Bullish Calls:

American Express (AXP): "AXP, a stock that we recommended last week remains on fire… everybody I know has sold this stock… all I have to remind you is that this stock was in the $50’s not that long ago… it is an incredibly well run company that is the best way to play the return of high end retail…"

I am a numbers person – especially when it comes to stock analysis. Every month, I fill up a spreadsheet with 1,000 stocks and 244 columns of data and formulas. I then turn my computer loose, and it goes wild performing two million calculations.

Why so many calculations?

Q3 2009 Earnings Call

October 28, 2009 8:30 a.m. ET

Back in August, I advised investors to load up on Alcon (ACL), the eye care company because, this New Year's, Novartis (NVS) could be forced to buy all of Nestle's (NSRGY.PK) approximately 150 million at a $181 price.

In brief, Nestle's has the right as of January 1 to sell all of its 52% share of Alcon to Novartis for 20.5% above the average of the past week price to a maximum of $181. I speculated that minority shareholders could piggyback on the ride to $181.

The founders of the Galleon Group, a hedge fund started in 1997 and which has a technology and healthcare focus, have been charged with insider trading. Galleon is one of the 250 hedge and institutional investment funds that are available on AlphaClone. The fund's Top 10 Holding Clone, which invests quarterly in the the fund's ten largest holdings at the time they are disclosed, is up 48.2% so far this year but has not performed very well over time returning a negative 3.9% annualized over five years and a dismal negative 18% annualized since 2000 (all returns as of 10/15/09 close). We thought we'd list the fund's 50 largest holdings below (as of 6/30/09). Now that the fund will almost certainly wind down, perhaps there are some good short opportunities.

Earlier this week, Alcon Inc. (ACL) signed a definitive agreement for the acquisition of Swiss biotech company ESBATech AG. Alcon will pay $150 million in cash at closing. Besides this, Alcon may pay up to $439 million on the achievement of future research and development milestones.

With this acquisition, Alcon will gain access to ESBATech’s proprietary antibody fragment technology, which is used for the development of compounds for the treatment of eye diseases like age-related macular degeneration, diabetic macular edema, glaucoma, dry eye and uveitis.

Keeping track of dates is important: birthdays, anniversaries, graduations, income tax deadlines. Miss the date and you're toast; get it right and you're safe. In the stock market, sometimes just remembering one important date is all that it takes to make a lot of money. For instance, one particular stock becomes a great deal more valuable on New Year's 2010. I wrote that date down on April 7, 2008 and it's now time to tell you to check out Alcon (ACL), the Swiss eye care company.

Remember that Nestle (NSRGY.PK) once owned 77% of Alcon. Back in April 2008, Novartis (NVS) agreed to buy 25% of Alcon from Nestle for $143 per share. Novartis and Nestle struck a deal as to how to dispose of Nestle's remaining 52% of Alcon. Starting on New Year's Day 2009 until July 31, 2011, Novartis has the right to buy those remaining Alcon shares from Nestle at $181. On the other hand, Nestle has the option of selling those shares for $181 a share or for 20.5% above the market price of Alcon covering the preceding week (whichever is less). Right now Alcon trades at $132. If this was New Year's, Nestle could force Novartis to buy its shares at about $159. As the months go by, Novartis must be hoping that shares will not reach $144 or they will be forced to eat the deal at $181, or $28 billion. It's going to get pretty tense around Novartis come 2010.

Q2 2009 Earnings Call Transcript

July 23, 2009 8:30 am ET

With so much talk of patent cliffs and biosimilar regulatory pathways, 2009 is shaping up to be a boom time for investors in generic companies, a half-yearly analysis of stock performance by EP Vantage has revealed. Alongside Teva Pharmaceutical (TEVA), as a rare big pharma stock to register a gain in the first half of the year, all five of the biggest winners for mid-cap companies were generic, with the average gain for global generic stocks a healthy 28% (see tables below). In comparison, the average decline for big pharma was 11%, excluding the bid targets Wyeth (WYE) and Schering-Plough (SGP). With cuts to dividend payouts and scrapping of share buy-back schemes compounding the patent risk exposure of big pharma, it seems investors are switching their allegiance to the generic companies which will profit the most from the woes of big pharma (Vantage Point - boom time for generics as patent cliff looms large, May 18, 2009).

By Jason Napodano, CFA & Brian Marckx

Alcon, Inc. (ACL) faces some challenges in the near future: patent expiration, patent challenges, generic threats, softer pricing on certain of its products and Medicare rebates. Additional near-term challenges come from slower top-line growth due to a weakening economy and negative foreign currency affects.

In a previous article, I provided a list with the best dividend stocks for the long run. Since the list included only US stocks several readers asked for a similar list with international dividend growth stocks instead. Furthermore, I am also looking to expand my portfolio to include at least some allocation to global dividend companies.

I do agree that in the globalized society of the 21st century it is important do be able to diversify your stock investments away from the US. By purchasing international stocks one essentially receives income in a different currency, which is a decent hedge against a possible devaluation of the US dollar. Another benefit of shopping for quality dividend stocks abroad is the huge potential for economic growth and development that both established and emerging economies posses.

