Seeking Alpha

jstratt

jstratt
Send Message
View as an RSS Feed
View jstratt's Comments BY TICKER:
Latest  |  Highest rated
  • 2014's Trash Could Be 2015's Treasure [View article]
    I always enjoy trying to prepare for the next year in December.

    For 2015 I have gone underweight in technology as I dont understand the valuations vs the prospects overall. No FB, AMZN even sold PANW after a near double. Smallish positions in ORCL, CSCO, HPQ remain.

    GILD is an outsized holding. In short it has the best cure for Hep C which has 350MM afflicted around the world. The PE on expected 2014 results is near 11. I lightened up on other biotech positions. It may be the Biotech century but the major biotechs are up about 300%-500% in the past 5 years. Holding CELG, REGN, BIIB, AMGN.

    If I believed the GDP growth data I should be heavier in financials but I am slightly underweight. BAC and a couple others. Still holding long term positions in HON, MMM and UTX.

    JNJ, PG, KMB, CL, NSRGY, DIS, UNP remain staples and added Roche. Fighting to keep from being too overweight health care.

    Placed small bets on COP, CVX, APA and BHP in mining. Oil usually crashes farther and for longer than expected so I am not in a hurry but keeping an eye out and after a bottom is in excellent return opportunity exists.

    Oil is an example of my major theme this year which is Over investment. Huge amounts of money have flowed into Oil, Technology and even biotech for several years. Finally enough is enough! Money needs to seek new opportunities. Oil just crashes faster than anything else.

    Since Europe has diverged and the dollar is high vs the Euro I bought a Vanguard European equity fund. I think Europe will recover during 2015.

    Began building a VZ position in late 2014 and think it offers an excellent risk reward opportunity from the current level. 10%+ annually over 3-5 year outlook as they have the best networks, low valuation and increased customers and usage.

    Things I am sick of include IBM, GE and to a lesser extent T which are horribly run companies. I dont own much anymore but it makes me want to puke just to see their stock symbol.
    Dec 27, 2014. 07:19 PM | 3 Likes Like |Link to Comment
  • Market Crash And High Yield Debt [View article]
    In 2007 around Labor Day I sold all financials after hearing about a crash with larger #s for 6 months. Got over $50 for BAC and C shares. Entered 2008 with 0 debt holding IBM, T, VZ, PG, JNJ as my 5 largest holdings.

    I stayed at about 20% cash then during periodic drops I would buy more T as it would get pushed to a 6.8% dividend yield and even a 7% at the worst. I was able to buy at $22 and later sell at $24 or a variation on that theme about 5 times during the year. I bought IBM in a similar manner as I trusted their recurring software revenue.

    Basically I had seen previous crashes and want no part of financials when the threat of a crash exists. After a crash is over I invest heavy in financials because they have cleaned up balance sheets and generally above average returns.
    Dec 27, 2014. 05:43 PM | 1 Like Like |Link to Comment
  • RBC: Gilead could launch $10B+ accelerated buyback [View news story]

    This morning I completed my final purchase of GILD shares. Since the ABBV news I have been placing orders almost daily and doubled my position. Also in December both before and after the ABBV news I have reduced my other biotech holdings.

    Part of what I like about GILD is the wide disparity in valuations with wildly bearish and wildly bullish views. The ABBV news helped capitalize on the bearish scenario and presented what I believe to be a bargain.

    As I enter 2015 I seek opportunities to realize a significant gain with a manageable risk level. Biotech has been good to me in 2014 and I like it long term with exciting innovative new products. At the same time huge investment flows have products surging through the pipelines perhaps faster than the funds to pay for them.

    In just about 5 weeks GILD will report for the 4th Qtr and 2014. The gap will start to close between bulls and bears for the following reasons.

    - world revenue and profits will become visible
    - US revenue will clarify whether to expect future decreases, increases or stability. The 22% decrease in 3Q EPS from 2Q EPS and 7.5% revenue drop really made attentive investors take a hard look.
    - perhaps after huge Hep C differences get resolved, investors can at least consider the other 50% of product revenue such as HIV, and the pipeline.

    My view remains that GILD is worth $130 but no longer expect that after 2014 earnings are announced. I do think GILD is rapidly moving back to $100.

