Gilead Sciences Inc. (GILD)

They made a lot of money on their HEP-C drug, but sales have come off. They made an acquisition. They extract T-cells and re-engineer them to hunt for and kill cancer cells. They get FDA approval in late November. He is concerned that there is a lot of excitement that they will repeat what they did with the HEP-C drug. But they already specialized in HEP-C drugs when they bought that company. They are not in cancer drugs at present. He worries about why the company they acquired sold out at this point.

Just made an acquisition of Kite Pharma at a large premium. They have some wonderful oncology drugs. You have to give them the benefit of the doubt because they have a very good track record in terms of acquisitions. Thinks they will be able to use the Kite acquisition to supplement their portfolios. Also, they still have a lot of cash on the balance sheet so they have a lot more options. They can do another acquisition or can buy back stocks. He likes this for the long haul.

It has broken out of the 200 day moving average recently. As long as during any pull back that it holds the 200 and 70 day moving averages, we could expect to see some improvement. We could bounce up to about $80 before we struggle again. If it does not hold the $70 then get out.

The seasonal strength is June 10 to October 24^th. The average is 15% over that period. We did have a nice break of declining trend line resistance. We do have a declining trend line and we are not out of the woods yet. He would hope it could find some support. If it holds $70 you want to be buying it.

The potential for this company is for them to use their cash in a positive way. They have about $30 billion of cash on the balance sheet, which represents about 35% of their total market cap. This cash has been acquired because of their hepatitis C portfolio. The drug cures, but costs about $100,000 in the US. However, it is covered by most medical plans. Their opportunity is to make some good acquisitions with their cash hoard.

(A Top Pick June 23/16. Down 9.98%.) He still loves this one and has bought more at around $64. The FDA has just approved their drug for hepatitis C. His model price is $119.20, a 60% upside.

The whole sector has struggled and is cheap. The concern is patent expiry. They have large cash positions and the question is what they are going to do about it. He thinks the stock is mispriced. (Analysts’ target: $81.00).

This has struggled. It is cheap, trading at about 9X earnings. There has been a resurgence of late, which is positive. The hep C franchise is just not showing tremendous growth, and there are not a lot of things in the pipeline. They have a fair bit of cash. He would prefer Celgene (CELG-Q) on a pullback or Vertex (VRTX-Q), which has had some innovative drugs on multiple sclerosis.

(A Top Pick Sept 6/16. Down 0.4%.) This was in a downtrend, but has finally broken into an uptrend. A cheap, cheap stock, trading at a single digit PE. The #1 provider of HIV drugs globally, and the #1 provider of hepatitis drugs. About 2-3 years ago, they introduced a revolutionary Hepatitis C drug which cured, so the inflow of patients dropped off. Pays about a 3% dividend. Cheap, cheap stock.

This had an enormous set back from its peak, and has got to a level that is quite attractive. Has loads and loads of upside potential. Feels the downside risk is now behind it and he likes it here. It could go a fair distance.

(A Top Pick April 14/16. Down 27.5%.) Most of the stocks he picks, when they get cheaper, he likes to buy more. Not only did he buy more in his fund, but he also bought more personally. It is currently at $68.96, and his model price is $114.31, a 65% increase.

Growth rate has been completely decimated based on its business model. The stock really came down, but bounced up in the last couple of weeks with the rest of the biotech space. It is now stuck at around the 200-day moving average. Their growth rate has come down to the low single digits, and is still trading at a pretty decent multiple, 9X earnings. If you own, consider Selling and look at something like Celgene (CELG-Q).

A very important story. They had a Hep C drug that was so good it was curing everybody, so it is running out. Everybody underestimated how fast it was happening. This is trading at about 8X earnings. Has a great dividend yield and lots of cash and an incredible balance sheet. They have an HIV drug which is very strong and does well. Feels they have to do something with their cash and move in a different direction by making an acquisition. At this point, the stock is really giving the company zero value for their Hep C business. There is some good value in their pipeline. You aren’t paying a lot for the company right now with their free cash flow yield of almost 9%.

(Market Call Minute.) Pretty much a one product company treating hepatitis C. Sales are falling and the price is being challenged. The good news is that they have a huge cache of cash, 30%.

This is a volatile stock, which means the option premiums are pretty expensive on it. If you are bullish on this, he wouldn’t Buy an option, but would be more inclined to write a Put. Not sure he would buy an option on this.