The Case For Gilead

I have rebuilt my stake in Gilead during its most recent decline. Aside from the attractive valuation, I believe there might be some short term catalysts to help the stock and the recent pressure on the stock might soon lift:
  • After a two year roaring bull market Gilead is one of the few stocks where investors might still have tax losses. The stock is down over 15% for the year and over 30% from its all time high. If there has been tax loss selling in the stock it should soon abate.
  • Gilead is a former growth darling. While most of the growth investor base is now gone, there were still some growth funds with stakes at the end of the third quarter. I believe that many of the remaining growth funds want this name off their sheets for the new year.
  • Gilead saw some pressure after the most recent S&P 500 rebalancing. Its weighting in the index was reduced because the company has bought back a large amount of shares. That supply should have been digested by now.
  • I believe a Genzyme deal is a high likelihood in the next few weeks, which should be good for the entire biotech sector.
Have a happy, healthy and prosperous New Year.

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