To say "I am a trader and moved to ICLR" is disingenuous. According to your posting history, you've been invested in ICLR since last Sept. 7'th. It's done very well for you - up 32% since that point. Which, of course, is not quite as good as the 35% gain in the IBB over that same period.
Well, the dollar (and oil, which is, as we saw yesterday, largely a function of the dollar) certainly does play into this stock. If the plan was to garner $5 billion from non-US sales, for example, that has just become $4 billion, strictly on the FX effect. To say the stock is "institutionally owned" is fairly meaningless. Unless you actually keep your stock certificates under the mattress, your shares are "institutionally owned" in the name of your brokerage. You say that "spending time analyzing and second guessing what management, market makers and fund managers are doing is futile and exhausting." And then you proceed to do exactly that. Why? Because it's human nature to try and make sense of stuff. If you really believe that any attempt at analysis is futile, you ought to put all of your money into a market-weighted fund. (Not a bad idea for most people,incidentally.)
I asked you to explain your cryptic statement "Blocks are due to Derivatives". You seem to have ducked the question, hiding under the "Let us not waste each other's time" blowoff. Your statement that "Your response reflects you (sic) frustration" because "GILD is not moving in the direction you are used to" is silly. You are the one with a short position and the expectation that the stock will move down, which it has not been doing lately. In fact, looking back, you obviously missed a chance to cover your short down around 97.
But back to my question: What the heck does "Blocks are due to Derivatives" mean? I realize that you are pressed for time, but please take a moment from your busy schedule to enlighten us.
AZN, being a British company, earns pounds sterling, which has just reached a new 5 year low against the dollar. They're probably doing fine in terms of pounds sterling. Sometimes it pays to buy American.
Carolyn, I've basically been out of GILD - or short - since the last earnings release. However, when the stock begins to close near the high of the day, something has changed. I have a small long position at this point. Since it represents less than 1% of my portfolio, I don't think I'll "take a major loss". I don't doubt that the retail investors are getting discouraged. At one time the tenor of posts here was speculation as to whether it would take a week or two weeks to reach 120. At the moment, we are hearing folks bewailing the failure of the stock to keep pace with CELG. Or REGN. Or you name it. This stock, in my opinion is undergoing revaluation. Eventually, the market will have to recognize the potential in their pipeline in addition to the cashflow from the existing franchises in HCV and HIV. Incidentally, at one point last year, GILD constituted over 10% of my portfolios. This, I think, was the largest relative position I've held in any stock since the financial implosion, when I took very large positions in closed end muni bond funds.
PS Would you care to explain "Blocks are due to Derivatives"?
There we are: 640,000 shares @ 101.44. Close enough. About $65 million worth.
Well, I'm assuming that the blocks being reported after hours are GILD buybacks. If this is so, it's certain that everyone on Wall Street knows this and will let The Big Dog hunt. I would guesstimate that there have been about 8 million shares crossing this way over the past two weeks, which would represent less than $1 billion. However, when volume is low, as it has been recently, this is enough to control price action, I think. Let's see if they picked up another chunk at 101.50 today.
Yes, it's important to admit when you're wrong. The most fatal tendency in investing is the need to be proven right. At the end of February, I was predicting the end of the biotech bubble. This was certainly wrong, as it turned out. The IBB has moved from 335 on Feb 24 (my Cassandra day) to 365. One of the unfortunate outcomes was that I sold my PCYC, thinking the market was telling me that no one would pay more than 150 for it. However, by the beginning of March, I recognized the error of my ways and got back into MDVN and INCY and initiated or added to positions in some smaller biotechs. (One of which, HZNP, was suggested by a poster here.) At the moment, the market seems to be telling us that the buyback program is not going to let this fall below 100. In fact, it strongly suggests that this will close no lower than 101.50 today. I took a short position at 100.22 yesterday, but have covered and gone long. Consider it, Carolyn.
You misunderstand my point. I was suggesting that the buyback program has been supporting the price aggressively over recent sessions, not holding it down. They could have accumulated a lot of shares yesterday at prices well below 100.31 if they just wanted cheap shares. As for how much more they can buy with $15 billion, the answer is a lot. I would guess that they've spent less than a billion to this point.
