Friday, March 4, 2016

Stocks DD Cites: 80-Year old Shareholder with significant net worth in FNMA writes letter to FNMA Board

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Attorney At Law
2 Park Avenue
New York, NY 10016
Tel: 212.592.5912
Fax: 212.545.3497

Board of Directors
Federal National Mortgage Association
Office of the Secretary of the Corporation
3900 Wisconsin Avenue, NW (MS 1H 2S 05)
Washington, DC 20016-2892

March 1,2016 

Re: Fannie Mae Board of Directors Fiduciary Duty and Breach of Contract

Dear Ladies and Gentlemen of the Board:

I am an attorney, and Fannie Mae preferred shareholder. My Fannie Mae shares, together
with preferred shares of Freddie Mac which I also own, comprise a significant portion of my personal net worth. I am 80 years old, and these shares — amid recent revelations of Treasury looting — now provide considerable anxiety, emanating in great part from your consistent failure to exercise even a tiny modicum of the fiduciary duty you as directors owe to me, and to the Company.


 Read the full letter here . posted in Yahoo message board.

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Monday, November 23, 2015

Stocks DD Opines & Cites: Biosimilars - Arguably a Big, Complex, Niche Business Opportunity of this Decade in Pharma

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In just the next 5 years alone until 2020, a staggering $67b revenue/year Biologic drugs will go off-patent. That number will be even more huge if you take in to account the next 10 years. Arguably this is one of the biggest, niche business opportunities in the Pharma industry. Unlike the branded pill industry (Eg: Lipitor) this business opportunity is restricted to the specialized few due to the complexity of Biologics: in proving equivalence, manufacturing process and quality assurance as well as the high Capex needed. So only a handful of companies can compete in this niche opportunity making this very attractive business for these specialized companies. Even specialty drug companies of the likes of Amgen, Merck, Novartis are trying to get a piece in this huge niche opportunity. Here is a list of some companies/JV's attempting to bring Biosimilars in the Developed markets:
  • Novartis/Sandoz
  • Hospira/Celltrion
  • Pfizer
  • Actavis/Amgen
  • Boehringer Ingelheim
  • Mylan/Biocon
  • Baxter/Momenta
  • Merck/Reddy
  • Merk/Samsung
  • Richter
  • Oncobiologics

Biosimilar news


Regulatory Pathway  
Here is the FDA-follow-on-biologics pathway -Link

Biosimilars vs Interchangeable Biologic 
(Why I believe Interchangeable biologic can take bigger market share?)

From the FDA site:
A biosimilar product is a biological product that is approved based on a showing that it is highly similar to an FDA-approved biological product, known as a reference product, and has no clinically meaningful differences in terms of safety and effectiveness from the reference product. Only minor differences in clinically inactive components are allowable in biosimilar products.

An interchangeable biological product is biosimilar to an FDA-approved reference product and meets additional standards for interchangeability. An interchangeable biological product may be substituted for the reference product by a pharmacist without the intervention of the health care provider who prescribed the reference product

It is logical to expect the interchangeable biologic to make a bigger dent in the market as it is substitutable to the brand. Watch out for companies like MNTA that purportedly are aiming for interchangeable biologics. Of-course the opportunity is large but yet at the same time it seems there are many unknowns to produce interchangeable biologic. See this New England journal article

Assorted Links
1) The next 5 year Opportunity is staggering - Link
2) Biosimilars - Niche business - Link
3) The 1st biosimilar in the US is already launched this year. This is the Biosimilar for Neupogen named Zarsxio - Link
4) Companies have set their targets on the Top selling biologics like  Humira ($10b/year) - Link. Amgen is working with Allergan ($AGN) on biosimilars of Eli Lilly's ($LLY) Erbitux and Roche's Avastin, Herceptin and Rituxan

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Wednesday, May 13, 2015

Stocks DD Opines: The Shareholder Pledge, Shareholder Day & Words of Ethical Wisdom for Board Members

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Please sign the Shareholder petition with SEC PETITION link and share it with as many shareholders as possible.

 Let me start this post by way of a short self-introduction. I am a retail investor and have been buying and selling stocks for well over 14 years. A large part of my sweat from my prior day job & my net worth is invested in public companies. I consider my calling to invest in public equities. On the side, I intend to serve words of ethical wisdom to Board members of ALL public companies, with the intent make them more mindful in doing their duties towards Shareholders. I am hoping Board members of at least 50 public companies can see this wisdom and take the below pledge of ethics

I also like to see 1 calendar day in the year dedicated to Shareholders called 'Shareholder Day' (If we can have 'Presidents day', 'Veterans Day','Yoga Day' - I think the most significant and often ignored constituent in the modern economy, who in aggregate, have invested Trillions of dollars, the Shareholder deserves a day.) where Board members of ALL public companies  take/renew the 'Pledge of ethics' in front of their Shareholders. Many companies already do annual Investor/Analyst day. I am suggesting 3 changes: Nomenclature change-call it Shareholder day and not analyst/investor day, Make it a Common Day for ALL public companies & Have Board members take the Pledge of ethics in front of the company's own Shareholders. I am going to lobby with SEC, NYSE and shareholder advocates like Carl Icahns or Ackmans for making 'Shareholder Day' and 'Pledge of Ethics' a reality.

The  lynchpins of our modern capital market system are the following (and regrettably this is getting forgotten and needs to be reminded):
1. Shareholder Capital that allow entrepreneurs to start or grow business.  This is
capital produced by the sweat of ordinary people in many instances life savings.
2. Board that is appointed to SERVE interests of Shareholders(Absentee owners) and the implicit Trust that shareholders have in Board that they will do the right thing for all Shareholders

That said, I will make the following plea to Boards of ALL public companies and urge them to take 'The Shareholder Pledge'. 

