NYSE: GILD
Gilead Sciences, Inc., a biopharmaceutical company, engages in the discovery, development, and commercialization of therapeutics for the treatment of life-threatening infectious diseases. Its products include Truvada, Viread, Atripla, and Emtriva for the treatment of human immunodeficiency virus infection in adults; Hepsera, an oral formulation for the treatment of chronic hepatitis B; AmBisome, amphotericin B liposome injection to treat serious invasive fungal infections; Flolan, an injected medication for the long-term intravenous treatment of primary pulmonary hypertension and pulmonary hypertension; and Vistide, an antiviral medication for the treatment of cytomegalovirus retinitis in patients with acquired immunodeficiency syndrome (AIDS). The company also offers Tamiflu, an oral antiviral for the treatment and prevention of influenza A and B; Macugen, an intravitreal injection for the treatment of neovascular age-related macular degeneration; Letairis, an endothelin receptor antagonist for the treatment of pulmonary arterial hypertension in patients with WHO Class II or III symptoms; and Cicletanine, which is being evaluated for the treatment of pulmonary arterial hypertension.
My attention was drawn to this company after its acquisition of CV Therapeutics, Inc. for the rights to the Ranexa (ranolazine). With the positive prospects for this drug and Gilead's line of antiviral treatments, Gilead should be a stable, if not profitable investment for the medium term. Of current interest is Tamiflu for which it receives 20% royalties from Roche. With the outbreak of "swine flu," flu vaccine sales are poise to rise as is Gilead's bottom-line.
Tuesday, May 5, 2009
Sunday, March 22, 2009
A poor man's access to profitable Wall Street corruption
I recently suggested Goldman Sachs as a "buy" given its revolving door policy with the US government. As an alternative to owning Goldman Sachs common stock, which can be volatile, you can buy a trust preferred security offered by Goldman Sachs. They are commonly described as a hybrid between a bond and a preferred share. In any case, one offering from Goldman Sachs which I would like to highlight is
Corporate Asset Backed Corp., CABCO Series 2004-1 Trust (Goldman Sachs Capital I), 6.00% Class A-1 Callable Certificates
It trades like a stock on the New York Stock Exchange with the ticker symbol GYA.
Click here for IPO prospectus.
There are of course a lot of technical details associated with this security. I think the following is all you need to know. Assuming Goldman Sachs will never go bankrupt, this security will always be "in the money" and you stand to collect an annual dividend of $1.50 per year and have each share redeemed at $25 if you wait for its maturity on 2/15/2034. With the shares trading around $15 now, you stand to collect a 10% dividend yield on what I consider to be a safe bet. This is much higher than any interest rate you can earn in any bank or investment account. With this security, you also have the potential for capital gains. If Goldman Sachs goes bankrupt, the worst case scenario is you lose the value of your then-investment. In the event of bankruptcy liquidation, you stand to collect residual proceeds before the common shareholders. This makes these shares "safer" than owning common stock.
I doubt Goldman Sachs would ever go bankrupt given their prowess and profitability. So here's a safer alternative to participating in Goldman Sach's corrupt profits without having to actually work for them.
Corporate Asset Backed Corp., CABCO Series 2004-1 Trust (Goldman Sachs Capital I), 6.00% Class A-1 Callable Certificates
It trades like a stock on the New York Stock Exchange with the ticker symbol GYA.
Click here for IPO prospectus.
There are of course a lot of technical details associated with this security. I think the following is all you need to know. Assuming Goldman Sachs will never go bankrupt, this security will always be "in the money" and you stand to collect an annual dividend of $1.50 per year and have each share redeemed at $25 if you wait for its maturity on 2/15/2034. With the shares trading around $15 now, you stand to collect a 10% dividend yield on what I consider to be a safe bet. This is much higher than any interest rate you can earn in any bank or investment account. With this security, you also have the potential for capital gains. If Goldman Sachs goes bankrupt, the worst case scenario is you lose the value of your then-investment. In the event of bankruptcy liquidation, you stand to collect residual proceeds before the common shareholders. This makes these shares "safer" than owning common stock.
I doubt Goldman Sachs would ever go bankrupt given their prowess and profitability. So here's a safer alternative to participating in Goldman Sach's corrupt profits without having to actually work for them.
Friday, March 20, 2009
A case for Philip Morris International
The use of tobacco products, especially cigarettes is hazardous to your health. You hear about the risk of lung cancer, but there are a host of other health ailments that can be contributed to cigarette smoke such as heart disease and gum disease. According to some statistics, an average 400,000 Americans die each year due to smoking-related illnesses.
It may seem that investing in a cigarette manufacturer seems immoral. However, from my standpoint, tobacco companies will exist and prosper and any investment or lack thereof, will not change the situation. It is inconceivable that people will withhold enough investment capital to prevent tobacco companies from conducting business. Therefore, the idea of socially responsible investing is of little significance in effecting change.
