Novartis (NVS)

[flatlander_60048]

NVS has gotten pummeled the past two weeks. The short position is at nearly 35 million shares. I think this may be an all time high. The hedge fund community appears to be betting that NVS will need to up their offer for the minority stake in Alcon before the end of the year. I don't think the shorts will be as confident going into the new year when they could be blindsided by any number of news items (good Gilenya launch data, all business units clicking like last quarter etc.).

I think NVS should show the shorts that they are serious about being comfortable owning 77% of Alcon. Perhaps a tender offer to purchase MNTA at 30 would send a message to the hedge fund community that they see no urgency to consummate the Alcon takeover. I imagine that MNTA has told NVS that they want to remain independent for now. I'm certain NVS would not do a hostile takeover but there must be a price where MNTA would say bring a tender offer. I would think a 80 to 100% premium would provide a good discussion point.

FL