BANK STAKE GAINS: Bank of America Corporation (NYSE: BAC) was listed as a larger position at 64.3+ million shares, higher by almost 4 million shares.  Keep in mind that there are also positions in warrants due 2018 and 2019 in the position at BofA.  Capital One Financial Corporation (NYSE: COF) was raised slightly to 22,200,000 shares worth $879.7 million, but the old stake of 21,100,000 shares worth $1.09 billion. 

BANK STAKES LOWERED OR ELIMINATED (partial): Citigroup Inc. (NYSE: C) was a much lower stake at 25.1 million shares worth $643 million versus a stake of 33.5 million shares worth some $1.395 billion a quarter earlier.  J. P. Morgan Chase & Co. (NYSE: JPM) was not even listed as a position, yet it was about 4.7 million shares at the June 30 report ( but there is still a warrant position).  Wells Fargo & Co. (NYSE: WFC) is a lower position of 23,847,900 shares worth $575 million versus the prior position of 33,600,000 shares worth $942 million. XL Group plc (NYSE: XL) was lowered as well to 23.675 million shares worth $445 million versus his previous larger position of 28.23 million shares worth $620 million. NYSE Euronext, Inc. (NYSE: NYX) was dropped from the positions entirely after being listed as 3 million shares a quarter before.

PAULSON’s OTHER LOWERED POSITIONS (partial): SPDR Gold Trust (NYSE: GLD) was cut by more than one-third down to 20,273,540 shares (now worth $3.2 billion) versus 31,500,000 shares worth nearly $4.6 billion previously. Teva Pharmaceutical Industries (NASDAQ: TEVA) was cut by more than half to 1,976,900 shares worth $73.5 million from 4.18 million shares worth $201 million.  The stakes in FAMILY DOLLAR STORES INC. (NYSE: FDO) and the stake in MGM RESORTS INTERNATIONAL (NYSE: MGM) were also lowered by Paulson.  Hewlett-Packard Co. (NYSE: HPQ) was lowered to 15.2 million shares worth $340 million from 23.5 million shares worth $855 million a quarter earlier.

PAULSON’s NEW POSTIONS:  AMC Networks Inc. (NASDAQ: AMCX) is a new position of 5,000,000 shares worth $159 million, making Paulson a zombie fan for The Walking Dead.  Cephalon Inc. (NASDAQ: CEPH) is a new position of 3,684,000 shares worth some $297 million.  Covidien PLC (NYSE: COV) is a new position of 2,000,000 shares with some $88.2 million.  CVS Caremark Corporation (NYSE: CVS) was another new position of 2,500,000 shares worth almost $84 million.

Mylan, Inc. (NASDAQ: MYL) was a higher stake of 24,896,500 shares worth $423 million versus 14,940,000 shares worth $368 million previously.

Fortunately for Mr. Paulson, the markets have recovered handily since the end of September and the start of October.

JON C. OGG

First off, this is a reintroduction for SIRIUS XM to the NASDAQ 100 now that it is no longer considered a penny stock. It was roughly 2004 when SIRIUS was added and then XM was deleted back in 2007.  If you look at the index addition, the gain this morning is now up 2.6% at $2.28. The 52-week trading range is $0.91 to $2.44.  What is more important is that SIRIUS XM has a market capitalization of $8.76 billion.

PowerShares QQQ Trust (NASDAQ: QQQ) is listed as having a market cap of over $24 billion but it trades an average of about 50 million shares per day.

Teva shares are lower with the broader market by -1.5% at $48.73 in pre-market trading and its 52-week trading range is $44.86 to $57.08.

The NASDAQ 100 is an index that is widely followed, but it is also now not as concentrated as it was before about six weeks ago when the index rebalanced. That actually helps a company with an $8 billion market cap.  Still, the NASDAQ 100 is not as widely followed as the S&P 500 Index and not as widely tracked as the Russell indexes.

JON C. OGG

Data and ranking provided by the Flame Index.

Teva’s $81.50 offer per share in cash may seem like a low premium of only about 6% to the closing price on Friday, but this is about 12% higher than Cephalon’s earlier $73 per share offer.   More importantly, this is nearly a 40% premium to Cephalon’s pre-merger offers.  The boards of directors of Teva and Cephalon have each voted in favor of this merger.  What we are most curious about is simple… Which biotech and small pharmaceutical companies will be next to be acquired?

Celera Corporation (NASDAQ: CRA) is one we felt made sense for genomics, particularly when you consider that so much of Celera was raw cash.  At that time of the deal, we also updated several other genomic possible targets.

Cephalon was noted as a possible buyout target even back at the end of January, and we gave a list with explanations on each of the following and more:  Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN); Dendreon Corporation (NASDAQ: DNDN); Human Genome Sciences, Inc. (NASDAQ: HGSI); Cubist Pharmaceuticals Inc. (NASDAQ: CBST); United Therapeutics Corporation (NASDAQ: UTHR); Cadence Pharmaceuticals Inc. (NASDAQ: CADX); AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG); and Sangamo Biosciences Inc. (NASDAQ: SGMO).  Details with explanations on that full list here.