An investment in Philip Morris International (PM)
Rationale: This is the world's largest cigarette manufacturer. Following its split from Altria (MO) which handles the domestic market, PM has only international operations. The split diverted the potential litigation liabilities of MO from PM. This was a practical decision as the US has been extremely litigious towards the tobacco industry. Despite a global recession, the company offers stable cash flow as their consumer base is essentially addicted. The company has had double-digit percentage growth in Latin American and Asian markets. As the emerging markets continue to grow, there is little doubt that PM will participate in the growth. In light of the drastic expansionary monetary policy of the US Federal Reserve, coupled with the enormous fiscal budget, the strength of the US dollar does not bode well. Stock in this company is desirable in a well-balanced portfolio as PM's sales are denominated in non-US currencies, which mitigates some of the currency risk in holding other US-denominated assets. This stock also boosts a safe 6% dividend yield @ $36 per share.
Risks:
Currency risk: a strong dollar can devalue the earnings.
Litigation risk: Western Europe is beginning to shift in the direction of the US with regards to litigation against tobacco for the health damages. Other regions of the world may eventually follow suit. Potential liabilities can bankrupt the company.
Raw material costs: Inflation, increased supply shortages, increased raw material costs all diminish earnings.
It may seem that investing in a cigarette manufacturer seems immoral. However, from my standpoint, tobacco companies will exist and prosper and any investment or lack thereof, will not change the situation. It is inconceivable that people will withhold enough investment capital to prevent tobacco companies from conducting business. Therefore, the idea of socially responsible investing is of little significance in effecting change.
An investment in Philip Morris International (PM)
Rationale: This is the world's largest cigarette manufacturer. Following its split from Altria (MO) which handles the domestic market, PM has only international operations. The split diverted the potential litigation liabilities of MO from PM. This was a practical decision as the US has been extremely litigious towards the tobacco industry. Despite a global recession, the company offers stable cash flow as their consumer base is essentially addicted. The company has had double-digit percentage growth in Latin American and Asian markets. As the emerging markets continue to grow, there is little doubt that PM will participate in the growth. In light of the drastic expansionary monetary policy of the US Federal Reserve, coupled with the enormous fiscal budget, the strength of the US dollar does not bode well. Stock in this company is desirable in a well-balanced portfolio as PM's sales are denominated in non-US currencies, which mitigates some of the currency risk in holding other US-denominated assets. This stock also boosts a safe 6% dividend yield @ $36 per share.
Risks:
Currency risk: a strong dollar can devalue the earnings.
Litigation risk: Western Europe is beginning to shift in the direction of the US with regards to litigation against tobacco for the health damages. Other regions of the world may eventually follow suit. Potential liabilities can bankrupt the company.
Raw material costs: Inflation, increased supply shortages, increased raw material costs all diminish earnings.
Monday, March 16, 2009
Taxpayers are the slaves of Goldman Sachs
The Federal government "had" to bail out AIG.
Whose opinion?
AIG CEO Edward Libby
(former Goldman Sachs director)?
Then-Treasury Secretary Henry Paulson
(former Goldman Sachs CEO)?
New York Federal Reserve Board of Directors
(many of whom are Goldman Sachs alumni)?
Who was the biggest beneficiary of the AIG bailout?
Goldman Sachs!
What just took place: Transfer of wealth from taxpayer to AIG to Goldman Sachs (and other investment banks).
Commentary: Goldman Sachs had some of the largest hedge funds who bought put options and credit default swaps and then sold short on the respective common stock. They engineered the trillions in losses and billions in profit for themselves. And finally, through the endless federal bailouts, they take the taxpayers' hard-earned money even though the taxpayer was not responsible for any of this scheming.
Opinion on Goldman Sachs common stock: BUY
Rationale: Their revolving door policy with the US government guarantees their success and solvency.
Applicable Tech Ticker video clip
Whose opinion?
AIG CEO Edward Libby
(former Goldman Sachs director)?
Then-Treasury Secretary Henry Paulson
(former Goldman Sachs CEO)?
New York Federal Reserve Board of Directors
(many of whom are Goldman Sachs alumni)?
Who was the biggest beneficiary of the AIG bailout?
Goldman Sachs!
What just took place: Transfer of wealth from taxpayer to AIG to Goldman Sachs (and other investment banks).
Commentary: Goldman Sachs had some of the largest hedge funds who bought put options and credit default swaps and then sold short on the respective common stock. They engineered the trillions in losses and billions in profit for themselves. And finally, through the endless federal bailouts, they take the taxpayers' hard-earned money even though the taxpayer was not responsible for any of this scheming.
Opinion on Goldman Sachs common stock: BUY
Rationale: Their revolving door policy with the US government guarantees their success and solvency.
