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I believe it is be for conditional approval.
KKR to Open Canadian Office With Focus on Energy Investments
http://online.wsj.com/news/articles/SB10001424052702303848104579310830886124534
And a summary found on seeking alpha.
KKR eyeing Canadian energy sector investment up to several billion dollars
Jan 9 2014, 16:31
KKR says it will open its first Canadian office next month in Calgary, the capital of Canada's oil patch, as it seeks to tap into growing demand for private-equity financing in the region and expand its presence in the global energy industry.
KKR Director Brandon Freiman, who will relocate from the NYC headquarters to start up the new office, is eyeing investment of $500M to "several billion dollars" over the next five years in upstream oil and gas production, midstream pipelines and related infrastructure as well as energy services businesses.
The planned investments will include providing financing instead of outright takeovers, KKR says.
Canadian energy names on the radar: SU, IMO, BTE, SOQ, ERF, CVE, COSWF, AAV, BXE, CNQ.
fwiw i cannot confirm that the companies listed are actually from kkr and not an add on by SA.
In my opinion canadian oil is undervalued compared to american companies and owning the best in breed will be a good bet over the long run. I own CNQ and may add others from the list. CNQ has a 25% free cash flow growth rate through 2017.
Although I do not see all the similarities between the two, one could parallel the both companies have drugs with proven p3 efficacy and both have billion dollar potential. I have a small position in ACAD and would like to see the thoughts of others, if any exist.
Ron, CELG has a growth rate of 25% through 2017. It's P/E is pricey right now but that will change as Abraxane, Pomylast, Apremilast, and Rev in maintnance and EU all ramp up. The CELG story is as strong as ever. I too thought it was pricey at $100, only to buy in at 130 to 150. For a wealth of information visit the investor village CELG board. Good Luck.
Adding 500 million per year while cutting Apremilast estimates in half leaves a lot of upside potential imo (I personally think there is a sizable market for Apremilast). Also look at CELG's pipeline and partnership base, the depth is stunning. CELG running on all cylinders right now.
Abraxane and Pomalyst should soon be there as well.
Excuse me if I am wrong, but I thought ritonavir had to be dosed BID?
My only comment is that the technology is "leased" so to speak. I believe it comes from a german lab, so when looking at CYTR one may want to consider that the value of the "platform" isn't there. From my simple minded prospective the data looks pretty good.
And I should add; Congrats to CYTR longs today.
I certainly can't answer that question Dew but I would like to pose another one to you? What do you feel is a fair P/E for Deere?
Barrons Picks for 2014
I am long CNQ. The thought of going from 1billion to 5 billion free cash flow by 2017 has me interested.
Even after the market's big runup, some shares look tempting.Why GM, Deere, Nestlé, MetLife, Citi, Intel, US Airways and others could climb.
It has obviously gotten tougher to find bargains in the stock market after the broad rally that has lifted the Standard & Poor's 500 by 27% in 2013.
But using screens, investor feedback, and Wall Street research, we've come up with our 10 favorite stocks for 2014. This is the fourth year in a row that we've predicted the coming year's winners in a cover story. The 2014 list includes well-known companies like General Motors (ticker: GM), Citigroup (C), Nestlé (NSRGY), Intel (INTC), and Deere (DE).
It's unlikely that this bunch will do as well as the 10 stocks we selected a year ago ("Where to Invest," Dec. 10). That group, led by Western Digital (WDC), BlackRock (BLK), and Viacom (VIA.B), was up, on average, 35.2% through Thursday, nine percentage points better than the S&P 500.
The success of last year's list shows the allure of stocks with low price/earnings ratios. Five of the 10 had single-digit P/Es, based on then-current projections of 2013 earnings, and only one, Barnes & Noble (BKS), had a multiple above 13. Buying low-P/E stocks lets investors benefit from both earnings growth and P/E-multiple expansion, which is what played out this year.
Based on predicted 2014 profits, six of the 10 stocks on our current list have multiples of 10 or lower -- Citi, GM, Deere, MetLife (MET), US Airways Group (LCC), and Barrick Gold (ABX). Buying cheap stocks looks like a good approach, given the market's elevated level.
For the record, our 2012 list beat the market, gaining 17% against a 12.6% rise in the S&P, while the 2011 list trailed the benchmark index, falling 7% as the S&P dropped 2%. We think that all 10 of our new selections can produce 15% total returns in 2014. Our picks, in alphabetical order:
Barrick Gold: Want a depressed play on a depressed commodity? With a year-to-date decline of 56%, to $15.50, Barrick trades below where it did a decade ago when gold was below $400 an ounce, versus $1,228 now.
