Knight Therapeutics (GUD.TO)

He likes this. It has $5 a share in cash and he likes that they have had the discipline to keep waiting for acquisitions that appear cheap enough to take over.

GUD acquires drugs (orphan drugs) and redistributes them in Canada through its own distribution channel. It has several competitors. Analysts expect lower earnings this year compared to last year. It trades at 62x forward earnings and pays a lower dividend than you can get from a bond.

Half of its market cap is cash. They’ve been slowly building a portfolio of futures in drugs. Knight has been waiting for the prices of companies like Valeant to drop. Knight sold assets to other companies that are struggling, and will probably wait to get them back at lower prices than it sold them for. He prefers Cipher, but likes Knight.

He's skeptical of biotechs, especially small-cap, because their new products either get approved or not. An investor really must study this industry well to understand it. He doesn't invest in this space.

It has raised a lot of money. They are very smart people and shrewd acquirers of orphaned drugs. It is hard to value. A lot of the valuation is based on their success of acquiring more drugs in Canada.

(A Top Pick June 6/17 Down 20%). They are sitting on $700 million in cash. They just have not done anything to attract investor interest. They have a solid management team. You may need to wait five years to see great returns. He is not worried about them doing the right acquisition, it may just take time. Revenues are only about $9 million.

They have $750 million in cash, a huge war chest. The new CEO is good, but it'll take him a bit of time to get going. It's trading in line with its cash. They are a smart company, not in licensing products, but in lending money in the medical space. But until something big happens, he's not interested.

Jonathan Goodman, the CEO, is a good guy. He has always looked at this company as similar to a mutual fund of health therapeutics. He has told investors that this is a very long term investment. If you buy it today, you are keeping it for your grandchildren. It is loaded with cash. It would take a gigantic transaction to move the needle on this stock. It will grow slowly under prudent management.

(A Top Pick Apr 11/17, Down 25%) He has never had so much trouble with a company that is so much in cash. They are trying to get licensing rights to certain drugs. Your risks are very low at this time.

He says they are always watching this one to buy into it. He thinks management is patient and has made great returns on smaller acquisitions. If you have long term patience, this company has a good track record at making value for investors.

He has looked at it out of curiosity. It garners quite a valuation based on a cash hoard. Let’s see them execute. He would replace it with RX-X. It is very similar.

He is not sure why the stock came off. He likes to buy things that trade at NAV or below. He wonders if an institution decided to take this off. There is not a ton of liquidity.

It is a very long term appreciation. It is a very fine business in that it finances and funds other production that it believes will come its way. It won’t move up until the time comes and you might have to wait a long time. It is not speculative.