Today (On Wednesday), Sanofi-Aventis (NYSE:SNY) inked an agreement to acquire Genzyme Corp (NASDAQ:GENZ) after sweetening its bid price to $74 per share plus a contingent value right (CVR), up from the $69 per share bid that GENZ rejected as too low back in October. We wrote in October that SNY was overpaying for GENZ because we valued the shares at $64. Including the CVR, which is contingent on recovering from the manufacturing problems it’s faced for its 2 key biotech drugs, as well as receiving FDA approval to market its multiple sclerosis drug candidate Lemtrada, and increased sales targets, the market is valuing the total bid price at about $78 per share.
On February 12, 1973, after the second Treasury announced devaluation of the dollar, George Shultz said, “there is no doubt that we have achieved a major improvement in the competitive position of American workers and American business.” Translated, a weak dollar would stoke an exporting bonanza for U.S. businesses that would need to hire new workers to help fulfill all the demand driven by the dollar’s debasement. That Shultz was soon enough revealed as tragically incorrect is a classic understatement. Needless to say, the dollar’s devaluation predictably unleashed a lost decade of inflation and economic misery for the U.S. and the world.
Earlier this morning the Rafael Resendes, Co-Founder of The Applied Finance Group and co-manager for the Toreador Large Cap Fund: TORLX, appeared on CNBC’s Squawk on the Street alongside Roger Ibbotson, Yale Professor of Finance. In the interview Mr. Resendes provided three stocks that he believes are attractive investment opportunities.
Wal-Mart has so far been unsuccessful in its efforts to secure permission to open stores in the five boroughs. This has no doubt pleased its many clueless detractors apparently able to afford higher-cost grocery items, but for the New Yorkers already suffering nosebleed rents in what is one of the world’s most expensive cities, they’ll continue to overpay for basic goods in order to prop up local grocery stores able to mark up prices thanks to a lack of realistic competition.
It’s not so much that we should ignore what President Obama or congressional leaders have to say, as much as what they say and do shouldn’t concern us that much. Limited by a very clear document, their actions shouldn’t impact how we live to a very high degree.
Quality companies that have either taken a warranted or sometimes unwarranted pounding in the market, but still possess an attractive valuation to value-hungry, long-term focused investors
As the market has rallied over the past few months, the expectations for sales growth have risen and currently look lofty relative to what the S&P 500 has delivered in sales growth historically.
The problem with the deficit commission's recommendations is that it's assumed deficits exist due to a lack of revenues, rather than a government that does to much. But the tax simplification achieved through the abolishment of deductions is pro-growth, and will wake the half of the country up that doesn't pay for the cost of government
Price stability is the new fad among Fed critics who understandably want to see its mandate reduced. The problem is that even if the Fed could engineer price stability, this would be very economically damaging. Prices gyrate with regularity, and their movements tell producers what we want more and less of. If the Fed is to be given any mandate it should be one in favor of dollar-price stability. Nothing more than that.
When companies are unproductive and destroying wealth, management teams should not be looking to grow that business. Instead, management needs to improve profitability by either divesting it unprofitable units and/or restructuring the units to make them profitable before they earn the right to expand. The alternative is also true, just as investors do not like to see management grow a unprofitable business, investors do like to see management grow a profitable business (generating positive EMs) to maximize its profitability
Today we will highlight the stocks “Gurus” have either recently been adding to their portfolios as new holdings or companies that they have recently increased their position in the last quarter and rate them using the Economic Margin Valuation model. In the coming weeks we will be taking the pros picks and give them letter grades (A,B,C,D,F) based on how we look at the company (based on value score).
There's an enduring myth that the U.S. has never defaulted on its debt, but that's merely a function of how default is defined. When Treasury abrogated the gold clause in 1933, holders of U.S. debt suffered serious losses, and as evidenced by the dollar's decline versus gold since 1971, Treasury has been a serial defaulter ever since. Assuming a default of the haircut variety, this has been the global norm for at least two centuries, and if the U.S. were to default in this way, it's not something we should fear. Post WWII the largest economic powers were regularly in default of the haircut kind, and the global economy boomed.
The negative incentive effects of unemployments are well known. What's maybe not discussed enough are the less visible effects of jobless benefits, which include reduced productivity on the job, not to mention reduced savings thanks to it being known that unemployment brings with it a check from the government
Paul Volcker's public loss of control of the Federal Reserve Board in 1987, combined with President Reagan's unwillingness to publicly back him, ultimately led to Volcker's resignation that same year. Kevin Warsh's Wall Street Journal op-ed wasn't just coincidence, and it presumably signals rising discontent within the Fed that will eventially reveal itself in votes against Bernanke. Volcker's loss of control led to his resignation, and Bernanke's similar problems probably point to his.
