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35+ years as a private investor, college finance/economics adjunct lecturer, corporate project engineer and business development strategist, individual and small business tax preparation. Corporate experience in communications and energy BS Mechanical Engineering - Carnegie Mellon University MBA... More
  • Make Investing A Story 0 comments
    Jun 25, 2013 2:33 PM | about stocks: CELG

    You all have heard the aphorism: "You get what you paid for." For the value investors, the followers of Benjamin Graham's school of thought, that idea is anathema. The whole idea of investing is to seek out stories of stocks, bonds and other financial assets, where you hope to get a lot more than you paid for.

    I used to be dragged along to Filene's Basement on the corner of Boston's Washington and Summer Streets to witness what I always thought was very rude and aggressive behavior of women tossing garments all over the place, seeking to find the best clothing bargains around. They, too, were looking for something worth a lot more than they were going to pay.

    So, it is ironic, that people investing their hard earned money into the stock and bond markets, are trampling over each other in a rush to sell their financial assets on days as we had last week, when prices were dropping like rocks. Those are the bargain basement days when stocks go on sale. Those are the days that the legions of Grahamites like Warren Buffet and others of his ilk, are scouring the financial landscape for assets to buy, not sell.

    That is not to say that those bargains might be even better purchases somewhere down the road. But when cliff-like moves in asset prices occur, you should be alert and on the lookout for those Filene Basement gems.

    Some people like to categorize certain asset purchases as "story stocks," investment ideas that transcend the average buy, sell or hold that the "Street" analysts are wont to produce. Examples of these are potential acquisition targets, companies that will be affected by disruptive technologies (both positively and negatively) or changes in a company's strategy or management.

    My take: Every asset has a story; therefore, all investments are storied. It should be up to you as an individual investor to build that story for yourself as you surf through all potential candidates to include in your portfolio. And if and when that story changes, that is the time to take action, buying more, selling some or selling all of it. If you write that story for yourself, then you will certainly know when that story changes.

    For example: Celgene, an international, large cap biotech, is in the process of re-inventing itself from a one product company to a multifaceted, multi-drug company with several potential blockbusters(over one $ Billion in annual sales).

    Celgene's Revlimid, a blood cancer fighting drug, now accounts for most of the company's sales and net income. Revlimid is in late stage clinical trials to treat other cancers and has been recently approved for mantle cell lymphoma.

    Celgene's newer drugs via acquisition and development, Vidaza, Abraxane and Pomalyst, have all been approved and are expanding their indications to treat solid tumor cancers and blood cancers.

    Apremilast, an autoimmune system drug, is entering a totally new field for Celgene. Apremilast will compete in the psoriasis and psoriatic arthritis markets where injectable drugs with toxic side effects are now the standard of care. Apremilast is in pill form without the severe side effects.

    Celgene management is expecting its sales to jump multiple times in the next 3 to 4 years and has scores of clinical trials underway.

    Celgene's relatively new CFO has been conducting a multibillion dollar repurchase of shares over the last year, which is continuing at an accelerated pace.

    Do not just memorize something in your head. Pick up your pen and paper or use your favorite digital application and make your storied stock come alive. It need not be some tome that kills trees. Make it a tangible anecdote so that you can quickly read it, modify it and embellish it as the story unfolds.

    You read that story here, first.

    Disclosure: I am long CELG.

    Additional disclosure: I have owned Celgene for a decade or more.

    Stocks: CELG
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