A Pre-Election Update

Next week is the presidential election in the US. Markets have been extremely nervous and sour the past few days after the latest poll showing a narrowing lead by Clinton. A little over a week ago, the certainty of a Clinton-win was calculated by CNN to be more than 95% – this value is now down to around 77% this morning. Still a strong lead, but there has been growing uncertainty leading to turmoil in Global Markets. One thing is for sure – markets do not favor a possible Trump win, and many has searched to hedge their investments or simply going cash until the election is over. This is also the case for Manivest – we have hedged and closed several large positions this week, and we have suffered a draw down of 6%. But better safe than sorry, and nothing seems predictable in the market these days. However, we also see this period as one of the most interesting for investing, and we believe there are some very attractive buying-opportunities out there. Many of the companies on our watchlist are currently trading at significant discounts. Below some of the new investments in our portfolio.

Danish Pharmaceutical company Novo Nordisk (NOVOb) is down around 35% in the last 3 months. The company recently adjusted its revenue growth outlook for the year from 10% to a more modest 5% – it is still growing, just not as fast as previous anticipated by the market. It is now trading with a P/E around 16 – down from 29 in 2015, which means it now fits one of the main Manivest investment criteria. Novo has an estimated EBITDA margin of 46.4% and an estimated EBIT margin of 43.5% for 2016. ROE is a staggering projected 71.7%. With estimated and adjusted revenue growth rates of around 5% the next 3 years and a dividend yield of 3%, we believe this is a solid investment trading at a “discount” around 240 DKK a share. The average consensus target is 335 DKK a share which represents a potential upside of almost 40%. We have also noted, that several insiders have traded around 240 DKK a share.

Below the chart for Novo Nordisk including 50 and 200 day Moving Averages and Relative Strength Index (RSI).

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Another current pharmaceutical investment is Akorn Inc (AKRX), who is set to release its 3rd quarter results today November 3rd. Akorn has also been “punished” by the recent volatility in the market, as well as dissapointing earnings reports from its peers. We have added significant to our holdings in this company now trading around 25 USD a share, down around 26% the last 3 months. Akorn is also fully “compliant” with the Manivest investment criteria, and has a high score on our internal evaluation system. Trading at the moment with a P/E around 11.4, expected EPS growth of 80+% this year and steady forecasted revenue growth around 10% per year, we see a significant upside potential in this company. ROE is expected to be around 32% this year and an EBITDA margin of 45% which equals the strong fundamentals of Novo Nordisk. The average consensus target for Akorn is 37 USD a share which equals a potential upside of 50%!

Below the chart for Akorn Inc including 50 and 200 day Moving Averages and Relative Strength Index (RSI).

screen-shot-2016-11-03-at-11-47-31-am

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As always feel free to send me any comments or questions at mail@manivest.net

 

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