Barrick's founder and longtime chairman, Peter Munk, a key architect of its disastrous expansion strategy of recent years, is stepping down at year end. And Barrick has stopped development of a huge mine in South America that faced political obstacles. It also has shored up its balance sheet with a $3 billion equity offering in October.
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Barrick trades for just seven times projected 2014 earnings. What it has lacked is free cash flow, because of heavy capital expenditures. Management is moving to generate more free cash, but it can do more.
Earlier this year, we estimated that Barrick would be worth $44 a share in a breakup scenario. That looks high now, given weaker gold prices and the dilutive equity offering. But Barrick still could be worth $35 or more. It wouldn't be surprising to see an activist try to mine gold from Barrick next year.
Canadian Natural Resources: This company has one of the best production outlooks among large North American energy outfits and could gush free cash flow after it completes an expansion of its oil-sands facility, scheduled for 2017.
Its shares (CNQ), now trading at $32, have risen just 11% in 2013, mostly because the company is getting a deeply discounted price for its Canadian heavy crude, which accounts for 45% of its output. That crude trades at a discount of $30 a barrel, relative to West Texas Intermediate, the U.S. benchmark. The gap could narrow next year, boosting cash flow, because of increased rail capacity and the potential go-ahead for the Keystone XL pipeline (see Follow-Up).
A 60% dividend boost in October has brought the stock's current yield to 2.4%. Energy output, heavily weighted toward oil, is likely to rise 7% in 2014. Free cash flow could hit $5 billion annually by 2018, from $1 billion next year, once the Horizon oil-sands facility expansion is done.
Citigroup: Well capitalized, Citi has the best international franchise among major banks. It also has a cheap stock. At $51, it trades for less than 10 times projected 2014 earnings of $5.41 a share and below its tangible book value of $54.52. No other big financial company trades below tangible book. And Citi's P/E is one of the lowest in the sector.
The bank has an unmatched global presence in 100 countries and gets almost 60% of its revenue outside of North America, triple the percentage at JPMorgan Chase (JPM). Citi's low-key CEO of the past year, Michael Corbat, actually is a banker -- Citi's first such leader in more than a decade -- and he's winning over Wall Street with his disciplined, no-nonsense approach. He aims to boost Citi's still-anemic returns, which could lead to $6-plus in profits in 2015.
Citi is expected to get the regulatory go-ahead for a big boost in its trivial penny-per-quarter dividend and to expand its share buybacks in 2014. The payout could be 30 cents or more per share next year, and the buybacks could total almost $5 billion, writes Bernstein analyst John McDonald. He rates the stock Outperform, with a $57 12-month price target.
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Deere: It's rare to find any industrial stock changing hands at 10 times earnings, let alone an industry leader like Deere, whose shares fetch about $84. Caterpillar (CAT) and the like have mid-teens multiples on 2014 earnings. Some smart investors own Deere, including Berkshire Hathaway (BRK.B) and Cascade Investments, Bill Gates' investment arm.
The knocks on Deere, the top producer of farm equipment, are that the U.S. farmers are being pinched by lower grain prices and that reduced government tax incentives might crimp sales. With Deere projecting a single-digit sales drop for its current fiscal year, ending next October, Wall Street views it as dead money. Yet, a low valuation can create its own catalyst, such as an activist investor.
The long-term outlook for Deere is good because a rising global population will need more food. Deere has a strong balance sheet, and it increased its stock-buyback program last week to $8 billion, about 25% of its market value. Deere is the kind of company that Warren Buffett probably would love to buy if it became available. Stranger things have happened.
General Motors: A profitable GM has revamped its vehicle lineup and looks poised to start paying a dividend in 2014 and buy back a large amount of stock.
Its shares are up 36% this year, to $39, but still trade at just eight times estimated 2014 profits. Analysts like Barclays' Brian Johnson see upside to about $50. GM holders include hedge-fund manager David Einhorn and Berkshire Hathaway.
Washington is likely to finish selling its remaining stake in the car maker by year end, and there's speculation that GM will buy back a $4 billion equity stake held by the Canadian government next year.
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GM has $15 billion of net cash (after subtracting debt and preferred) and is generating $8 billion of free cash flow annually. Initiation of a 1% to 2% dividend is a good bet for next year. GM could be a better play than Ford (F), which trades at a premium to it and isn't buying back stock.
Intel: The chip giant could surprise Wall Street in 2014 as concerns fade about its exposure to personal computers and limited inroads into tablets and smartphones.
At $24, Intel trades for 13 times projected 2014 earnings of $1.90 a share and yields 3.7%. Intel's dividend rate is the highest among major techs.
