Picked Up Some Crucell

I loaded up on some Crucell (Ticker: CRXL) today ranging from $32.38 to $32.44. Crucell is in the process of being acquired by Johnson & Johnson (Ticker: JNJ) for 24.75 Euro, which equates to ~ $34.40 US. The stock sold off these past two days because the company halted shipment of two vaccines manufactured in their South Korean manufacturing facility due to possible sterility issues. The market is over reacting big time and I’m fairly confident that the deal with go through. Looking at a potential 6% gain of course there will be some currency risk.

Missed CommScope

This is what happens when you try to be cute with your trades. CommScope, Inc. (Ticker: CTV) officially agreed to be bought out for $31.50. I didn't think they would reach a definitive agreement this soon so that's why I was trading CommScope, Inc. If I only held on one more day. Oh well, you can't be too greedy...

Sold CommScope Again

I sold CommScope, Inc. (Ticker: CTV) today at $30.17 generating a one day gain of 0.56%. Nothing else much…

CommScope Again

Ok, I’m back in CommScope, Inc. (Ticker: CTV) today at $30.00. Like I said yesterday, this is a pretty good risk reward opportunity for a risk arb play.

Sold CommScope

I decided to take my profits in CommScope, Inc. (Ticker: CTV) today at $30.27 generating a 0.90% return in one day. In the risk arb game, this is a decent return. It’s all about hitting singles and doubles in this game. I rarely ever swing for the fences unless the odds are heavily in my favor. Now, I want to focus back on the Genzyme (Ticker: GENZ) / Sanofi-Aventis (Ticker: SNY) take over play.

CommScope Risk Arb

We should call this merger Monday with all of these deal announcements today. I picked up some CommScope, Inc. (Ticker: CTV) today at $30.00. This company is getting close to be taken out by the private equity firm, Carlyle Group for $31.50 in cash. I view this as a pretty good risk return with the potential to generate a 5% over a 3 to 4 month period. I’m still eyeing some of the deals that were announced today such as Pre-Paid Legal Services, Inc. (Ticker: PPD).

Sold Momenta Pharmaceuticals

I don’t like the tape action here and it looks a bit tired so I’m raising some cash. I took some quick profits in Momenta Pharmaceuticals (Ticker: MNTA) at $15.49 generating a 3.26% gain over a two day period. Everyone is hoping that Momenta Pharmaceutical remains the only Lovenex generic player, but that is doubtful. Teva Pharmaceuticals (Ticker: TEVA) is expected to receive approval at any moment. This will lower the profit sharing agreement between Momenta Pharmaceuticals and Sandoz. Right now, Momenta Pharmaceuticals is in a sweet spot, but I don’t think it will last much longer.

Some Momenta Pharmaceuticals

The biosimilars market is just in its infancy and now is probably a good time to nibble at some of these players. I’ve been eyeing Momenta Pharmaceuticals (Ticker: MNTA) ever since they received approval for the generic version of Lovenox, an anticoagulant from Sanofi-Aventis (Ticker: SNY). Levenox generated ~ $3.9 billion in sales in 2009 and now Momenta is going to get a piece of that action. Today, Sandoz, the generic unit of Novartis (Ticker: NVS), reported that the generic version of Lovenox generated $292 million in sales. Momenta has partnered with Sandoz in the development of the generic version of Lovenox. There are other players waiting for FDA approval for their own generic version of Lovenox, but the approvals may not come until next year. The FDA has set the bar very high for biosimilars and there will be a few players, but it will not be crowded like the small molecule generics. I like Momenta here and picked up a few shares at $15.00.

Back to Genzyme & Sanofi-Aventis

It looks like Sanofi-Aventis (Ticker: SNY) has been busy doing some behind the scenes work in their acquisition of Genzyme. The Financial Times reported that Sanofi-Aventis has closed a $15 billion loan right after announcing their hostile takeover of Genzyme (Ticker: GENZ). It was reported that they were able to raise the money from the banks and close the loan in just 9 hours. The banks are stumbling over each other to get a piece of the action. Another interesting piece of info from the article was that there were rumors of another pharma looking to raise some serious $$$. This apparently prompted Sanofi-Aventis to move quickly in raising the cash, which prevents others potential bidders from using those same banks. I sense another bidder is sniffing at Genzyme.

Genzyme reported so so earnings yesterday and provided guidance for Q4. It looks like the company will earn about $4 next year and if you place a 19 multiple on it, you will come up with $76. Sanofi-Advents initial bid was based on a 19 multiple on Genzyme 2011 earnings. I think Sanofi-Aventis has to offer at least $76 to have a chance in getting Genzyme. Even at $76, I think Sanofi-Aventis will have a hard time in getting Genzyme. Tomorrow, Genzyme will present their 2011 views and make their case as to why the $69 tender is too low.

Sold Massey Energy

Ugg… I made a stupid trade today. For some unknown stupid reason, I sold Massey Energy (Ticker: MEE) this morning at $37.97 generating a 0.60% return. Of course if you look at today’s action, Massey closed at $39.27. Am I going berserk!? I didn't stick with my original game plan of holding through November. Anyways, enough of this ranting and raving. I’ll learn from this trade and try not to get too cute by over trading.

Back in Apple

Maybe it’s sellers remorse, but I’m back in Apple (Ticker: AAPL) today @ $309.78. All in all, it was a blowout quarter and Apple will continue its march higher. Valuation wise, this is a cheap stock and all it needed was to reset the expectations just a bit. I can’t see why this stock can’t go to $400 by the end of next year.