    Finally I would add that when I put on my bull hat I could see a double of my recent GILD purchases by year end 2015. Biotech investors are all about potential and if they saw potential in the pipeline an expected 2014 PE of 11 would be long gone.
    Dec 26, 2014. 11:48 PM | 4 Likes Like |Link to Comment
  • Market Crash And High Yield Debt [View article]
    I appreciate hearing a good bear case. Havent heard one in a while.

    It is always a good time to weigh risks wisely and Junk bonds arent of interest to this investor.

    At the same time I have never sold stocks to avoid market falls and I have never found a time not to invest. In an investment article it would be nice to mention a strategy to avoid Armageddon.

    In 1992 I got knicked a little, 2001 was tough and 2008 I did better than I had a right to expect. Being in for the full recoveries however was amazing. That is what I think you likely miss with an attempt to perfectly time entry and exits from the market.
    Dec 26, 2014. 01:28 AM | 4 Likes Like |Link to Comment
  • A Reason To Be Bearish On Gilead - Everyone Seems Bullish [View article]
    Just a thought on ABBV and Hep C

    Since most Hep C patients are Baby Boomers, how many dont take statins, antacids or a flu shot? All are contraindicated for Viekira.

    Were I to have Hep C I would do all 3 of those things. My $4 generic statin, free flu shot and cheap antacid would all be worth it just in case they were needed.
    Dec 25, 2014. 11:08 PM | 5 Likes Like |Link to Comment
  • A Reason To Be Bearish On Gilead - Everyone Seems Bullish [View article]
    What GILD could consider for shareholders in 2015?

    GILD does have a problem with HCV, which is that it is so large and dominating that it overshadows the entire company rendering anything else valueless for shareholders.

    GILD should consider whether it would add value to split into 2 stocks. One stock call it HCV would focus on curing the Hep C market and its 350MM worldwide population over 30 years. That stock would be like a PFE and have a solid dividend return.

    The other stock would remain GILD and be the approximately 50% of non HCV revenues and the pipeline. Today it is a valueless afterthought. Separated it could be a 20 PE Biotech company.
    Dec 25, 2014. 08:58 AM | 4 Likes Like |Link to Comment
  • A Reason To Be Bearish On Gilead - Everyone Seems Bullish [View article]
    Thanks for the article!

    I agree one should always be interested in information that contradicts their opinion.

    Now regarding GILD I just read an authoritative paper and commentary that suggests ESRX only covers about 2.5% of HCV infected patients. Some of the key points

    - most with HCV are Baby Boomers and huge #s pass into medicare in the next 2 years.

    - medicare, prisoners and uninsured huge portion of cases

    - 3.2 Million estimated infected

    - huge effort to identify and treat taking place

    - US will attempt to cure the infected in the next 10 years

    http://bit.ly/1GTZjN4


    - US may only be 1% of worlds infected population.

    In short HCV is so large that GILD valuation is driven almost solely by it. Fears look to be overblown and other GILD products and its pipeline are overlooked.

    HIV as an example is growing rapidly and 9 of 10 new patients are using GILD products. The pipeline is also promising with several new revenue sources at work.
    Dec 25, 2014. 12:08 AM | 10 Likes Like |Link to Comment
  • Gilead Feels The Heat Of Competition [View article]
    Xiaoliu

    Thanks! That is a study everyone should review.

    So about 2.5% of HCV patients are covered by ESRX. Since most are Baby Boomers and statins or other issues restrict Viekira usage we are probably at 2% or less of HCV infected patients covered by ESRX.

    Further my suspicions that ESRX is trying to delay patients from being treated would make sense. In the next 2 years a huge percentage of the infected population will pass to medicare and government expense.

    My guess is that those choosing ACA plans would also be pushed to other PDPs saving cost to ESRX.
    Dec 24, 2014. 11:37 PM | 3 Likes Like |Link to Comment
  • Gilead Feels The Heat Of Competition [View article]
    What recourse does a Dr have if he should feel that GILD products are the best treatment for his patients and ESRX is effectively trying to limit the number of people seeking treatment by offering only an inferior treatment alternative with dangerous side effects.

    If a Dr prescribes Harvoni specifically what will happen?

    Can ESRX say sorry that drug is not on our formulary you cant have it?

    Does an appeal process exist?

    What steps is GILD likely to take in response to this decision? Can they ask for a court injunction on some grounds?