There are signs that the PC market is bottoming, and Intel is moving aggressively into tablets and smartphones, now dominated by chips using architecture from ARM Holdings (ARMH). Intel's manufacturing might could pay off with chips with faster processing speeds and lower power needs. Jefferies analyst Mark Lipacis writes that Intel "for the first time" is about to have a "manufacturing advantage in mobile."
Then there is Intel's high-growth group focused on the semiconductors for servers and other storage devices for cloud computing. Credit Suisse analyst John Pitzer sees Intel earning $2.50 a share in a few years. He has a $30 price target.
MetLife: Even after a 55% gain in its shares this year, to $51, MetLife is valued at less than 10 times projected 2014 profits of $5.76 a share and at a slight premium to a conservative calculation of book value of $48 a share.
MetLife could rise into the $60s in 2014 if earnings estimates pan out and it gets the regulatory OK to start buying back stock and to lift its dividend. Bulls think the payout could rise about 50%, lifting the yield to 3% from the current 2%.
Morgan Stanley analyst Nigel Dally likes MetLife's "improving returns, reasonable growth, and ongoing expense-reduction program." It has a respectable 11% return on equity. It's also a play on higher interest rates; life insurers could reinvest proceeds from maturing bonds at more attractive yields if rates rose.
Nestlé: The world's largest food outfit has one of its industry's best growth outlooks, thanks to a big presence in the developing world. The Swiss company aims for 5%-6% annual organic sales growth, and it should come close to hitting that target this year. Analysts believe that Nestlé is capable of high single-digit yearly gains in earnings per share.
Nestlé's U.S.-listed shares, at around $72, fetch about 17 times estimated 2014 profits. Listed in the Pink Sheets, they yield 2%.
Nestlé isn't cheap, but it rarely is a bargain, because of the strength of its global portfolio, which includes candy, coffee, bottled water, ice cream, infant formula, and pet food. It owns almost 30% of cosmetics maker L'Oréal, a stake worth $30 billion. Excluding that, Nestlé trades at only a small premium to slower-growing U.S. food outfits like General Mills (GIS) and Kellogg (K).
Simon Property Group: Despite the growth in online retailing, Americans still like shopping at malls; foot traffic was higher over the Thanksgiving weekend than it was a year earlier. Simon, the industry leader, owns 220 traditional malls and outlets, including the Copley Place in Boston and the Forum Shops in Las Vegas. Its shares are down 4% this year because of higher interest rates, a tough retail environment, and general weakness in real-estate investment trust stocks.
Simon (SPG) looks inexpensive, trading at about $151, down from a spring peak of $180. In October, it boosted its quarterly payout to $1.20 a share, 9% above the year-earlier level. Current yield: 3.2%.
Morgan Stanley analyst Haendel St. Juste recently upgraded Simon to Overweight from Equal Weight and boosted his price target to $186 from $180. Simon comfortably covers its dividend and generates an additional $1 billion of annual free cash for mall expansion and other growth initiatives. Funds from operations, a key REIT financial measure, are expected to rise 8% next year.
US Airways Group: This airline may be the latest beneficiary of industry consolidation, now that the government has cleared its controversial merger with American Airlines.
Shares of the carrier, which will emerge as the world's largest airline, trade at about $22, less than 10 times estimated 2014 profits of $2.45 a share (assuming a full tax rate). Four airlines -- US Air, Delta Air Lines (DAL), United Continental Holdings (UAL), and Southwest Airlines (LUV) -- will soon control more than 80% of domestic air traffic, which could keep pricing rational and allow them to boost fares if oil prices rise. While US Air could encounter merger-integration problems, they probably won't last into 2015.
JPMorgan analyst Jamie Baker last week boosted his price target to $37 from $29, arguing the "earnings power of the new American [as the carrier will be known] appears sorely underappreciated." Baker sees the potential for $3.50 a share in fully taxed 2015 profits and notes that US Air trades at a sharp discount to Delta and United.
CELG MM-020 data
Very convincing data today for expanded use of Revlimid. Will support 1st line maintenance US use (with expanded time of use) and EU approval. Looking at 27% EPS growth through 2017, with projected room to grow.
This sums up my current feelings very nicely. Right now there are a lot of flashing lights surrounding GILD and i'm not sure the market realizes the large disparity between gt1 and gt 2,3. There may come a point in the next 12 months were GILD sentiment reverses and a buying opportunity presents itself.
Do you know which company will get approval first for genotype 1 all oral?
I also openly wonder if everyone buying GILD right now realizes the first few quarters of sales may not be "off the charts" until the all oral combo is approved.