I picked up some Massey Energy (Ticker: MEE) today @ $37.74. The Wall Street Journal reported that the company is exploring strategic alternatives. We should hear of the company’s decision in November.

I still like Monsanto (Ticker: MON) a lot and nibbled on some more. Yesterday, the CEO of Monsanto, Hugh Grant, purchased 18,000 shares at an average price of $56.36. This is on top of the 37,500 shares at an average price of $52.06 he purchased back in July. Monsanto’s long climb up is just beginning.

Sold Apple

It’s hard to do, but I sold Apple (Ticker: AAPL) today at $316.71 generating a 20.34% gain over a 4 month period. Without a doubt, Apple is an awesome company, but this is such a crowded trade where any bit of perceived negative news will pummel the stock. As a general rule, I consider selling when I have a 20% gain.

Monsanto Looking Good

Monsanto (Ticker: MON) has had a nice run recently and no, I am not taking any profits here. I believe there are still lots more upside for Monsanto. If you compare Monsanto to the corn futures, you’ll see that Monsanto closely tracks the corn futures contracts. Beginning in early 2010, Monsanto and the corn futures started to diverge with Monsanto under performing. With the spike in corn futures, I see Monsanto rallying and closing the performance gap with the corn futures. We’re basically in a commodities bull run, which tends to be long multi year cycles. I would add to Monsanto on any pullback.

Some Monsanto

I picked up some Monsanto (Ticker: MON) today at $52.11 as a contrarian play. The company is generating tons of free cash, which it uses for stock repurchase and increased dividend payouts. Back in July, the CEO and CFO purchased a good amount of stock. This stock was getting beat up and all it needed was a catalyst to get it going. The catalyst came last Friday when the USDA reported that corn production will be lower than expected. This is great news for Monsanto. It looks like all the stars are now aligned for Monsanto stock to start heading higher. Oh, a ton of analysts have recently downgraded Monsanto because of the corn yield concerns with SmartStax… Surely, this means that Monsanto will certainly start heading back up!

Genzyme to Sanofi: No Thank You

Wow, that was a quick… Today, Genzyme (Ticker: GENZ) officially rejected Sanofi-Aventis (Ticker: SNY) tender offer. Companies usually wait until the final day to issue a press release regarding their decision on a tender offer (a company has 10 business days to respond to a tender offer). Genzyme is making a statement that it’s not even worth their time to evaluate such a low ball offer.

The Wall Street Journal is also reporting that Genzyme has authorized a review of strategic alternatives. In English, this means that the company is basically putting itself up for sale and the highest bidder wins. It’s not a surprise that no one has approached Genzyme yet because they have told their bankers to hold off in seeking out buyers. Now, they have given their bankers the green light to seek higher bids. This will force Sanofi-Aventis to move quickly with a higher bid or risk losing Genzyme. It’s obvious that Whitworth and Icahn pushed for this. The board had no choice, but to make this move after Sanofi-Aventis went hostile.

Sold American Express

I sold my position in American Express (Ticker: AXP) today at $38.05 yielding a 1.33% gain over a three day period. Looking into this further with the pending fight with the DOJ, AmEx swipe fees has no way to go, but down… Visa and MasterCard will be slowly fighting it out to grab market share. AmEx will simply get left behind if it doesn’t start to lower their fees. I’ll just hang onto my Visa (Ticker: V) and looking to initiate a position in MasterCard (Ticker: MA) if it corrects a bit…

American Express

Ok, a small break from the risk arbitrage stuff. I noticed today that American Express (Ticker: AXP) was selling off hard. They’re going to fight the antitrust lawsuit that was imposed on them yesterday. This will likely take years to resolve and I believe AmEx should fight it. AmEx is without a doubt, the leader in the corporate biz category and many consumers cherish their generous rewards perks. I couldn’t help, but pick up a few shares of AmEx at $37.55 today. This sell off in AmEx is a bit ridiculous as it reminds me of the recent sell off in Visa (Ticker: V).

Hostility from Sanofi-Aventis

Sanofi-Aventis (Ticker: SNY) went hostile on Genzyme (Ticker: GENZ) today, which was just a bit sooner than what I had expected. Let’s be real, no one with a brain cell will tender at $69. This is obviously a tactic to get Genzyme to open their mouths. Here’s a blurb from the tender offer filing that I found very interesting:

“Mr. Termeer remained unwilling to engage in constructive discussions in this regard or to provide his perspective on what he felt was an appropriate valuation of Genzyme. During the meeting, Mr. Termeer stated that he was in no hurry, the timing for a transaction was not right, and he suggested to Mr. Viehbacher that Parent withdraw its offer and consider reinitiating contact in 2011. Mr. Termeer further stated that he understood if Mr. Viehbacher felt he had to take more immediate action and launch a tender offer. Mr. Viehbacher explained that he was disappointed with Mr. Termeer’s unwillingness to engage in constructive discussions, particularly given the response of Genzyme’s shareholders, and that Parent was left with no choice but to take its proposal directly to Genzyme’s shareholders.”

Sanofi-Aventis was left with no choice, but to go hostile and this should have been no surprise to Genzyme. It’s interesting to note that Mr. Termeer wanted to wait until 2011 to engage in merger talks with Sanofi-Aventis. Obviously, he wanted the clinical results of Campath as leverage for a higher valuation for Genzyme. Unfortunately, time is not on Genzyme’s side. Sanofi-Aventis will raise the tender price to get the shareholders and managements attention. Sanofi-Aventis will get Genzyme before year end. We’ll hear from Genzyme in 10 days as to why shareholders should reject the tender.