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Chris DeMuth Jr.
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"It's not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it - who look and sift the world for a misplaced bet - that they can occasionally find one." - Charlie Munger I look... More
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  • M&A Forum 6 comments
    Feb 24, 2014 10:22 AM | about stocks: QRVO

    What are your top 2014 M&A candidates? Here is a basket that I put together of top candidates for takeovers in 2014. TQNT announced their deal today and is up on the news. Hopefully, there will be many others to follow. What am I missing? As always, comments welcome.

    Themes: M A Stocks: QRVO
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  • Chris DeMuth Jr.
    , contributor
    Comments (5554) | Send Message
     
    Author’s reply » +5.9% so far: http://bit.ly/M9ElTw.
    18 Mar 2014, 11:22 AM Reply Like
  • atosh12
    , contributor
    Comments (10) | Send Message
     
    Chris,
    What is your take on recent successful trial results by ITMN for IPF (Idiopathic Pulmonary Fibrosis) ?

     

    ITMN stock price sky-rocketed on the recent successful trial news and there is lot of chatter about it being a potential company that could be acquired by a big player.

     

    On the flip side, there was an article in Biopharm Insight in February about how ITMN's competitor have better results on the IPF and would be disclosing those results at May conference.

     

    Just wondering what your thoughts were and if you were following this story.

     

    Thanks!
    18 Mar 2014, 10:35 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (5554) | Send Message
     
    Author’s reply » Following/like it/own it/expect it to get bought for a premium to the market price. Thrilled about the IPF results in February.
    18 Mar 2014, 10:39 PM Reply Like
  • atosh12
    , contributor
    Comments (10) | Send Message
     
    Chris,
    Just a follow-up on ITMN.

     

    I personally think that ITMN's chance for FDA approval is still 50/50. My reasons are:
    1) ITMN pretty much has the same data as in previous trials. They just had one group this time and shortened the time period to 52 weeks. Had they combined the previous trials data ( 2 groups) it would have been significant difference statistically.
    2) ITMN doesn't know the specific mechanism by which their drug works.
    3) Rumours regarding a competitor drug have now been confirmed. They had successful results as well.
    4) The competitor (Boehringer) has already started another trial but with a different, and better, endpoint.

     

    What do you think the buyout price for ITMN would be ?
    23 Mar 2014, 07:38 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (5554) | Send Message
     
    Author’s reply » Good, challenging points. You could well be right. I have been using slightly over 50%, but I can't argue with your points. Price for a deal? In the current biotech boom, essentially all deals are being struck at prices above what I would pay. So, I guess my answer is "too much". I am short BIB to try to take out some of the exposure. We'll see what happens with ITMN; meanwhile, I have it in my FDA Risk Tracker here: http://bit.ly/1jd4QCS.
    23 Mar 2014, 08:06 AM Reply Like
  • TMFDeej
    , contributor
    Comments (258) | Send Message
     
    Hi Chris. I hope that you had a great weekend. Reuters has a great article about M&A in the industrial sector today. It got me thinking about how that area is ripe for takeovers.

     

    I'd love to get your thoughts about potential targets in the sector. I think that any list of them has to start with the recent spinoff Allegion (ALLE)...which I currently own a small position in.

     

    M&A pickup among U.S. conglomerates may be undercut by prices

     

    http://fxn.ws/1ggrUfQ

     

    "RIPE FOR A PICKUP?

     

    Industrial companies reorganize through deals, which allow them to obtain growing products, realize cost savings and find other ways to augment their central businesses.

     

    Such reshaping can include sales or spinoffs by the companies themselves, often in response to investor pressure, to focus on their central businesses. Dover Corp made such a move earlier this month with its spin-off of microphones maker Knowles Corp , while General Electric is exiting its private label credit card business.

     

    Globally, acquisitions by all industrial companies slipped 8 percent last year, more steep than the 6 percent overall decline for global deals, according to Thomson Reuters data.

     

    The value of acquisitions by 10 U.S.-based multi-line industrial companies fell last year to the lowest level since 1998, according to Thomson Reuters data.

     

    "M&A is a core part of what industrials do and that's how they optimize their portfolios over time," said Kevin Toney, senior portfolio manager with American Century Investments. "My sense is the buyers wanted to buy, but maybe the prices just weren't there."

     

    Because of the diverse lines of business for these manufacturers, potential targets exist in numerous sectors, including aerospace, security or climate control systems, healthcare products or electrical equipment.

     

    Certainly, conditions look ripe for a deal pickup in many ways.

     

    Analysts at Citi Research noted recently that among multi-industry companies, net debt stands at "attractive lows" of only 17 percent of total capital.

     

    "The sector currently holds ample firepower for strategic deals, with a willingness to pull the trigger once the M&A climate improves," Citi analyst Deane Dray wrote in a research note earlier this month.

     

    The lofty level of the stock market also could be a benefit to potential acquiring companies.

     

    "The average buyer has a stock that has gone up a lot so they have a lot of currency," said Scott Davis, an analyst at Barclays. "I think we're going to see a lot more transactions using stock."

     

    There is no shortage of eager buyers.

     

    Honeywell's Chief Executive Dave Cote said at the conglomerate's investor day earlier this month that the company was planning on $10 billion in deals through 2018, more than double what the company spent the previous five years.

     

    3M has expressed a willingness to spend "multi-billion dollars" on individual deals, more than it has in the past, as it eyes $5 billion to $10 billion in acquisitions through 2017.

     

    Danaher Corp , which has cited $8 billion in "M&A capacity," is among the other companies expected to be on the prowl this year.

     

    United Technologies last week became the latest company to make noise about bulking up through acquisitions.

     

    Not yet two years removed from closing its Goodrich deal, executives said they did not foresee an acquisition anytime soon. But United Tech has set a target of $50 billion in revenue for its commercial buildings segment by 2020, recognizing that about $8 billion of $21 billion needed for that goal might have to come from acquisitions.

     

    United Tech's targets could include security companies Allegion and Tyco International , and electrical and lighting systems company Hubbell Inc , according to Credit Suisse.

     

    "We have demonstrated that we do very well on large deals," United Technologies Chief Executive Louis Chenevert told the investor conference, adding: "Some of you thought I overpaid on Goodrich. I don't think anybody thinks I overpaid today on Goodrich."

     

    Jason
    31 Mar 2014, 10:27 AM Reply Like
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