    If GILD agreed to match the ABBV price would ESRX be able to deny an effective treatment?

    In the end perhaps people will not be forced to take Ribavirin?

    This story has more chapters to be written and it is time to think ahead.
    Dec 24, 2014. 05:40 PM | Likes Like |Link to Comment
  • Gilead, Abbvie, Express Scripts, And Biotech Industry Turmoil Seen By Market-Makers [View article]
    Thanks for a unique and interesting analysis!
    Dec 24, 2014. 04:57 PM | Likes Like |Link to Comment
  • 4 Reasons I'm Adding Gilead To My Healthcare Holdings [View article]
    Thanks for an excellent article!

    I have been buying since the drop and got some shares at $86.50 yesterday. GILD recovered substantially by the end of the day. My lower bids dont look promising now so I may try to get more below $90.

    I would be more concerned if Harvoni had a few chinks in its armor. With higher cure rate, fewer side effects, shorter treatment duration, fewer drug interactions and easier regimen customers and Doctors are going to demand Harvoni. Even from ESRX.

    There is risk in everything. At about an 11 PE on expected 2014 EPS the market is suggesting a significant decline in Hep C revenues which seems like a strange conclusion given a treatment pool around the world of 80MM people.

    As an investor my view is GILD is worth about $120 currently and will end 2015 between $150-$200. At some point in 2015, NASH and Hep B products in the pipeline are likely to drive significant excitement. I am not quite as bullish on Oncology as the author, but good value exists in this pipeline area.

    In fairness I see pricing of drugs to be a huge long term issue. It is ironic that GILD probably has lower pricing risk as for every dollar drop in the price, the longer the line of people demanding to be cured.
    Dec 24, 2014. 08:48 AM | 8 Likes Like |Link to Comment
  • Who Is The Devil? Will Gilead Fall Or Soar In 2015? [View article]
    Menicholas

    We dont know how much lower the actual price is to ESRX. To get an agreement not to restrict treatment knowing heavy advertising has already started suggests a strong price cut. Given the stakes involved I wonder how definitive the agreement actually is.

    ESRX did their job which was to force prices down. ABBV for their part probably guaranteed a profit on Viekira before 2016 competition arrives. I have read your comments and your experience suggests ESRX may fail with this initiative.

    Thanks for sharing your 1st hand experience which is valuable to know.
    Dec 23, 2014. 06:37 PM | Likes Like |Link to Comment
  • GE: A Promising Pick, Looking Ahead To 2015 [View article]

    I sold some GE again today.

    I just dont like the risk reward profile. They needed to have accomplished a turnaround in 3-4 years. Instead 6 years into a restructuring that would would make a tortoise proud, GE remains underfunded and under the government systemic thumb.

    So far it is hard to see how risk has been reduced by selling financial assets to buy Oil assets. The government probably wasnt thrilled about letting GE raise the dividend at all.

    As for Immelt, he must continue to try to pump GE and say things like he expects flatish results from the Oil unit and use that decades old GE trick of announcing huge order increases which have never ever materialized.

    I am not trying to denigrate GE, but I am trying to provide a more realistic viewpoint. GE is ok and I own some. At the same time if another downturn comes into view I would look carefully at dividend supportability.

    Investors have good reason to be very disappointed in the leadership at GE.
    Dec 23, 2014. 01:54 PM | 11 Likes Like |Link to Comment
  • Who Is The Devil? Will Gilead Fall Or Soar In 2015? [View article]
    Whatsallthefuss

    You seem wiser than most and if you keep investing you will do well! Let me try to help you understand the fuss, however.

    A stock will come along periodically that seems like a sure thing. When that happens some people take more risk than they can afford to handle. It is called greed and the market is very efficient at separating those people from their money.

    If you invest properly then this is a time to buy more if you still believe in the company. I think people are giving away their shares.
    Dec 23, 2014. 01:32 PM | 3 Likes Like |Link to Comment
  • Money flowing out of biotech today [View news story]
    I think the Gilead investors are a little angry just now. That is especially true because GILD looked like a sure thing and many people got greedy and over invested.

    I must admit as a GILD shareholder I had some angry thoughts. However I bought some more today with a good opportunity for gain in 2015.
    Dec 23, 2014. 12:27 PM | 1 Like Like |Link to Comment
COMMENTS STATS
2,515 Comments
3,321 Likes