On November 12, 2004, I did a column about my bizarre email back-and-forth with Overstock (NASDAQ:OSTK) CEO Patrick Byrne, whose third-quarter earnings release today showed his stock was up on bluster and hot air. On that same day, in that same column, I wrote glowingly about Kos Pharmaceuticals (KOSP), whose stock yesterday lifted 54% after the company agreed to be bought by Abbott Labs (NYSE:ABT).
I was in no way forecasting an acquisition – or anything positive, for that matter -- but for fun, let’s rewind the part of the tape about Kos:
“I can't speak to whether Kos Pharmaceuticals is a good investment. With a P/E multiple of 11 to 12 times the latest quarter (annualized) and under four times revenue, it could be viewed as cheap for a drug company -- especially with gross margins of 92 percent, which are well above the industry average of 74 percent.
“At the same time, however, more than 10 percent of its float is held by shorts. (Could it have something to do with the related-party dealings involving the company's founder and controlling shareholder? Or is it just because it's a specialty drug company? Something else?)
“Whatever the case, Kos recently got a boost after reporting results of a study that showed using its niacin compound, Niaspan, with a cholesterol-lowering statin (like Lipitor) resulted in remarkably high levels of the ‘good’ HDL cholesterol.
“I'm no doctor (for which you should be thankful!), but I've been on that regimen for well over a year in part to battle a genetic predisposition to unusually low HDL. Even my doctor, not a huge fan of alternative therapies, is astounded at the off-the-charts high level of my HDL, which leaped above the recommended range after adding Niaspan to the Lipitor.
“You don't take heavy doses of niacin, which is a vitamin, on a whim. You have to get your liver functions checked regularly -- as you do when you take a statin -- and you can get (as I do) skin-tingling wake-you-in-the-middle-of-the-night flushing. (No menopause jokes!)”
Kos Kicker – and the ultimate irony: On that day Kos closed at $44.05; today, $77.06. Overstock: $60.20; today, $14.59.
P.S. – if you think I only mention my good calls: In that same column I wrote glowingly about Rubio’s (RUBO), a San Diego-based Mexican fast-food chain. I noted how the lines at the stores and the quality of the food seemed consistent. Stock then: $12.31. Today: $9.95. Nexxtttt!