Valuentum Exclusive Analysis for the Discerning Investor

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Apr 21, 2021

Vertex and CRISPR Therapeutics Partnership Update
Image: Vertex Pharma is co-developing gene-based therapy for sickle cell disease (SCD) and transfusion-dependent beta thalassemia (TDT). CTX001 may offer a potential cure for people that have SCD and TDT.On April 20, Vertex Pharma and CRISPR Therapeutics issued a press release that noted “the companies have amended their collaboration agreement to develop, manufacture and commercialize CTX001, an investigational CRISPR/Cas9-based gene editing therapy that is being developed as a potentially curative therapy for sickle cell disease (SCD) and transfusion-dependent beta-thalassemia (TDT).” The development is a win-win for both Vertex Pharma and CRISPR Therapeutics and reinforces our positive view towards both company’s capital appreciation upside. We prefer Vertex Pharma as our speculative biotech play in the Best Ideas Newsletter portfolio given its more resilient financials and established commercial portfolio. Note that with early stage biotech companies such as CRISPR Therapeutics, investors are taking outsized risks and could lose all their capital should future endeavors not pan out as expected.

Mar 31, 2021

Why You Need to Hire an Active Stock Manager and Ditch Modern Portfolio Theory
Image: Why You Need to Hire an Active Stock Manager and Ditch Modern Portfolio Theory. An Approximate Hypothetical representation of an active manager that charges a 2% active management fee that mirrors the S&P 500 benchmark versus an advisor that charges a 1% advisor fee that applies a 60/40 stock/bond rebalancing from 1990-2021. Approximate Hypothetical returns are based on the following extrapolation: “Since inception in November 9, 1992, returns after taxes on distributions and sales of fund shares for the [Vanguard Balanced Index Fund Investor Shares] VBINX came in at 6.5% through June 30, 2020, while the same measure since inception in January 22, 1993, for the S&P 500, as measured by the S&P 500 ETF Trust (SPY), came in at 8.12% through June 30, 2020.” The ‘Approximate Hypothetical 60/40 stock/bond portfolio w/ 1% advisor fee (smoothed)’ represents a hypothetical 100,000 compounded at an annual rate of 5.5% [6.5 less 1] over the period 1990-2021. The ‘Approximate Hypothetical S&P 500 (SPY) w/ 2% active management fee (smoothed)’ represents a hypothetical 100,000 compounded at an annual rate of 6.12% [8.12 less 2] over the period 1990-2021. Approximate Hypothetical results are for illustrative purposes only and are based on the data available. Let's get caught up on recent developments at Korn Ferry, Dick's Sporting Goods, Chewy, GameStop, Williams Sonoma, McCormick & Company, and CRISPR Therapeutics.

Feb 3, 2021

Eli Lilly and Vertex Pharma Provide Promising Guidance for 2021
Image Shown: An overview of Vertex Pharmaceuticals Inc’s drug pipeline and commercialized drug portfolio. Image Source: Vertex Pharmaceuticals Inc – Fourth Quarter of 2020 IR Earnings Presentation. There are many attractive opportunities in the healthcare sector. Vertex Pharma is our favorite biotech play, and we are intrigued by the potential upside its strategic partnership with CRISP Therapeutics could generate. Additionally, we like the broad exposure to an attractive sector that the Health Care Select Sector SPDR ETF (XLV) provides the newsletter portfolios. The end of the COVID-19 pandemic will make conducting non-COVID-19-related clinical trials an easier task over the long haul, which supports the outlook for the pharmaceutical and biotech industries. We are also big fans of Johnson & Johnson, which is included in both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios, and UnitedHealth Group, which is included in the Dividend Growth Newsletter portfolio.

Jan 24, 2021

Best Idea Vertex Pharma Is an Intriguing Biotech Play
Image Shown: A snapshot of Vertex Pharmaceuticals Inc’s approved therapeutic offerings and its drug pipeline. Image Source: Vertex Pharmaceuticals Inc – January 2021 IR Presentation. Vertex’s market leading position in the cystic fibrosis ('CF') therapeutics space underpins our expectations that its free cash flow will grow at a brisk pace going forward (supported by the potential for the company to expand into new markets and the potential to grow the application of its CF portfolio). We also like Vertex’s exposure to gene therapies via its partnership with CRISPR Therapeutics. Vertex’s existing drug pipeline is decent, and the biotech has the ability to use its net cash position to bulk up its drug pipeline even further if needed (through a strategic partnership, acquisition, purchase of drug development rights, etc.). Though we generally don't get too excited about biotech plays given their speculative nature, the difficulty in predicting the success of drugs in their pipeline, and the potential for shareholder dilution via new equity issuance, Vertex’s financial position is rock-solid, its outlook is bright, and we like having exposure to the company in the Best Ideas Newsletter portfolio.

Jan 15, 2021

Steris Ties the Knot with Cantel Medical
Image Shown: Cantel Medical Corp is getting bought out by Steris PLC through a cash-and-stock deal. The image up above highlights Cantel Medical’s promising long-term growth outlook, though its performance in 2020 was subdued due to headwinds created by the coronavirus (‘COVID-19’) pandemic. In our view, Steris was attracted to Cantel Medical’s improving outlook (the latter started to stage an impressive rebound in the second half of calendar year 2020) and the ability for the combined firm to generate substantial synergies. Image Source: Cantel Medical Corp – December 2020 IR Presentation. On January 12, Steris PLC announced it had reached an agreement with Cantel Medical to buy the company through a cash-and-stock deal worth ~$3.6 billion (~$4.6 billion when including the assumption of debt and convertible notes) that valued CMD at $84.66 per share based on the closing price of STE on January 11. The deal includes $16.93 in cash and 0.33787 share of STE for each share of CMD. Steris is heavily focused on sterilization products for hospitals and laboratories (it also provides related services). The company intends to fund the cash component of its deal for Cantel Medical with new debt issuance and committed bridge financing, which will also be used to refinance most of Cantel Medical’s existing debt. Shares of Cantel Medical have advanced ~38% (as of the end of normal trading hours January 13) from when we first wrote about the idea back in early December 2020. Even before the acquisition was announced, investors started to warm back up to the company due to expectations that the headwinds that held the firm back last year would start to dissipate this year. In our view, Steris’ acquisition of Cantel Medical is highly complementary. It appears Steris was optimistic that Cantel Medical’s long-term growth outlook remained bright even though the firm had a rough 2020.

Jan 12, 2021

ALERT: We’re Still Bullish! Some Portfolio Tweaks
Trust you’re doing great, and hope you are enjoying your membership to Valuentum! We’ve received a number of questions from members during the past several weeks, and we’d like to address them briefly in this note. We will write a follow-up note in the coming days that goes into our broader outlook for 2021 and beyond. However, we want to get these takeaways to you as soon as possible, as our inboxes have been overflowing. If you haven’t read our market/analysis recap for the year 2020, please do so.