic about this?

I genuinely want to know.

John