Dean Orrico Rite Aid Corp. RAD-N PAST TOP PICK Jan 25, 2017

This has been the “sick man” of the pharmacy business. It is now dominated by CVS and the Walgreen conglomerate, and there would be serious anti-trust concerns if one of those 2 bought this company. A great sector to be in.

He doesn’t cover this, because as a pharmacy it is considered a consumer staple. Right now this is being subject to a takeover by Walgreen Boots Alliance (WBA-Q).

About a year ago, Walgreen Boots Alliance (WBA-Q) wanted to take this over in a friendly deal, at $9. For the better part of 9 months, the stock didn’t move. There have been a number of M&A transactions in the healthcare space that didn’t work out, so all the risk arbitrage players who were focused on healthcare weren’t playing it. He is sure this is a transaction that is going to happen, which would give you a 20% lift.

Doesn’t think there is really an issue with this stock. Pharmacies haven’t quite been where the action is in the healthcare vertical. This is a decent name.

The deal to be acquired by Walgreens (WBA-Q) didn’t get off the ground. There were some antitrust issues. However, they struck a deal to buy individual stores. It is going to take Walgreens from about 8000 stores to about 10,000, which will compete pretty much head-to-head with CVS (CVS-N). These stores are not as efficient and need some work. Also the company needs some capital, because they need to improve their offering.

Getting a $5 billion injection from Walgreen which will help with their long-term debt. Has had his brains blown out of the water on this stock. Bought it as an arbitrage play because of Walgreen. Has bought more recently. This has been one of his big losers. He is happy to hold it as he thinks it has a lot of upside. Same-store sales going down in a company is not great.

It has been one of his biggest losers. At this point it is an iffy company. He is holding it because he thinks there is some upside. They could get taken out still.