Foreign buyers have an advantage of preying on US companies due to the incredibly weak U.S. Dollar and drug companies are looking to bolster sagging drug pipelines.  The deals will continue, but the real risk for biotech investors is that there will be very few quality companies with real earnings left to invest in.

Not all of these other companies will be acquired.  Some are too expensive though others offer a buyer a significant pipeline and emerging drug boost… for those willing to pay up.

JON C. OGG

Cephalon, Inc. (NASDAQ: CEPH) is up 5.5% premarket to $81.20, relative to a 52-week range of $54.15-$77.59. Teva Pharmaceuticals (NASDAQ: TEVA) agreed to purchase the company yesterday for nearly $7 billion. Teva is up 3.2% premarket to $47.30, relative to a 52-week range of $44.86-$60.78.

Spectrum Pharmaceuticals, Inc. (NASDAQ: SPPI) is up 7.8% premarket to $9.70, relative to a 52-week range of $3.67-$10.63. The FDA recently approved the company’s Fusilev drug.

Tivo, Inc. (NASDAQ: TIVO) is up 16.5% premarket to $11.15, relative to a 52-week range of $6.92-$18.44. The company received a $500 million settlement in a lawsuit from Echostar (NASDAQ: SATS) and Dish Network (NASDAQ: DISH)

Biotech HOLDRs (NYSE: BBH) is the oldest biotech ETF and its shares hit a multi-year high of $107.75 today.  That is up more than 25% from the lows of last summer.  Amgen Inc. (NASDAQ: AMGN), Gilead Sciences, Inc. (NASDAQ: GILD), and Biogen Idec Inc. (NASDAQ: BIIB) now equate to right at 85% of the entire Biotech HOLDRs.  Genentech and Genzyme are now not there to counterbalance the ETF with large weightings.

SPDR S&P Biotech ETF (NYSE: XBI) avoids this as it has more companies in the underlying ETF but it too runs the risk that many of the mid-cap constituents are being acquired.  This one has not hit a year-high today, but its shares are up more than 35% from the lows of last summer.

First Trust NYSE Arca Biotechnology Index Fund (NYSE: FBT) has a more diversified holdings base as well, but its weighting is over 6% in Celera Corporation (NYSE: CRA) (already in a deal) and just under 6% in Cephalon Inc. (NASDAQ: CEPH) with a status pending on whether or it stays independent or merges.  Soo far it has yet to take out a 52-week high but even by a closer margin than the “XBI” above.  This one is up nearly 40% from the lows of last summer.

iShares NASDAQ Biotechnology (NASDAQ: IBB) also came well within 1% of a 52-week high yet again today, with its shares up about 35% of last summer’s lows.  If you are looking for a biotech ETF with the least disruptive impact by the M&A waves in the sector this one (at least currently) appears to be the least dented by M&A.  That may change but that is noted solely ‘just in case.’

Obviously not every single biotech will be acquired.  That is not the point.  What is important to watch is how the continued trend of mergers is changing the weighting of each of these ETFs.  If these weightings change too much it can impact how each of these trade.

JON C. OGG

Our screen was looking for roughly 50% upside or more to the consensus analyst price target at Thomson Reuters.  We also screened out extreme small cap names and those which are too thin in volume.  We came up Alnylam Pharmaceuticals, Inc. (NASDAQ: ALNY), Dendreon Corporation (NASDAQ: DNDN), Geron Corporation (NASDAQ: GERN), Halozyme Therapeutics, Inc. (NASDAQ: HALO) and VIVUS Inc. (NASDAQ: VVUS).  There were actually enough in the $200 million to $1 billion range that we’ll probably have another list tomorrow.  Thomson Reuters has a consensus price target of $17.94 but a median price target of $15.00.  The analyst field is also very mixed here and the coverage looks a bit stale by our count.  The lower target still implies upside of more than 55%.

Alnylam Pharmaceuticals, Inc. (NASDAQ: ALNY) is fresh off news that it won a $10 milestone payment from Takeda in Japan on part of its gene silencing drug collaboration.  Alnylam transferred its RNA technology and it stands to win up to $1 billion ($140 million or so collected so far) if all milestones and targets get reached.  With shares at $9.65, its 52-week trading range is $8.79 to $17.59 and its market cap is almost $410 million.

Dendreon Corporation (NASDAQ: DNDN) was surprising to see on the list of implied upside targets despite its Provenge which has been approved for prostate cancer.  Shares are already up big from before its approval, but they are also considerably from highs.  The revenue stage has not yet gone into full tilt as production is being ramped up through 2011 and into 2012. At $36.17 its 52-week trading range is $25.78 to $57.67 and its market cap is about $5.2 billion.  Thomson Reuters has a consensus price target of $54.50, implying upside of just over 50%.  Bristol-Myers’ recent approval has helped this class of drugs which use the body’s immune system to fight cancer back in favor. Shares were around $33.00 on Friday versus $36.17 today.

