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Over 30 years of investing in individual stocks. Extensive business experience with small to mid-size companies, including as CEO. Many hundreds of blog posts on financial and economic matters since 2008. Focus on value with catalysts for upside price action. Background as a physician and... More
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  • More On Gilead Versus AbbVie In Hepatitis C

    Quote of the day, week and young year for this competition comes from Massachusetts. The article is titled Competition in Hepatitis C drug market lowering cost of expensive treatment. It discusses how Harvard Pilgrim Health Care, an insurer, expects to save a whopping $10 million in 2015 because of the discount Gilead (NASDAQ:GILD) gave it to make its Harvoni, for hepatitis C type 1, the preferred choice over AbbVie's (NYSE:ABBV) Viekira Pak.

    Before this deal was signed, the two products were on equal footing. The article was written pursuant to a conversation with the Harvard Pilgrim chief medical officer, Dr. Michael Sherman, and contains these lines:

    Over the last month, even with a competitive drug on the market, doctors have solely prescribed Harvoni and Sovaldi for the treatment of Hepatitis C.

    "Even in a world where we don't have a discounted rate, the docs have spoken with their prescription pads," Sherman said.

    Indeed, the docs have spoken.

    Next, investors may take GILD right back to the $115 range, where it had reached when AbbVie's Q3 conference call brought on a barrage of GILD sales.

    Jan 30 8:59 AM | Link | 9 Comments
  • Taking Trading Profits In Trinity Industries

    I recently wrote an article on Trinity (NYSE:TRN) when the stock was around $25.50. Even though oil prices and the stock market have not gone up since then, TRN has risen to $27.87.

    In view of some weak economic reports and a 2% slide in WTI crude oil prices this morning, I'm closing out this trade. A quick 9% gain looks good here. I remain long a modest amount of TRN as a core holding.

    Extensive discussion that my article engendered has not altered my thinking that the adverse jury verdict against TRN has likely been overly discounted in the share price, but weighing against that is the bearish action in oil prices as well as evidence of downshifting in the U.S. economy.

    Tags: TRN, Oil
    Jan 28 8:35 AM | Link | 2 Comments
  • More Issues For Alibaba

    Alibaba Group Holding Limited (NYSE:BABA), one of the topics of an article I wrote last week on it and Yahoo! (NASDAQ:YHOO), is the topic of intense media attention today. It appears that last summer, China's SAIC regulator assisted the company's IPO effort by holding off from publishing a closed-doors meeting with the company. This is how Bloomberg News is reporting it in China Accuses Alibaba of Lax Oversight of Merchants:

    Alibaba Group Holding Ltd. has a "credibility crisis" fueled by a failure to crack down on shady merchants, counterfeit goods, bribery and misleading promotions using its online malls, the Chinese government said.

    The scathing report by the State Administration for Industry & Commerce accused Alibaba of allowing merchants to operate without required business licenses, to run unauthorized stores that co-opt famous brands and sell fake wine and handbags. Alibaba employees took bribes, and the e-commerce giant didn't fix flaws in customer feedback or internal credit-scoring systems, the report said.

    "For a long time, Alibaba hasn't paid enough attention to the illegal operations on its platforms, and hasn't effectively addressed the issues," the report said. "Alibaba not only faces the biggest credibility crisis since its establishment, it also casts a bad influence for other Internet operators trying to operate legally."

    The above may be shrugged off by BABA bulls as old news. What Bloomberg says later is something that, I wonder, might be a problem for BABA in the future if the stock tanks:

    Although that encounter came in July, the report wasn't published until now to avoid affecting Alibaba's record-breaking $25 billion initial public offering in September, the government said. The report was released a day before the Hangzhou-based company is expected to release earnings from its first full quarter since the IPO.

    Hmmm. Was this material to the IPO? Should investors have known it? If not, why did the report get withheld? If so, did the company make full disclosure in its registration documents?

    Also of interest was the following quote that Bloomberg reported:

    "The SAIC is now teaching Alibaba a lesson and telling it to learn its place," said Li Muzhi, a Hong Kong-based analyst at Arete Research Service LLP by phone.

    What other surprises might await BABA investors?

    Maybe there is a good reason why Yahoo! is disassociating itself from BABA as soon as it can.

    With so many other stocks to choose from, even more than before, I cannot see any compelling reason for a U.S. investor to own BABA shares. There simply appear to be too many risks. And given that BABA is material to YHOO's trading price, the risks inherent to BABA are meaningful risks to YHOO investors, as well.

    Tags: BABA, YHOO, Internet, China
    Jan 28 8:06 AM | Link | Comment!
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