Applicable Tech Ticker video clip
Saturday, March 14, 2009
Investing admist lies and market manipulation
I think the content of this video is self-explanatory.
http://www.youtube.com/watch?v=5M-OiXUhZNE
Personal advice: Do not believe what you hear and be wary of "expert" opinions. A successful investor invests in good companies that they understand well. If you seek to "guess" or "time" the market, I doubt you will have any success in the long-run, unless you are an insider or a major market player.
http://www.youtube.com/watch?
Personal advice: Do not believe what you hear and be wary of "expert" opinions. A successful investor invests in good companies that they understand well. If you seek to "guess" or "time" the market, I doubt you will have any success in the long-run, unless you are an insider or a major market player.
Lehman Brothers bankruptcy was engineered?
I hope the following video will be available for as long as this blog is online.
http://www.youtube.com/watch?v=ATDsUk10BKE
According to hedge fund insider, Jim Cramer, this is what happened.
Lehman Brothers had $158 billion in debt.
Hedge funds bought $365 billion worth of credit default swaps* (bond insurance) on Lehman Brothers debt. The SEC, under the corrupt aegis of Bush-appointed Christopher Cox, allowed for this to happen. This should have never happened because why would a rationale person insure something for more than it is worth (and at this magnitude).
Hedge funds then set to destroy Lehman Brothers by collapsing its equity through short selling of their common stock. They assumed correctly that the government would not bail out this investment bank. With the loss of confidence, credit rating downgrades, investor panic, covenant violations, and with no savior, Lehman Brothers had no choice, but to file for bankruptcy. As a result of the bankruptcy, Lehman Brothers bonds were in default and the hedge funds were set to gain $365 billion in insurance proceeds
An analogy of what the hedge funds did - you buy a house for $1 million, but insure it for $20 million. You then set the house on fire and collect $20 million in insurance proceeds.
AIG was one of the largest counterparties in this type of deal. They were essentially insurers of Lehman's solvency and now had to pay the hedge funds hundreds of billions in insurance payments for which the hedge funds only paid a pittance in premiums.
AIG faces a financial crisis and the government bails out AIG using billions of US tax dollars so that AIG could fulfill their insurance obligations.
Take-away message: Hundreds of billions of hard-earned US tax dollars (your money) is given to diabolical hedge funds who brilliantly exploited the system.
Lamentation: What's the point of working? Our wealth just gets stolen anyway.
Additional note: To top off collecting a $365 billion insurance jackpot, hedge funds also profited handsomely by short selling and buying put options.
*Credit default swaps can be thought of as bond insurance. The buyer pays a fee (premium) to a counterparty who will insure a bond's payment. In the event of the bond's underlying company defaulting, the counterparty will make a payout to the buyer according to the agreed terms (which in many cases is the principal and interest that the defaulted company should have paid).
http://www.youtube.com/watch?v=ATDsUk10BKE
According to hedge fund insider, Jim Cramer, this is what happened.
Lehman Brothers had $158 billion in debt.
Hedge funds bought $365 billion worth of credit default swaps* (bond insurance) on Lehman Brothers debt. The SEC, under the corrupt aegis of Bush-appointed Christopher Cox, allowed for this to happen. This should have never happened because why would a rationale person insure something for more than it is worth (and at this magnitude).
Hedge funds then set to destroy Lehman Brothers by collapsing its equity through short selling of their common stock. They assumed correctly that the government would not bail out this investment bank. With the loss of confidence, credit rating downgrades, investor panic, covenant violations, and with no savior, Lehman Brothers had no choice, but to file for bankruptcy. As a result of the bankruptcy, Lehman Brothers bonds were in default and the hedge funds were set to gain $365 billion in insurance proceeds
An analogy of what the hedge funds did - you buy a house for $1 million, but insure it for $20 million. You then set the house on fire and collect $20 million in insurance proceeds.
AIG was one of the largest counterparties in this type of deal. They were essentially insurers of Lehman's solvency and now had to pay the hedge funds hundreds of billions in insurance payments for which the hedge funds only paid a pittance in premiums.
AIG faces a financial crisis and the government bails out AIG using billions of US tax dollars so that AIG could fulfill their insurance obligations.
Take-away message: Hundreds of billions of hard-earned US tax dollars (your money) is given to diabolical hedge funds who brilliantly exploited the system.
Lamentation: What's the point of working? Our wealth just gets stolen anyway.
Additional note: To top off collecting a $365 billion insurance jackpot, hedge funds also profited handsomely by short selling and buying put options.
*Credit default swaps can be thought of as bond insurance. The buyer pays a fee (premium) to a counterparty who will insure a bond's payment. In the event of the bond's underlying company defaulting, the counterparty will make a payout to the buyer according to the agreed terms (which in many cases is the principal and interest that the defaulted company should have paid).
Friday, March 13, 2009
Must See TV - Jon Stewart confronts Jim Cramer
Muckraking journalism from Comedy Central's The Daily Show with Jon Stewart, what has happened to cable news?
Click here to watch the full episode
Click here to watch the full episode
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