It is early in the life cycle but SSH's device could be the answer to heart devices and blood clots.
Where did you read this Ron? I missed this in the press release if it is there. t.i.a.
BofA note on HCV
ABBV’s first Phase 3 trial reads out, awaiting 5 next studies
ABBV announced positive data for the first in a series of six Phase 3 trials for its
HCV oral combination from the SAPPHIRE-I study, showing a 96% SVR (viral cure)
rate for patients treated for 12 weeks. We are not surprised by the positive data, and
believe that additional studies will be important to understand the near-term
competitive outlook to GILD’s oral regimen. Key perspectives to keep in mind as we
await the remaining studies:
(1) The SAPPHIRE-I study selected for an easy-to-treat GT1 patient
population, excluding any patients with cirrhosis. In addition, the regimen
tested involved a high pill burden: 5-6 tablets of ribavirin (RBV) twice daily
(10-12 pills), two pills once daily of the fixed combo ABT450/r/ABT267, and
one pill twice daily of ABT-333. High pill burden and tolerability of RBV is
an incremental drawback vs. GILD’s one pill once a day regimen.
(2) The amount of viral breakthrough and relapse was low in SAPPHIRE-I, at
1.7%. We expect this rate to increase in patients with cirrhosis and prior
treatment failures. Resistant virus is an incremental drawback vs. GILD’s
high barrier to resistant regimen.
(3) The majority of patients enrolled were patients with GT1a virus, which
tends to be more difficult to cure. SVR rates were incrementally lower, at
95%, vs. 98% SVR in GT1b. We suspect that most, if not all, of the viral
breakthrough/relapsed patients were in GT1a, which suggests a total
resistant population of 3% for GT1a, still relatively small in this setting.
(4) Key trials we are waiting for from ABBV include PEARL-4 and
TURQUOISE-2. PEARL-4 is evaluating the role of RBV in GT1a patients.
We expect a higher relapse rate without RBV in this setting, based on
Phase 2 results, which would reinforce a higher pill burden requirement
and increased side effects to manage vs. GILD. TURQUOISE-2 is
evaluating treatment experienced patients and cirrhotics for the first time
(12 and 24 weeks). We think this study is likely to show that 24 weeks will
lead to better treatment outcomes for ABBV, although there is zero prior
clinical data to base our predictions on; GILD is likely to need RBV in the
cirrhotic setting, based on Phase 2 results, and this may be enough, such
that 24 weeks isn’t necessary for GILD.
For the record BofA now has a 107$ target for GILD
http://news.yahoo.com/princeton-university-import-vaccine-combat-meningitis-outbreak-164804011.html
Novartis makes the vaccine apparently. Subtype B is one of the three most common strands world wide and thankfully subtype A, C, and W-135 already have vaccines.
The cost of inflation and PCL
Dew, As the Fed's talks of tapering heat up how does this impact your view of PCL where a large part of their allure is the dividend + tax rate. In semi - private conversations with an incredibly wise oil man he has warned of the impact of inflation on MLP investments and expects to see a direct inverse correlation between interest rates and MLP prices (based of yield). I expect the same to hold true for PCL. Do you agree with this?
Also where do you see the growth coming from for PCL, an overall increase in the price of timber? I ask because if PCL has a stable but not growing business than a rise in interest rates could have a large effect.
Thanks in advance Dew
PCL question
This is directed towards Dew but anyone feel free to chime in.
Do you know of a break down of where PCL derives their subsurface royalties from? I ask because I believe they may have some very valuable land in the south west corner of Mississippi which if it is as I think will be an incremental positive for PCL. Look up the Tuscaloosa Marine Shale, the "sweet spot" is in Wilkinson and Amite county MS and PCL has some acres there. I am trying to track down an acre amount and royalty rate from investor relations, so far to no avail.
Thanks
The next question becomes what drug will these patients switch to? I welcome anyone with knowledge of the oncology space to chime in.
I believe at some point CELGZ will lose it's current focus, and if/when it does I will be patiently waiting to buy some. DonShimoda, thank you for summing it up with that prospective.
P.S. I also agree that Celgene may buy them at some point.
CELGZ
Here is one that I am going to keep on my radar. CELGZ is a CVR that came from of a merger of Celgene and Abraxis that happened a few years ago. The payout agreement is for abraxane: 2.5% on sales from 1-2 bill, 5% from 2-3 bill, and 10% over 3 billion. In the most recent quarter (out thursday) management projected sales reaching 1-1.25 billion by 2015 and 1.5-2 billion by 2017. In the last quarter abraxane had sales of 170 million (680 on a yearly basis). This number will be greatly increased by the recent approval in pancreatic cancer, which is seen to be at least a 400 million per year addition, “conservatively”. Not to mention the 4-5 other indications, in which abraxane has an opportunity for approval. Other indications also are not factored into company guidance.
