Value Investing Thoughts on PDLI (PDL BioPharma)? Looks like a bargain with excellent management and growth prospects. |
- Thoughts on PDLI (PDL BioPharma)? Looks like a bargain with excellent management and growth prospects.
- Would shorting stocks for the purpose of reducing portfolio's beta/being market neutral be a bad idea?
- Calculating margins on fully integrated companies with high intersegment revenues
| Posted: 28 Jan 2018 02:12 AM PST "PDL BioPharma Inc is engaged in the discovery of a new generation of targeted treatments for cancer and immunologic diseases. It focuses on intellectual property asset management, investing in new royalty bearing assets and maximizing value of its patent." Over the last year, the company has pivoted, from making royalty and debt investments, to primarily making equity investments. The framework would allow for greater upside. The company has an excellent track record 'betting' on biotech companies, it has nearly $1b in retained earnings, much of which came from long bets that came to fruition and have past. The company has an impressive track record. The company's Enterprise Value is $173m and Market Cap is $449m. They have over $500m in cash to deploy. Based on a recent offer they made to Neos Therapeutics (accelerating revenue, no profits yet), it appears that they are making medium term bets on drugs that will get approved and be cash cows. Their primary equity investment in Noden Pharma recently received FDA approval for hypertension. "While we have previously made three different types of investments to build value for our stockholders – royalty monetizations, debt structures and hybrids of the two proceeding, it is our intent to prioritize equity investments in specialty pharmaceuticals over royalty monetizations and to significantly reduce debt investments." Reasons to buy this company. An investment in conservative and value oriented biotech investment managers. If you want to invest in biotech, but are not sure how to judge the complicated calculus of FDA approvals, then this company will do the heavy lifting. It is cheap, yet it has net margins that are north of 24% TTM, and likely to increase as new investments are made and come to fruition. Reasons why this company is cheap now. The company has a very choppy income statement, and one of their largest cash flow generators ended in 2016. I'm really looking forward to your insights into this company. [link] [comments]  |
| Posted: 27 Jan 2018 11:37 AM PST There have been a few threads on short selling recently, and overall the responses seem fairly negative on the topic. I'm working on my equity analysis skills and the motivation for doing that is that I want to trade stock spreads in an attempt to lower correlation with the broader market. I get some of this from forex trading, but the variety of uncorrelated bets I can take on in currencies seems limited in comparison to stock/stock spreads. The idea is similar to what Dalio has called the "Holy Grail of investing", "People think that the way that you do best is to have the best possible bets," Dalio said. "The way that you do best is to have the best possible diversification. I learned that if I could have 10 or 15 uncorrelated bets, and they're all about the same return, that I could cut my risk by 75% or 85%," he added. That would mean that I would increase my return to risk ratio by a factor of five through diversification." In another interview, Dalio said that Bridgewater sees the opportunities for uncorrelated bets as virtually unlimited because of spreads. I admittedly don't have the skills for deep equity analysis yet, but I'm working, and I tend to be a fast learner. As of now the only short position I have is a small short Herbalife position, I'd like to get to the point of confidently using stock spreads on themes that create uncorrelated opportunities. I do plan to keep the portfolio net long in various degrees depending on where I feel we are in the macro/business/credit cycle. [link] [comments]  |
| Calculating margins on fully integrated companies with high intersegment revenues Posted: 27 Jan 2018 10:26 AM PST I'm analyzing a company that is fully integrated and records a large amount of intersegment revenues, especially at the top of the value chain (5 different segments). When I'm calculating the profitability margins on each segment, should I be including the intersegment sales? The only thing the 10-K says about the intersegment sales is: "Intersegment sales and transfers reflect arm's length prices as if sold or transferred to third parties at the time of inception of the internal contract, which may cover several years." [link] [comments]  |
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