Rite Aid Corp. (RAD-N)

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.

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.

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.

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.

(A Top Pick Oct 11/16. Down 3.59%.) This was and is subject to a takeover offer by Walgreens. Sold his holdings at about $8.30.

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.

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).

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.

Pharmacy stocks are defensive holdings overall. The best time from a seasonal perspective, is really when everybody else is perturbed by the market, which is in the summer months. He wouldn’t be investing in this right now. Chart shows this is still in a downward trend.

The type of company that tends to hold in pretty well in weak markets. Weak markets are where you can get good companies that haven’t held in well and don’t seem all that safe. There are other places that he would go to, but in a different sector.

Just announced that some of their earnings are going to be rough going forward. He prefers CVS Health (CVS-N). Rite Aid has been beaten up quite a bit.

Thinks the turnaround has been completed. They are now profitable again, not hugely so, but thinks they have turned the corner. The stock has rebounded dramatically from its lows. This is the 3^rd biggest player in its group and he doesn’t see how you would want to pay 25X earnings for this, compared to 17 to 20 times earnings for CVS (CVS-N) or Walgreen’s (WBA-Q), which have a lot more going for them. Good sector.

Looked at this when it was around $2. Didn’t like the salaries of managers. Had a big debt load. This is still on his Watch List and he is watching for further weakness in the sector. A good sector to be in because drug companies are tremendous at marketing people.