So lets be conservative and say abraxane never reaches more than 1.1 billion per year in sales until 2017 and 1.5 billion until 2025. There are 43 million shares, and the original founder of abrades still owns 80%.
.06 $ per year (15-17)
.18 $ total (15-17)
.29 $ per year (18-25)
2.32 $ total (18-25)
2.5 $ total. That is not so good, however there are many variables that can be changed in that scratch calculation to make it look a lot more appealing. First there is a clause that states the CVR can go until 2030 if it is still producing over 1 billion. That would include future indications and combinations of Abraxane, and considering it is already doing 680 million per year, it is definitely possible. Lets say it does 1.25 billion between 2026-2030. That is an additional .87$ per share. Still that is only a total of 3.19 or a 59% return over 17 years. Remember that management projects sales to 2 billion by 2017, so I could reasonably double some of my numbers and still be within management guidance.
However, that is “worse case scenario”. So lets look at best case scenario.
"here is one guess of what a payout might look like based on Abraxane sales alone. Assuming sales of $1.3 billion in 2016, peak sales of $3 billion, and 2030 sales of $2 billion, we'd receive $14.67 per CVR in total.
YEAR SALES PAYOUT
2016 1,300 $0.173
2017 1,600 $0.347
2018 2,000 $0.578
2019 2,500 $1.155
2020 3,000 $1.733
2021 3,000 $1.733
2022 3,000 $1.733
2023 3,000 $1.733
2024 2,750 $1.444
2025 2,500 $1.155
2026 2,000 $0.578
2027 2,000 $0.578
2028 2,000 $0.578
2029 2,000 $0.578
2030 2,000 $0.578
$14.674"
This is from a respected poster on the IV CELG board, moranpicks. He knows as little as us, just chose different numbers. I think his 3 billion is aggressive but I can’t argue it considering the potential outside the few indications that are figured into the calculations.
Any one else have thoughts on CELGZ? I am very interested...
Propthink ENTA article
http://propthink.com/enanta-pharmaceuticals-holding-ahead-key-events-10-22-13/7293
Of note is ABBV's confrence call is on 10/25.
Considering the headlines of the data was already released, why the move now?
Very interesting read, thanks to Kadaicher1 for information. I'd be very happy to start an open conversation if you or anyone else wants.
One point that stood out to me was from Prana's September 2013 PR. A 40% patient retention rate seems very low, particularly for mild cognitive impairment. This is a point I am curious about.
It's also worth noting that the lead doctors from the analysis of the P2 trial decided it was worth investing into prana.
Alzheimer's treatment is the next frontier. Does anyone have investment ideas for alzheimer's related companies? I ask this, but it is hard to have conviction when there is still debate over the actual cause.
I have no knowledge of PCSK9 target however a few things from this PR don't sit well with me. For starters the headline reads up to 57% and hidden deep in there ALNY states the mean is 40% reduction of LDL. A quick search revealed that lipitor mean reduction is 39 - 60% dose dependent. And there is no mention of the baseline LDL levels. Also why would anyone take an IV injection when many PO alternatives are available?
To be fair I know nothing about this company other than the name and this press release.
Nope Dew, never heard of them.
Time will tell (enta +abbv)
One thing of interest is ABBV (+4%), also close to 52wk high. Good to see both stocks moving in same direction.
So does that theoretically cut ENTA's future revenue to 35% of current estimations? In other words, are current models based on royalties of 10% of 2 billion (for discussion sake) and will that now become 10% of (35% of 2 billion)?
ZTS added to BofA US1 list.
Profit margin acceleration story underappreciated
With an overly controversial 2Q report behind it, focus should turn to ZTS’
meaningful profit margin ramp in 2H13 following its formal separation from Pfizer.
On annual revenue growth of 4%-6%, ZTS should grow its EBITDA margin 382 bps
in 2013 and 246 bps in 2014, as it optimizes profitability as a standalone company
through various initiatives such as a new ERP system, changes in manufacturing
and supply chain processes, modified health and pension plans, and more cost
effective real estate management.
Sounds oddly familiar ;)...
Thanks Dew for sharing your knowledge!
SNTS. Any opinions?
SNTS bounced from 23ish to 28 on Q2 earnings (i think) and has since drifted back down to 22. Any thoughts on this company?
AUXL and BSTC today
Strange to see AUL up 4% and BSTC up pennies on todays news of the PDUFA pushback. I cant figure what to make of it. Anyone have thoughts? TIA