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Alexander J. Poulos  

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  • Illustrating My Decision To Invest In UPS [View article]
    Robert,

    Thank you, the transports got a boost from UPS comments. I was heartened by the follow through today, up again. UNP has rebounded quite nicely, they are above where they were before the earnings report. PErhaps my thesis of a second half rebound will play out. Check your inbox, I sent you a detailed message on F.
    Jul 29, 2015. 09:00 PM | Likes Like |Link to Comment
  • A Few Key Points I Am Watching For From Gilead Sciences [View article]
    Suzi,

    Well done with your long term hold of GILD. I strongly urge you to change your moniker and drop the clueless, perhaps clairvoyant is a more pat description. GILD delivers a beat and raise quarter and yet the shares are up only $4 in the after hours.

    The largest impediment to a more sustained advance is the fear of a sudden drop in HCV revenue. Undoubtedly, we would see a share price spike if we saw a move similar to CELG acquisition of RCPT. I suspect management is bidding its time, waiting to see the progress from its own internal endeavors before pursuing additional acquisitions. The Street would applaud an acquisition, they would bid the shares much higher. I would rather have the shares flat line here than management squandering their war chest on questionable moves. Thanks for reading and commenting.
    Jul 28, 2015. 09:12 PM | Likes Like |Link to Comment
  • A Few Key Points I Am Watching For From Gilead Sciences [View article]
    Tony,

    The key as you stated is cash flow. The amount of cash GILD has coming to them actually mitigates some of the risk. They can easily go out an acquire companies to fill in the holes in their product lineup when needed. A recent example of this strategy is ABBV with Pharmacyclics and CELG with the purchase of RCPT. Lets see how the shares respond after hours.
    Jul 27, 2015. 09:40 PM | Likes Like |Link to Comment
  • The Importance Of Newly-Released Data For Gilead's HIV Drug Patent Cliff [View article]
    Doc,

    Great article as always. The HIV franchise tends to be minimized due to the hyper growth of the HCV franchise. I suspect the TAF compound will be GILD answer in reversing the decline from 7 out 10 to its current 6 out of every 10 patients infected with HIV. To answer a post above concerning GILD valuation, the price continues to forecast a rapid decline in the HCV franchise one that may not come to pass. The role of the clinical pipeline takes on additional importance here, a new franchise would propel the shares much higher and eliminate the fear of an impending revenue cliff. I am anxious for tomorrows earnings report.
    Jul 27, 2015. 09:34 PM | Likes Like |Link to Comment
  • Illustrating My Decision To Invest In UPS [View article]
    Robert,

    Thanks for reaching out. Let me clarify a few points. The LR model is a dynamic chart that constantly updates. The assumptions shown are my own calculations and in my view valid. I would use the $117 price target, the shares are a bargain at their current quote.

    A quick primer on UPS. The share price tends to move up in the fourth quarter in anticipation of strong holiday revenue numbers. As the shopping trend moves more towards online fulfillment, UPS is uniquely levered to take advantage of this trend. In my view, it is impossible for a competitor to build out a similar network from scratch, hence the wide moat. The problem for UPS is the crush of business during the 5-6 days before Dec 25th. 2 years ago they had a service failure which resulted in refunds back to angry customers/merchants. Last season they overspent on personnel to ensure they would not have a repeat which ate into profits. I suspect the management team will get it right sooner rather than later.

    As for my investing style. I run a diversified portfolio with an eye towards overall returns. The style box that most accurately represents the portfolio is value, I refuse to chase momentum names. For example, I invested in GILD due to their large cash flow and low multiple and refuse to chase CELG as they exhibit the exact opposite. I tend to key off EBITDA (Earnings before interest, taxes, Depreciation and amortization) as shown in the charts above. I want to see EBITDA accelerating higher long with margins. The reason why I use EBITDA instead of reported earnings is the earnings number can be manipulated by accounting tricks whereas EBITDA is not.

    The portfolio is up 7.63% YTD whereas the S&P is up 2.06%. Since 2012 the portfolio is up 16.52% versus an S&P gain of 16.41%. The out performance came from sticking with a value bent and allowing the stories to play out. I haven't gotten them all correct, (I had a significant exposure to energy last year, thankfully I was able to sell and redeploy elsewhere) however the hard work has paid off.

