Under Pressure

Gilead has been under pressure for the past couple of days due to the issue of convertible debt in order to facilitate their stock buyback. Initially the buyers of the convertible debt are likely to hedge by shorting Gilead stock. But the net effect of the buyback and the issuance of the debt will be a large positive. I remain very bullish on the name and very long.

5 comments:

Anonymous said...

I totally agree that GILD is insanely undervalued, but that doesn't mean that holders will get short-term gratification. The whole sector has been deeply undervalued for a very long time.

Tsachy Mishal said...

There are numerous catalysts for Gilead. That is what is different this time. The first is the buyback and the second is a huge takeover in the sector. Once the takeover is completed there will be $20 billion in cash in the hand of biotech investors. I am uber bullish.

Anonymous said...

Doug Kass is shorting the spy.

Anonymous said...

Mark Schoenebaum of ISI sent out a survey asking whether people believed the stories about the Sanofi and Glaxo bids for GENZ. I guess not everyone does. But Sanofi definitely has a huge revenue hole to fill with Lovenox going generic. I think the odds of a merger are over 50%. But I still sold 1/3 of my Genzyme.

Tsachy Mishal said...

With multiple suitors and an activist board the chances of a deal are extremely high. It is all a game right now of trying to get the best price.