Volume has been relatively light over recent sessions, but there have been large blocks reported after hours - half a million shares yesterday, up to a million shares on some other days. If I am correct in assuming that these blocks are the result of GILD buybacks, the trend is interesting. These blocks have consistently set the closing price. Last week, there were occasions when, during the last few minutes of trading, the stock dropped to what had obviously been the price at which the stock was being bought in the dark pools. But for the past two days, the stock has held up and the large blocks were traded at the high end of the day's range. This suggests that the buyback strategy has shifted from just supporting the stock price to aggressively trying to drive it up.. Because if the aim had merely been to accumulate shares at the lowest possible price, they could have bought those shares much more cheaply both yesterday and Monday. (For example, the after hours blocks yesterday were at 100.31, if I recall, near the day's high.) The other interesting thing is that the MM's obviously know the price at which GILD is adding shares. So GILD itself is, in effect, setting the closing price. (At the moment, it looks like 101.50.) I note that some longs here say they are adding shares. I would suggest that if you are long, you are adding shares whether you know it or not. The company is taking the cash in your shares and using it to buy more shares. So your commitment to GILD stock, as opposed to cash, is increasing daily.
As we know, that "runup" today was based upon the fact that many had shorted the averages in anticipation of a more hawkish Fed statement. The relatively dovish statement made it easy to take out the shorts, and the fact that the statement didn't drive the dollar up further helped energy stocks rally, which drove more shorts to cover. The uptick in volume on GILD today was early, while the stock was dropping, and I suspect that when we finally get a really high volume day it will be on a move down.
You contemplate the possibility that the stock you've mortgaged your house to buy may drop further. But you're not worried --because if it drops, you'll buy more. Great.
Ps If you check the eps estimates here on Yahoo!, you'll see that the consensus for this year has dropped from 10.09 to 9.56 over the past 90 days. Presumably the buybacks are figured into this. (I know they were figured into the Credit-Suisse estimates, which nevertheless dropped sharply.). I would expect that not all of the analysts have yet factored in the full effect of the rising dollar. When they do, these estimates will drop some more.
GILD management has already done the math for you. They stated that all the eps growth in the next three years would be due to buybacks ...in other words, shrinking the s rather than growing the e. The effect of the buybacks (and the dividend distribution) is already factored into the earnings projections.
There's lots of evidence. Half a million shares were just reported after hours @ 100.28. The interesting thing is that over the last couple of days these dark pool transactions don't seem to be supporting the price of the stock.
When we've had a 44 point turnaround in the S&P and the stock is up a penny, perhaps this isn't the most wanted stock around.
I would suggest that something fundamental HAS changed. The announcement that Sovaldi/Harvoni was being effectively discounted by 46%, rather than the anticipated 30 - 35% meant that the only way the board could increase earnings in the next few years was to buy back stock. That, coupled with the institution of a dividend, meant that rather than a growth stock, this was now a value stock. This will result in the stock being dropped from many portfolios. Obviously, at some point, it will be added to other portfolios, but, as of yet, there is no sign that the stock is being accumulated.
Yes, if you held the stock for a decade, as everyone knows, the appreciation was terrific. What often goes unobserved is that there were fairly long periods where the stock went nowhere. Many here seem to be waiting for a big runup on the success of Harvoni. My contention would be that this runup happened last year. In the absence of some new development - always a possibility with GILD - I don't think this is going to rally anytime soon.
That's an interesting question. Looking back to Dec. 22, the Monday after the last rebalancing, we see that the IBB has advanced 14.2% since then. So, if the aim is to preserve the relative weighting, any stock which has appreciated less than that would be added and any stock which has appreciated more than that would be reduced. Among the top five holdings of the IBB, this would mean that AMGN, which is right where it was on Dec. 22, would be the biggest beneficiary. CELG and GILD, which have appreciated by 5.7% and 7.5% respectively, would also benefit. REGN, which has appreciated by 13.1% would be a slight beneficiary. And BIIB, which has appreciated by 19%, would be sold. (At 9.58%, it is now the largest component of the IBB.) Maybe we should go back and see what the effect of this IBB witching has been in the past. Unless someone already knows.
Lately, this stock has tracked the IBB. Today, with the exception of REGN, which is up sharply, the other major components of the IBB - BIIB, CELG, AMGN - are like the IBB itself, off slightly. This one, obviously is underperforming today. It will be interesting to see whether, at the end of the day, large blocks are reported at the closing price. For several days last week, these large blocks, which I speculated may be GILD buying back stock, have created the closing price. But it seemed to have slipped under 100 without a ripple, which is surprising.