    To give you an idea of the value bent look back through my history with C. C is hated by most yet when acquired in early 2014 at $47 its was a steal. I subsequently doubled the position in July of last year at $51. The position is up over 20% outpacing the gain in the S&P during this time. The best part of C is it is trading at liquidation value (known as Tangible Book Value or TBV), Know that is becoming more clear the Fed will raise rates, the Net Interest Margin (NIM) will rise for the banks generating higher profits. I would not be at all surprised if C was to trade at 1.5x TBV of $90 in the next two years. The effect on the portfolio would be wonderful. Feel free to reach out with any further questions, I would be happy to offer additional clarity.
    Jul 26, 2015. 09:06 AM | Likes Like |Link to Comment
  • A Few Key Points I Am Watching For From Gilead Sciences [View article]
    moneywell,

    A very valid point.
    Jul 22, 2015. 09:27 PM | Likes Like |Link to Comment
  • A Few Key Points I Am Watching For From Gilead Sciences [View article]
    CSYJ,

    The parallel with VRTX remain. Kalydeco in a similar fashion to Sovaldi is the building block for additional combo therapies that would open up the CF marketplace. Orkambi is the first of potentially additional therapies. In essence GILD would dominate the CF field. Now there would be additional scrutiny brought upon GILD due to the cost of therapy and the asking price to acquire VRTX. My suspicion is management will purchase smaller companies now while saving the money for a larger acquisition down the road if/when the HCV revenue stream begins to decline. As always thanks for reading and commenting.
    Jul 22, 2015. 09:27 PM | Likes Like |Link to Comment
  • A Few Key Points I Am Watching For From Gilead Sciences [View article]
    Doc,

    Thank you for the kind words. GILD breakout in May was a thing of beauty. Lets hope history repeats.
    Jul 22, 2015. 09:21 PM | Likes Like |Link to Comment
  • A Few Key Points I Am Watching For From Gilead Sciences [View article]
    Paul,

    The answer is nobody know when, not even management. Lets examine how the marketplace has evolved so far. Last year, management wouldn't even issue quarterly revenue guidance for the HCV franchise. They were simply too many moving parts. The fear in December was ABBV would steal a formidable amount of market share from GILD. The analyst community remained fixated in the weekly script counts yet they didn't even tell the whole story as certain data was purposely excluded by ESRX. The 1st quarter report comes out and we get a meet and beat quarter.

    Management has made several comments in various conferences they expect the HCV franchise to follow a similar trajectory as seen with traditional therapies due to pent up demand. This is wonderful news for me as GILD is my fourth largest holding. The question becomes how to model the event as accurately as possible so as to not mislead the audience. I decided to construct the model based on managements guidance for this year using the high side of expenses and the low end of the range for revenue. I figure we will see additional growth next year, if GILD comes in at the high side of this years numbers, the figure for 2016 is way too conservative.
    Jul 22, 2015. 09:20 PM | Likes Like |Link to Comment
  • A Few Key Points I Am Watching For From Gilead Sciences [View article]
    lincmgmt,

    I can speak to this point quite well. The DEA has severly cracked down on the over prescribing of pain killers most notably oxycodone. The step up in enforcement has led to the skyrocketing of the price of oxycodone for those who are able to obtain it. Invariably money becomes an issue with heroin becoming the most economical substitute. Naturally, an sharp uptick in IV drug abuse will lead to an increase in the cases of HCV.
    Jul 22, 2015. 09:04 PM | Likes Like |Link to Comment
  • A Few Key Points I Am Watching For From Gilead Sciences [View article]
    suzie,

    Excellent question. Biotech/Pharma companies tend to cut staff/ detailing activities during volume loss. It is not out of the question that GILD will look to downsize the workforce to maintain margins if necessary. What makes GILD so interesting/vexing is the dynamism of the HCV marketplace. It remains quite difficult to predict sales and margins. Notice how management has lifted guidance yearly guidance after one quarter. The potential remains they may do so again after the second quarter. Lets see how the story plays out.
    Jul 22, 2015. 09:00 PM | Likes Like |Link to Comment
  • Viacom Is Trading At A Steep Discount To Its Fair Value [View article]
    us44,

    I sold the shares once the company suspended its share repurchase plan. My sales price was roughly $66 per share far less than my entry point. The landscape has changed dramatically in the pay-TV space. VIAB is losing its core audience (young children) to YouTube and other fares. Perhaps the company can be resurrected, the story is not for me. In the media space I own CMCSA which is performing quite nicely. Feel free to review http://seekingalpha.co...
    Jul 22, 2015. 08:53 PM | 2 Likes Like |Link to Comment
  • An Assessment Of Celgene's Deal For Receptos [View article]
    Doc,

    Excellent article as always. I have followed RCPT for a bit and came away surprised they were taken out by CELG. The premium is on the low side, I suspect in part due to the competitive nature of the MS field. Its a crowded field with established entities flexing their sharp elbows. I prefer GILD in the biotech space, the FCF is simply stunning.
    Jul 21, 2015. 09:35 PM | Likes Like |Link to Comment
  • A Few Key Points I Am Watching For From Gilead Sciences [View article]
    haha,

    Thanks, I predominantly write about my holdings. Feel free to follow.
    Jul 21, 2015. 09:26 PM | 1 Like Like |Link to Comment
  • A Few Key Points I Am Watching For From Gilead Sciences [View article]
    Tony,

    I try to model based on conservative assumptions so as to not over exaggerate the opportunity. I have an affinity for companies that generate a significant amount of FCF, in my view it is a sign of strength. Thanks for reading and commenting.
    Jul 21, 2015. 09:26 PM | 2 Likes Like |Link to Comment
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