01-04-2016, 08:25 PM
I hold GILD and bought some more when it dipped below $100 a couple weeks ago. It did it again today although I'm full up now.
My thesis:
GILD is taking a lot of heat for their pricing of Solvadi/Harvoni -- in the thousands in the developed world but pennies on the dollar for 3rd world countries. I'm not so sure I like the practice but my personal beliefs shouldn't affect my investing decisions. They're doing just what they're supposed to do for shareholders. If the guv'mnt's going to cry about it, then they should remove the restrictions on Medicare/Medicaid from negotiating drug prices.
I'm not so sure GILD's in-house research department is as productive as it should be but they are good at buying companies with promising products at mid- to end-stage development and shepherding the product through clinical trials and approval. They then market the "heck" out of them. I don't think they're as conservative as JNJ when looking at buyouts but they don't grossly overpay which helps the bottom line.
GILD also has the top drug lineup for HIV, another killer they've managed to "contain", along with some promising oncology meds in the pipeline.
I don't know when Mr. Market will finally price GILD along with the rest of the biotechs and for now don't care. The cash keeps piling up giving them ammunition to boost the dividend
and cash on hand for when they find the next company with a promising product they think will fit with their strategy.
I think one of two things will happen. Either their "house of cards" will fall apart and GILD will sink into the sunset OR the P/E will get so low (or the cash hoard so large or both) that the market will HAVE to react to its cheapness. Whoever heard of a company that is pulling in that much cash with products that are so vital to saving lives falling apart? Obviously, I'm betting on the latter and see slim chances for the former.
My thesis:
GILD is taking a lot of heat for their pricing of Solvadi/Harvoni -- in the thousands in the developed world but pennies on the dollar for 3rd world countries. I'm not so sure I like the practice but my personal beliefs shouldn't affect my investing decisions. They're doing just what they're supposed to do for shareholders. If the guv'mnt's going to cry about it, then they should remove the restrictions on Medicare/Medicaid from negotiating drug prices.
I'm not so sure GILD's in-house research department is as productive as it should be but they are good at buying companies with promising products at mid- to end-stage development and shepherding the product through clinical trials and approval. They then market the "heck" out of them. I don't think they're as conservative as JNJ when looking at buyouts but they don't grossly overpay which helps the bottom line.
GILD also has the top drug lineup for HIV, another killer they've managed to "contain", along with some promising oncology meds in the pipeline.
I don't know when Mr. Market will finally price GILD along with the rest of the biotechs and for now don't care. The cash keeps piling up giving them ammunition to boost the dividend
and cash on hand for when they find the next company with a promising product they think will fit with their strategy.I think one of two things will happen. Either their "house of cards" will fall apart and GILD will sink into the sunset OR the P/E will get so low (or the cash hoard so large or both) that the market will HAVE to react to its cheapness. Whoever heard of a company that is pulling in that much cash with products that are so vital to saving lives falling apart? Obviously, I'm betting on the latter and see slim chances for the former.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan