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the_value_vulture

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  • What GSK's Q3 Results Mean For Theravance [View article]
    Thanks for your continued highlights on THRX developments. After listening to the call and reading the transcript, I received a similar message. Sales of Breo and Anoro will continue to be slow until the two drugs get more coverage and a crucial label expansion for Breo sometime in 2015. The drugs are gaining traction, yes, but it looks like sampling will continue to be very heavy and it's my guess probably through 1H of 2015 before starting to taper. GSK seemed a little more confident regarding some type of projection into their respiratory business in the near future.

    I still have questions regarding the "sales incentives" that continue to come into question. Citigroup brought it up this CC during Q&A while it was also brought up in THRX's most recent CC. Witty pretty much summed up the question by saying they would continue to press on with the same compensation structure. I do wonder if it has been a real issue because it's been brought up more than just once and even an article back in late July.

    From an investment standpoint, while I think there will be considerable success in this position it looks like I personally was a year too early. This is sounding more like a q4 2015 story with 2016 being a year with much more interest as sales really take hold. It should be treated more like an income stock for the time being with no expectations for capital appreciation until q4 2015 at the absolute earliest.
    Oct 24 08:15 AM | Likes Like |Link to Comment
  • Update: Why Theravance Jumped [View article]
    GSK will be reporting tomorrow. All eyes will be on Anoro/Breo sales.

    There was an interesting article out from Bloomberg around 11:30 today about Connelly and performace issues at Glaxo regarding drug sales in the US. It explained some of the issues but there are a few positives that stood out.

    http://bloom.bg/1tJn0oD

    “Establishing the two new drugs in the U.S. is “priority No. 1,” Connelly said.”
    “Analysts shouldn’t focus on total prescriptions but instead the number of new-to-brand prescriptions, said Connelly, which show how many physicians are prescribing to first-time patients. New prescriptions for the drugs “are very solid,” she said. “Every Friday, every Monday, I get data,” Connelly said. “What that is telling me as I look at that data is that progression for these products is solid.”

    “The biggest group of COPD patients, those over 65, are covered by Medicare, and more than 70 percent of the privately run Medicare prescription plans now cover Breo, up from 3 percent at the start of 2014, Connelly said.
    “I’m very pleased with where we are,” she said of Breo’s current sales.

    Negatives continue to include cost cuts on Breo, the drug's access issues especially with Express Scripts regarding pricing, proper sales incentives, and Glaxo hoping Breo is approved for asthma in US sometime next year.

    Definitely worth a read. I look forward to the Glaxo CC tomorrow for additonal commentary from management.
    Oct 21 05:59 PM | 1 Like Like |Link to Comment
  • Oversold conditions get worse [View news story]
    Selling is indiscriminate across all sectors. When fear and panic trump rationality, this is what the market looks like. My shopping cart is going up and down the aisles today.
    Oct 13 05:24 PM | 1 Like Like |Link to Comment
  • GT Advanced seeks to wind down sapphire manufacturing ops [View news story]
    GTAT is going to wind down the sapphire operations and you think the IPad and watch will have sapphire screens? Anyone trading GTAT around is just playing with worthless stock at this point.
    Oct 9 10:33 PM | 4 Likes Like |Link to Comment
  • ChipMOS REPORTS SEPTEMBER 2014 REVENUE; 3Q14 REVENUE ABOVE HIGH-END OF GUIDANCE [View article]
    The collapse of the corporate structure is getting in the way of good performance being reflected in the share price. It's rather unfortunate for now but good for those that are still buying on dips (out of dry powder for me on this position).

    Coupled with excellent business prospects and some serious catalysts I'm sleeping well with Chipmos in my portfolio.
    Oct 9 04:12 PM | 1 Like Like |Link to Comment
  • Micron -2.3% after Samsung announcement; SNDK, TSM also in focus [View news story]
    I cannot believe I got to play the January 2015 35 calls again! A 5% dip in the share price today because of supply that may or may not come online in 2017 because Samsung is trying to decide whether to go with memory or not?? Really??
    Oct 6 04:17 PM | 2 Likes Like |Link to Comment
  • GT Advanced halted with news pending [View news story]
    My condolences for shareholders. Seriously didn't see this coming.
    Oct 6 10:22 AM | 1 Like Like |Link to Comment
  • Ready To Deal: Deep Value In HC2 [View article]
    Hi Bradd,

    Thanks for highlighting this.

    “HC2 is now a public market security, so there is an arbitrage when one buys a private market business and then puts it into a public company holdco. This may even be the heart of Falcone's strategy for HC2.”

    This is one of the premises for my investment in HC2. Finding good value is still possible in this market (although becoming more difficult) but recent acquisitions of public companies are being done with little margin of safety or done at what are seemingly overpriced valuations. The private markets are where good deals can still be had as you pointed out. HC2 seems to be taking this direction and I believe the Jefferies connection can prove to be very beneficial in finding potential candidates as well as in the financing angle.

    What’s even more advantageous and unusual about this scenario is that Falcone, a successful veteran deal maker with a proven track record, is at the helm of this microcap holdco. Starting from such a small base, it's going to take a lot less to move the needle. You really can’t beat this for a start up.
    Oct 5 03:42 PM | 1 Like Like |Link to Comment
  • Ready To Deal: Deep Value In HC2 [View article]
    "5. You already caught the error in not using a multiple on overhead, although I think 4x is too low a multiple. I believe Falcone will get a percentage of gains/earnings so overhead will likely grow faster than the businesses. "

    Hi Tim.