This is the 1st Quarter 2009 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings series preface.

We'll start our Q1 '09 coverage with Viking Global. Andreas Halvorsen is one of the many 'Tiger Cub' fund managers we cover here on the blog. 'Tiger Cubs' are the progeny of legendary investor and hedge fund manager Julian Robertson of Tiger Management. Many of the critical members of Tiger started their own funds, and Halvorsen is no different. Halvorsen has taken what he learned/used at Tiger and added his own spice to the value-oriented, yet growth at a reasonable price (G.A.R.P.)-tolerable investment style. Viking employs a fundamental strategy, using a bottom-up process to pick stocks. In terms of recent performance, It was +0.99% for March, and +9.27% year to date as of that time. We covered Viking and other hedge funds in our March performance update.

BB&T (BBT) and Legg Mason (LM) are the latest financial stock to drastically cut dividends . This didn’t shock anyone, as the financial sector has received a pretty bad reputation for its enormous losses and massive dividend cuts. The careful income investor who is looking for ways to generate some income from their investments should definitely look past dividend yield and instead focus on the sustainability of the payout, the dividend policy of the company and management’s desire to keep raising dividends. Some companies, whose sales are somewhat recession resistant keep generating enough cash flow to justify sharing their wealth with shareowners while also financing their operations efficiently. The bullish momentum after last weeks dividend increases from Exxon Mobil (XOM) and IBM is holding up quite well. Some solid companies such as PepsiCo and Alcon rewarded shareholders with increases in dividend income.

PepsiCo (PEP), which manufactures, markets, and sells various snacks, carbonated and non-carbonated beverages, and foods worldwide, raised its quarterly dividend by 6% to $0.45 per share. PepsiCo is a dividend aristocrat, which has rewarded its shareholders with an uninterrupted streak of increased dividends for 37 consecutive years. The stock currently yields 3.60%. Check my analysis of PepsiCo.

Dividend investors love companies that can sustain consistent dividend growth through the good times and the bad. For three years in a row PepsiCo (PEP) has been named to the Dow Jones Sustainability Index in recognition of the company’s economic, environmental and social performance.

Alcon Pharmaceuticals (ACL) faces some challenges in the near future: patent expirations, patent challenges, generic threats and softer pricing on certain of its products as a result of Medicare rebates. Additional near-term challenges come from slower top-line growth due to a weakening economy and negative foreign currency affects as the U.S. dollar strengthens against other currencies.

The company also took significant losses on its investment portfolio which, by our calculations, negatively impacted EPS by as much as $0.24 in the fourth quarter and $1.22 for all of 2008. The company has subsequently begun redeeming all investments and expects to be 90% invested in cash-equivalents by mid-2009. This should help reduce or eliminate any further investment losses.

Q1 2009 Earnings Call

April 23, 2009, 8:30 am ET

Healthcare Products and Supplies is a unique sub sector of healthcare that holds the potential for great growth opportunities in the coming years. The sub sector is extremely vast, with companies providing products and supplies to a variety of medical areas such as cosmetic surgery, eye care, cardiology, orthopedics, and diabetes to list just a few. Within these major areas, HCP&S' products are further divided into higher tech products such as drug eluting stents (DESs) and lower tech products such as hypodermic needles and scalpels.

In addition to the diversification of products, there are many other variables that affect the profitability and riskiness of companies in the industry. One example would be the geographic revenue breakdown, since revenue concentration in foreign markets typically increases risks associated with exchange rate fluctuations as well as changes in demand. However, geographic diversification simultaneously reduces risks to an ever changing healthcare landscape proposed by president elect Barack Obama.

This is the 4th Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings preface.

Next up, we have Thomas Steyer's Farallon Capital Management. Steyer founded the firm in 1986 and still manages it today. Steyer graduated from Summa Cum Laude from Yale University and received his MBA from Stanford's Graduate School of Business. Prior to founding Farallon, Steyer worked as an analyst in Morgan Stanley's Mergers & Acquisitions department and then as an associate in the risk arbitrage department of Goldman Sachs. Being so well versed in the area of risk arbitrage, Steyer employs similar strategies at Farallon. Farallon invests in both public and private debt, equities, private investments, and real estate.

This is the Fourth Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings preface.

We've already covered:

Bullish Calls:

Wal-Mart (WMT): “Is the only retailer on this show that I am recommending, the only single one…in 18 months they will own the world…but not up here…wait, be patient…this market is coming to you…it is a real bad market.”
Caterpillar (CAT): “I’ve been buying it very slowly…buying it for the yield…ultimately I think this company is going to turn around…I am trying to get ready for a turn that I think will coming in 18 months, but it ain’t going up…which is why I am buying on a scale down.”
Allergan (AGN): “I want to be in Allergan…because of Botox which is controversial because of a couponing issue. No one likes Allergan anymore. I still like it.”
Alcon (ACL): “Okay but I prefer Allergan.”
Amazon (AMZN): “Amazon is the only one I feel confident right now.”