Dear Board Members,

Subject: Please take 'The Shareholder Pledge'

 You are stewards of the capital produced by the sweat of ordinary people from all walks of life (Teachers, Software Programmers, Firefighters, Policemen, Nurses, etc). who have invested, in some cases life savings, for their retirement, education of their children, paying a mortgage in future, etc. It is these Shareholder's(Absentee owners) VOICE YOU are SERVING and you have an ETHICAL DUTY to protect and maximize value and conduct in EARNESTNESS and FAIRNESS at ALL times towards ALL shareholders.

Please be conscious of these EVILS: Entrenchment, Cronyism, Quid-pro-quo'ism(Eg: I'll be rubber-stamp to CEO because he nominated me to the Board), Self-Aggrandizement, Conflict of Interest/Self-Dealing, Lack of Earnestness and Fairness. Please take the PLEDGE of ETHICS that you will TRASCEND the aforementioned behaviors and truly surrender yourself in the SERVICE of ALL your Shareholders At ALL times by signing the below form


 If you are a Shareholder and you would like to petition a particular Board member in your company to take this pledge, fill this form link. 
If you like the idea of 'Pledge of Ethics' or 'Shareholder Day', please share this post.

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Sunday, April 26, 2015

Stocks DD Opines: Investor Relations and some Best Practices

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Additional Disclaimer: This is a general article and no references is intended to any company.

What is Investor Relations  ?
National Investor Relations Institute defines IR as "A corporate marketing activity, combining the disciplines of communication and finance, providing current and future investors with accurate portrayal of firm's performance and prospects, thereby having a positive effect on total value relative to the overall market and the firm's cost of capital."

I would use the word Fair in lieu of Positive. I would also use word Price in addition to Value because of the following: What if the company has decided they are never going to raise capital again in the market ?

What does IR Best Practices involve ?

It primarily involves the following:

1. Quarterly Conference call with all stakeholders on Earnings, Outlook & Mid/Long term Strategy with adequate time for Q&A.
2. Annual attendance in a few Investment Conferences where fund managers and analysts go and where market peers present. After all, capital assets with similar risks(same sector) are often rated relative to one another by same market participants (Same Intermediary analysts and Mutual Funds).
3. Conducting Annual Investor Day with interactive Q&A with all stakeholders
4. Ensuring information on risk, 2-3 year outlook of business & high level strategy is provided (without disclosing commercially sensitive information)
5. Ensuring adequate number of analyst firms cover the stock.
6. Ensuring IR team is quick and responsive to existing or future investor information requests

All the 6 pieces are required so the risks and the outlook of the business are clearly known to as many market participants (including intermediary analyst firms) to ensure proper valuation and liquidity relative to other similar capital market assets . Ultimately, valuation is based on perceived risk on business outlook (not just past performance) in relation to similar capital market assets (peers). If adequate information is not disseminated, then likely the company will have less following by analysts, investors, less independent opinions on outlook,  leading to potentially reduced liquidity and an improper valuation. Free sharing of Information in adequate channels aids in price discovery. 

An example for disseminating Risk and Outlook information objectively ( point 4 above, without giving away anything to competition) is demonstrated in this below slide. Note this information DOES NOT have financial guidance.

Financial Guidance

Examples of Annual analyst or Investor Day presentations can be seen here

Annual Investor Days is a great forum to showcase the business, risks, juxtaposition of risks and price with similar peers, outlook, strategy and how the company intends to add value to shareholders both in the mid term as well as in the long term. It is meant for market participants which includes Mutual Funds, Pension Funds, Hedge Funds, Analyst firms and Individual Shareholders. Investor Days could be a 2 way exchange of information. Shareholders could share their ideas of enhancing and protecting shareholder value with the management and get their feedback.

Investment Conferences
  • Barclays Global Heathcare Conference
  • RBC Global Healthcare Conference
  • J.P. Morgan Healthcare Conference
  • Goldman Sachs Healthcare Conference
  • Morgan Stanley Healthcare Conference

Summary - Robust investor relations practices  is needed so there is adequate information sharing, transparency and thus ensuring the integrity of the capital market system.

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Wednesday, October 8, 2014

Stocks DD Opines : A ruling in the Banana Republic creates a brouhaha and How will Ball Street Journal editorialize it ?

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Manshattan is submerged by a Flood, a huge calamity. Huge loss is anticipated and there are no private financiers. Anticipating an Armageddon, the Banana Republic Govt writes the HERO law on Manshattan and takes over to support and salvage the properties, in return for a 10% stake in all the private properties in Manshattan, including the private penthouse of a Ball Street Journal reporter. 2 months later the Floods subside and things start to look significantly better. Private financiers are available. However the Banana Republic is beset with its own deficit problems. The Banana Republic govt, in its wisdom, uses an egregiously outdated Manshattan Flood forecast and says we anticipate more money for flood support and hence we will take 100% ownership of all private properties in Manshattan (including BSJ's famous reporter) and all owners of private homes in Manshattan now immediately become renters of the same. Moreover the Govt does not talk to Private financiers who were willing to finance the flood recovery at significantly lower cost.
Manshattan ex-home owners(now renters) file a suit in the Courts of the Banana Republic alleging theft of their homes by the Banana Republic Govt. The Judge presiding over the case rules the HERO law gives Banana Republic Govt the right to 'hero'ically throw out the constitution including the private property rights and No Banana Republic court could even hear the case as guaranteed by the 5th amendment of the Banana Republic's constitution. The Ball street journal Reporter whose home has just been siezed by the Banana Republic, has been told to write a story on this  ? 
What will the Ball street Journal reporter write ? 

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