    FWIW According to the 2014 HC2 executive bonus plan in SEC filings I think the percentage you are referring to is derived from the Compensation NAV calc. It seems like it's up to 12% of any NAV increase above the 7% threshold from the beginning of the year til the end of the year.

    Still I'm a little confused. How is overhead likely to grow faster than the businesses? Can you explain that rationale?

    Thanks.
    Oct 4 10:31 PM | Likes Like |Link to Comment
  • Ready To Deal: Deep Value In HC2 [View article]
    Bradd,

    In your previous article written in April you believed that HC2 would acquire assets from Harbinger Captial Partners as the fund looks to liquidate. Do you believe this to still be the case some point in the future or has the company moved in a different (and still potentially rewarding) direction?
    Oct 3 10:01 PM | 1 Like Like |Link to Comment
  • Ready To Deal: Deep Value In HC2 [View article]
    Bradd,

    Excellent article and SOTP analysis on this little holding company. Really enjoyed reading it.
    Oct 2 11:04 PM | 1 Like Like |Link to Comment
  • Update: Theravance Reports Increased Patient Access And High Confidence In Dividend [View article]
    Abdullah,

    This has been my toughest investment of the year. Both GSK and THRX seem to be making new 52 week lows daily. THRX has been absolutely BRUTAL since the beginning of July. What I thought was a good additional buy at 19 is now down over 15% in 3 weeks. Even with the latest nose dive in PPS short interest remains stubbornly high. That bothers me along with no buyers currently in sight.

    That being said it’s currently hard to tell where things are currently at with Breo and Anoro and gauging their true potential at this juncture still remains difficult. As the article here states Breo will move to Tier 3 for Caremark and Tier 2 for Express Scripts but that won’t even start til the beginning of 2015. Anoro’s tier changes on both Caremark and Express Scripts just occurred on August 1st and October 1st. Access will still be an issue. Pending work on asthma approval is yet another patient population still out of reach.

    There was an interesting article written back at the end of July which details some speculation on why Breo and Anoro have been so slow out of the gate. I think pricing pressures may be part of it like suggested along with patient access but the article also provided an interesting view as well.

    http://bit.ly/1pJYZpc

    We’ll see what the GSK report says in terms of progress. No one said investing was easy right?
    Oct 2 10:43 PM | 1 Like Like |Link to Comment
  • Sears Holdings: Stick To The Actual Facts [View article]
    Was in it for the trade thinking Eddie would do a real estate mega deal or Sears Canada would be sold but ate some humble pie and lost on this one. Fortunately somehow I sold the day before Eddie helped himself to a high fee loan for ... well ... himself. Was lucky in that regard.

    Eddie has the credibility of a used car salesman. Management is also cut from the same cloth in that regard. Look to the Sears blog to find plenty of this evidence.

    From "Look Closer" post from Dean Carter on the Sears blog in August:

    What do you want people to know about Sears Holdings and our transformation?

    "It’s like a massive Jenga puzzle – deconstructing, transforming and building all at once. While it’s challenging, disruptive, and comes with a level of ambiguity, it’s exactly what smart companies do. It’s a challenge that’s not for everyone, but we have extraordinary associates and leaders who lean in and make it happen daily. Look closer and you’ll see the green blades of a new SHC emerging."

    I mean come on ... it's exactly what smart companies do? Green blades? Is he talking about fake ground turf in the lawn and garden section? This type of happy talk along with many other signs are clear red flags when reality is showing a VERY different picture.

    Also if you want to see the "pillars" to Eddie's plan, do some shopping at Shop Your Way. There is nothing user friendly about this experience. The site is a dizzy mess but I guess you'll find some good sales if you can search through the maze.

    True longs need to really think about what they are doing here. There is a lot of "I'm investing because of Berkowitz/Lampert". If that's one of the main driver's for investment then you really need to reassess with an open mind. As for the real estate just think how much value destruction will come before Lampert can liquidate. And when he does liquidate, do you think he somehow sells it to himself at advantageous prices?
    Sep 26 07:51 AM | 2 Likes Like |Link to Comment
  • The Vultures Are Circling Yahoo And It Is Time To Join Them [View article]
    The trading in yahoo since the baba ipo Friday looks like the aftermath of a lot of traders on margin getting blown apart hence the free fall dive. Took a position in the January 2015 calls. The author is likely correct about an activist stepping into the ring. There is just way too much cash and sum of parts sports a much higher valuation given the pps.
    Sep 22 03:53 PM | 1 Like Like |Link to Comment
  • Update: Theravance Reports Increased Patient Access And High Confidence In Dividend [View article]
    Adbullah,

    I also think the market is pricing in a lower yield for GSK as well. Payout ratio is between 80 and 90% (pushing close to 90%) so a lot of investors are thinking the dividend will be cut. My guess is that GSK will have to cut it at most in the next two quarters if things do not improve. They still have significant R&D to account for.

    As for THRX it has largely been a volatile stock even on a 1,2, or 5 year chart. I am not sure what is causing this stock to dive lately. These gyrations can easily happen with such a low float and large amount of short interest. Looking at the last quarterly report, there are likely around 114+- million shares. For example shares have cratered from last Friday about -9.77% yet only 2.36% of all shares outstanding changed hands if you combine all 5 days this week. It's hard to take a true stance on what the market is thinking with such a small amount of overall volume represented in these trades.

    Regardless, I'd say the past 3 months has been a trying time for most Theravance holders. Added 15% to my core holding today of an already overweight position at $19/shr.
    Sep 12 10:36 PM | 1 Like Like |Link to Comment
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