Geron Corporation (NASDAQ: GERN) is the king of stem cells in America as far as the investor community is concerned.  Analysts have an average price target of $10.13 but the median target is actually $8.00.  At $4.98, this still represents about 60% implied upside to the lower target and more than 100% to an average target.  The 52-week range is $4.37 to $6.40 and its market cap is roughly $641 million.  Again, the analyst crowd is very far apart here on expectations.  Another risk to consider is that the company conducts secondary offerings on and off as it needs to raise cash to fund its expensive R&D pipeline.  This stock tends to pop around stem cell study news and presentation results being given at key conferences.

Halozyme Therapeutics, Inc. (NASDAQ: HALO) is about six-weeks past news that it and partner Roche announced the first patient received subcutaneous MabThera (rituximab) as an anticancer biologic in a Phase 3 registration trial using Enhanze technology.  This was the second Roche cancer medicine after Herceptin to enter a Phase 3 registration study as part of the Halozyme-Roche collaboration. The clinical trial also triggered a milestone payment of $5 million to Halozyme. At $6.76 its 52-week trading range is $5.79 to $9.11 and its market cap is $685 million.  Thomson Reuters has a consensus price target of $10.80, implying upside of about 60%.  We would note that the consensus price targets are rather far apart here and no major analyst calls have been seen in some time.

VIVUS Inc. (NASDAQ: VVUS) has one of the more promising obesity drug candidates.  At $6.36 its 52-week trading range is $4.69 to $13.68 and its market cap is about $520 million. Thomson Reuters has a consensus price target of $9.36, implying upside of more than 47%. Just be advised that this ‘more promising’ notes has severe caveats.  The FDA doesn’t seem to endorse anything related to obesity treatments due to side effects and safety profiles.  The reason there is so much implied upside is because there are those who are fighting over whether or not VIVUS will win full FDA approval.

Stay tuned for another screen of other biotech-related shares in BioHealth for Thursday as there are many others with large implied upside ahead.  As always, do your own due diligence when it comes to “Wall Street Research” and always understand what you are investing in.  Speculative biotech stocks aren’t exactly for widows and orphans.

JON C. OGG

Cephalon, Inc. (NASDAQ: CEPH) is up 30% on heavy volume to $75.84, relative to a 52-week range of $54.15-$21.76. Valeant Pharmaceuticals (NYSE: VRX) has made a bid for the company for $5.7 billion. Valeant is also up 17%.

Netlist, Inc. (NASDAQ: NLST) is up 12% on moderate volume before the market open to $2.71, within a 52-week range of $1.81-$3.90.

ValueVision Media, Inc. (NASDAQ: VVTV) is down 7.5% premarket on very light volume to $6.35, relative to a 52-week range of $1.41-$7.67. The company announced a public stock offering after close yesterday.

Apple Inc. (NASDAQ: AAPL) Maintained Buy with $450 target but lowered estimates at Jefferies.
AXIS Capital Holdings (NYSE: AXS) Cut to Underperform as Bear of the Day at Zacks.
Cephalon, Inc. (NASDAQ: CEPH) Dropped from Buy on buyout at BofA/ML.
Dell, Inc. (NASDAQ: DELL) maintained Outperform as Bull of the Day at Zacks, but Dell also Cut to Hold at Needham.
Intel Corporation (NASDAQ: INTC) on Focus List with Outperform rating and $28 target at Credit Suisse.
Micron Technology Inc. (NASDAQ: MU) Reiterated Outperform and $15 target at Credit Suisse.
Pain Therapeutics Inc. (NASDAQ: PTIE) STarted as Buy with $12 target at BofA/ML.
Philip Morris International (NYSE: PM) Added to Conviction Buy List at Goldman Sachs.
TIBCO Software Inc. (NASDAQ: TIBX) Raised to Buy at BofA/ML.

You can join our free daily email distribution list to hear more about analyst upgrades and downgrades, top day trader and active trader alerts, dividend trends, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more. 

JON C. OGG

Activision Blizzard (NASDAQ: ATVI) Started as Outperform at Wells Fargo.
Amylin Pharmaceuticals (NASDAQ: AMLN) Raised to Overweight at Barclays.
Cephalon (NASDAQ: CEPH) Raised to Buy at Jefferies.
CNOOC (NYSE: CEO) Started as Sell at RBS.
Electronic Arts (NASDAQ: ERTS) Started as Market Perform at Wells Fargo.
Expedia (NASDAQ: EXPE) Started as Buy at Collins Stewart.
Priceline.com (NASDAQ: PCLN) Started as Hold at Collins Stewart.
Prudential Financial (NYSE: PRU) Raised to Outperform at Wells Fargo.
Tiffany & Co. (NYSE: TIF) Started as Buy KeyBanc.
Union Pacific (NYSE: UNP) Cut to Neutral at UBS.

You can join our open email distribution list to hear more news on key analyst calls, top day trader alerts, mergers and acquisitions, Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG
NOVEMBER 24, 2009