Agility Pays Off Again

Hi All,

Back in October, there was a sharp sell-off in a US Pharmaceutical company we had been watching named Celgene. The stock dropped from a high of $147.17 down to a low of $94.55 in a matter of weeks. On October 26th, Celgene released decent earnings but lowered guidance slightly and the stock sold off from about $120 to under $95 on that day. We felt that the selling was overdone and seeing it drop significantly on disappointing, but not disastrous earnings, we decided to snap it up and built an allocation at an average price of $96.021 USD.

The Celgene story is just one example of many time-sensitive opportunities most retail investors can’t act on. In traditional securities accounts, the logistics of locating hundreds of clients and processing hundreds of trades in a matter of minutes means that those investors pass on such opportunities on a regular basis. Without running a discretionary investment program of some sort, we would not be able to capture opportunities like we did with Celgene for our clients.

At the end of trading on November 2nd, the holding has gained just under 2.4% in just over a week. Here’s a chart of how it looked on the day from YCharts:


 

 

 

 

 

 

 

 

 

 

There could have been some ESP occurring last week, as we weren’t the only ones at our firm who picked up on the 18% intra-day plunge for a quality company. A couple of other partners at our firm saw the opportunity and called us. Celgene has great growth prospects and trades under 12 times 2018 earnings forecasts, while its competitors trade at over 14 times forward earnings. The company currently has more than $11 billion in cash and equivalents that may be used for acquisitions and/or licensing activities as well.

While all investments come with their share of risks, we think Celgene represents great value at this point. In addition to our thoughts, a company that covers equity research has a target of $130 on the stock, which would represent >30% return from these levels, and we believe this to be a great entry point for a long-term hold. Here’s a chart of the stock price going back 2 years:


 

 

 

 

 

 

 

 

 

 

Have a nice weekend,

Danny

Return to All Posts

 

HFWM_logo-vertical_RGB-72dpi

 

 

 

Daniel Popescu CFP, CIM, FMA, FCSI
President & CEO

MNP Tower, 3100-1021 West Hastings St.
Vancouver, BC V6E 0C3
T: 604-558-6830/1(877) 588-6822
F: 604-558-6823
harbourfrontwealth.com

 

For additional comments and info go to: www.harbourfrontwealth.com

“I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone, and may not reflect the views of Harbourfront Wealth Management. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by Harbourfront Wealth Management Inc.”
Disclaimer – This information transmitted is intended to provide general guidance on matters of interest for the personal use of the reader who accepts full responsibility for its use, and is not to be considered a definitive analysis of the law and factual situation of any particular individual or entity. As such, it should not be used as a substitute for consultation with a professional accounting, tax, legal or other professional advisor. Laws and regulations are continually changing and their application and impact can vary widely based on the specific facts involved and will vary based on the particular situation of an individual or entity. Prior to making any decision or taking any action, you should consult with a professional advisor. The information is provided with the understanding that Harbourfront Wealth Management is not herein engaged in rendering legal, accounting, tax or other professional advice. While we have made every attempt to ensure the information contained in this document is reliable, Harbourfront Wealth Management is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is,” with no guarantee of completeness, accuracy, timeliness or as to the outcome to be obtained from the use of this information, and is without warranty of any kind, express or implied. The opinions expressed herein do not necessarily reflect those of Harbourfront Wealth Management Inc. The particulars contained herein were obtained from sources we believe to be reliable, but are not guaranteed by us and may be incomplete. The opinions expressed are not to be construed as a solicitation or offer to buy or sell any securities mentioned herein. Harbourfront or any of its connected or related parties may act as financial advisor or fiscal agent for certain companies mentioned herein and may receive remuneration for its services. The comments and information pertaining to the Hudson Total Mandate Portfolio and/or the Willoughby Investment Pool (“The Portfolios”) are not to be construed as a public offering of securities in any jurisdiction of Canada. The offering of units of The Portfolios is made pursuant to the Offering Memorandum and Simplified Prospectus and only to investors in Canadian jurisdictions. Important information about The Portfolios is contained in the Offering Memorandum and Simplified Prospectus available through Willoughby Asset Management. Commissions, trailing commissions, management fees, performance fees and expenses all may be associated with investments in The Portfolios. Investments in The Portfolios are not guaranteed, their values change frequently and past performance may not be repeated. Historical annual compounded total returns including changes in unit value and reinvestment of all distributions do not take into account sales, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Unit values and investment returns will fluctuate and there is no assurance that The Portfolios can maintain a specific net asset value. Harbourfront Wealth Management Inc. (“Harbourfront”) has relationships with related and /or connected issuers, which may include the securities or funds discussed in this commentary and are disclosed in our Statement of Policies Regarding Related and Connected Issuers. This policy is included in your new client package, on our website, or can be obtained from your investment advisor on request.