Value Investing Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

From: E_K_S	11/14/2004 11:11:18 PM
	of 78666

11-14-04:(MRK $26.45 - market cap $58.66B) 60 Min headlined MRK's Vioxx complaints which should signal the beginning of the media coverage regarding the significance of this event. The potential liability is still unknown but the stock price reflects a $25 to $30 Billion discount from the company's original disclosure of their withdrawal of this drug. Watch for more news headlines in magazines (Time, Business Week etc.) and further class action announcements. This company will eventually be a "value" opportunity but may take still another six months of sellers throwing in the towel as more news hits the tape. Look for a lower low on lower volume and some other significant announcement from the company regarding how they plan to settle all outstanding claims. I suspect that in the May-June 2005 time frame the stock will see it's lows (perhaps in the teens or low $20's) when analysts release their worst case scenario about the potential liabilities that Mrk may face. I plan on accumulating shares through selling naked Puts and buying stock, once these lows are achieved. The key will be to buy when the on-balance volume is at a low and all the bad news is out. One indicator is if the company announces a set a side of monies in a trust account for all class action suits and how much they plan to fund this account (Halliburton Co did this when settling their asbestos claims). Therefore, keep this company on your "value" radar screen but stay patient on pulling the trigger until the market, news stories, the company and the OBV says it's a buy. When the eventual low is reached, I believe it's an easy double over 24 months with the potential for better than average growth as this sector will benefit from the aging baby boomer needs for drugs. The real profits will be made based on the eventual entry "buy" point selected. Mark this date as just one of the high light points when monitoring a story stock caught up in a significant "negative" event. The news is bad and should get worse. The "buy" entry point should be based on (1) News continues to be bad, (2) the long term holders continue to sell the stock (i.e. throw in the towel),(3) 50 week OBV avg. is at extreme lows and (4) the stock is selling at multi year lows (at least 5-10 year lows). This will be a good opportunity for 2005 if the value investor remains patient and ready on the trigger. EKS

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next