Monday, December 31, 2012

Stocks DD Cites: Analyst firm on Spectrum


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http://dawsonjames.com/portal/sppi_init_2012_11_26.pdf

Please note I have no relationship with this analyst firm or analyst

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Sunday, December 30, 2012

Stocks DD Cites: TARO Long Thesis by Value Investor Club


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The below thesis was posted in valueinvestorclub.com by a poster miser861.   TARO VIC thesis


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Saturday, December 29, 2012

Stocks DD Opines: Herbalife - Post-Ackman presentation - questions to ask before taking long or short position


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Before taking short or long position on HLF , here are some key questions to ask. Some key small hedge funds (Kerrisdale capital, Bronte Capital) took long positions in HLF in the $26. Personally , I am not convinced to take either long or short position in HLF. Here's why. But before that let me state unequivocally that I am in no way stating that HLF is non-compliant with any FTC regulations. I am just discussing here, if an investor can take long or short position based on what we know so far.

1. If FTC finds HLF to be in non-compliance(read the IF) and if it  has willfully violated regulations for years(read the IF), can it kill the company ? Or will HLF just end up in a monetary settlement with FTC ? Nobody can tell this. Ackman's presentation didn't have any past comparable examples of FTC regulatory actions. 

2. If HLF has to change it's business model to be in compliance with regulations, nobody can predict the quantum of impact those changes would have on it's future revenues. For example, if HLF has to make additional disclosures to it's distributors that would discourage many to join the HLF business opportunity knowing the "real" odds , how much would it impact the business ? Or, for example, if HLF has to ensure >50% has to be true retail(non-distributor or not bundled with business opportunity) sales, nobody knows the $ impact . So in these scenarios, nobody can value Herbalife until the scenario plays out. 

Unless you believe HLF is non-compliant with FTC regulations AND has willfully violated regulations and FTC will likely kill the company, there is NO WAY one can have the conviction that Ackman had when he said "we have basically shorted this all the way to zero". Even in this situation, the conviction that the stock will go to zero is not accurate (read point 4)

3. It is also possible that PE buyer may take the risk and do LBO of the company. Again nobody can tell what price it may happen. I personally believe this is less likely to happen until the cloud of uncertainty that Ackman has raised are to some extent cleared. However, it is clear the Herbalife brand is well known even outside the distributor network. For example, my Gym (nationwide business) Lifetime Fitness has Herbalife products all over.

4. Kerrisdale's position is that any FTC action is limited to US and HLF's US business is only 20% .  I think any US FTC action would have indirect cascading impact on regulators in other countries that HLF is operating, although this may not be immediate. Bill Ackman's other main point is once the distributors become aware of their "real" odds Herbalife sales (which per Ackman is mainly distributor sales) would plummet drastically.  But then again, we all know Amway is MLM company which is also running its business over 20 years in many countries. Just by putting a complicated 350 page presentation would definitely not educate would-be distributors from being involved with Herbalife.

In my opinion any cautious investor, should wait for the Jan 10th presentation from the company to hear the company's response. It is too speculative now to be long or short.


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Friday, December 21, 2012

Potential combo of Belinostat and Folotyn


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http://news.yahoo.com/spectrum-pharmas-blood-cancer-drug-meets-trial-goal-164551587--finance.html

QUOTE
MLV & Co analyst George Zavoico said Folotyn and belinostat have different mechanisms of action, and having two drugs for the same indication could be useful in cases of relapsed patients who develop resistance to one of them.
QUOTE

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Thursday, December 20, 2012

Stocks DD Cites: Ackman's Herbalife Short thesis


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Ackman's web site on Herbalife -> http://factsaboutherbalife.com/

Ackman's 350 page presentation on Herbalife -> http://factsaboutherbalife.com/wp-content/uploads/2012/12/Who-wants-to-be-a-Millionaire.pdf

http://www.chicagotribune.com/business/sns-rt-us-ackman-herbalifebre8bj0w1-20121220,0,4824394.story

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Wednesday, December 19, 2012

Stocks DD Cites: SUN pharma has returned an astounding 32500% in 18 years


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SUN pharma has returned 32500% in 18 years or annualized return of 1805% every year for the last 18 years or Compounded annual growth rate of ~38% for 18 years.

Source: http://www.sunpharma.com/images/presentation/SPIL%20Dec-12%20IR%20Presentation%20(USD).pdf




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Monday, December 17, 2012

Perrigo's FY 2013 guidance as a proxy to TARO


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Perrigo's guidance for it's RX Topical business bodes well for its competitor TARO. Perrigo is guiding for 15-19% Growth year on year. This is after registering >30% Year-on-Year growth in the last 4 years. Hopefully, TARO's management will update it's guidance and trash the highly inaccurate June 14th estimates.




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Friday, December 14, 2012

Interesting yahoo thread on Belinostat(source unverified)


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Link

QUOTE
Likelihood of FDA approval for belinostat, a histone deacetylase (HDAC) inhibitor, is "fifty-fifty," CEO Dr Rajesh Shrotriya told this news service at the 2012 American Society of Hematology Annual Meeting and Exposition.
Belinostat has a superior side-effect profile compared to other HDAC inhibitors available, Shrotriya said. Zolinza is very toxic, and Istodax causes significant bone marrow suppression among other side effects, he noted. Belinostat in comparison is the safest HDAC inhibitor, he added. Dr Enrique Ocio, hematologist, Hospital Universitario de Salamanca, Spain, countered that belinostat is no exception to the tolerability issues faced by HDAC inhibitors. Toxicity can be limited by lowering its dose, but in general the pivotal trial will have to show a robust toxicity profile for it to be approved, he noted. 
QUOTE

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