Friday, February 3, 2012

Dumping Gilead Sciences On Buyback Elimination

Gilead Sciences (GILD) had been about a 5% weighting in our Net Payout Yields model. The company had been on a huge buyback plan making the stock very attractive for this model that focuses on stocks with high yields from the combination of net stock buybacks and dividends.

Unfortunately with the recent Pharmasset (VRUS) buyout announcement, Gilead has strayed from the plan of rewarding investors with capital returns toward buying growth. Typically these deals don't workout for investors of the purchasing company.

With the reporting of Q4 numbers, Gilead verified on the conference call that stock purchases have all but been eliminated as the company raised debt to buy Pharmasset.

Via Seeking Alpha transcript:

Robin L. WashingtonAnd, Geoff, relative to your share count, as we talked about with the acquisition, we did moderate and pretty much have spent our share repurchases after October of 2011. We will do moderate share repurchases in the near term to offset option dilution primarily, but our real focus of cash in the near term is going to be on debt repayment, which we expect to be back in our target. That's at the top by mid-2013. So to your question on share count, we don't expect it necessarily to go down significantly. We were just going to try to manage a current balance as much as we can.


Combine this verification with a surging stock price, Stone Fox decided to sell the shares this morning. Taking advantage of a stock price that has soared from roughly $37 in mid December to $54 today.

The stock might go higher in the short term, but the new corporate focus of raising debt versus returning cash to shareholders is our signal to sell.

Details off the sell from Market Pulse:


Stone Fox Capital sold $GILD and now holds an allocation smaller than 0.1% in their Net Payout Yields Covestor Model

Chart showing the extreme overbought condition. RSI above 90 and CCI above 220.
























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1 comment:

رضا رمضان said...

شركتنا من المتميزون في اعمال الاصلاح بدون هدم او تكسير من خلال شركة ركن البيت التي تقدم الكثير والكثير في عمل اللازم وتصحيح الاخطاء التي تسببها تسريبات المياه فنحن مثلا

شركة كشف تسربات المياه بجدة تقدم خدمة لعمل الاصلاح بدون اي خراب ونقدم النصيحة للعملاء بالابتعاد عن الاعمال التي تؤدي الي هذا الخراب فتعاملك مع شركة كشف تسربات بجدة لديها الخبرة الكافية تساعدك في الحفاظ علي منزلك كما اننا نتمكن في اننا سوف نرتقي بخدمة لاننا نقوم بالعمل السليم لها كما يوجد لدينا خدمات العوازل التي تمنع التسريبات من الاسقف لكم والحوائط والخزانات من خلال شركة تسمي الاولي في مجالها لذلك نحن نقدم شركة عزل خزانات بالرياض التي تعتبر في عل الخزانات الارضية من الداخل بواسطة مواد متميزة كما نقدم لكم شركة عزل اسطح بالرياض لعمل العوازل التي تمنع جميع التسريبات في الاسقف