Use access key #2 to skip to page content.

David Einhorn's new Special Situation Stock

Recs

16

August 17, 2010 – Comments (4) | RELATED TICKERS: FURX.DX , PPDI.DL

This morning I singled out Furiex Pharma (FURX) as one of the two new David Einhorn positions that I planned on doing more research on.  I am now comfortable enough to add it to my CAPS portfolio, but not yet in real-life.  Here's what I have been able to find out thus far. 

FURX is a recent spin-off of Interesting spin-off of Pharmaceutical Product Development (PPDI) with nearly as much cash on its balance sheet as its market cap.

The theory here is that such a small spin-off of such a large company was likely unwanted by many large investors and hence sold, creating an undervalued security. 

Furthermore, like is the case with many spin-offs, significant insider ownership at FURX aligns management with shareholders.

The company is burning cash, so this is far from a pure asset play.  

It currently owns the rights to royalties from two drugs with potential milestone payments worth as much as $14.40/share.  Some companies on the street believe that the value of these royalties, the cash on FURX's balance sheet, and its product pipeline are worth as much as $30 to $36/share. 

Now I can see why Einhorn is interested in this situation.  Is anyone out there familiar with Furiex? I am interested enough in this one to begin the second level of deeper digging that I do on companies that I am considering buying in real life. 

Kudos to Farukh Farooqi for his excellent and timely from my perspective update on the company on Seeking Alpha today: 

Furiex Pharma's Cash Will Likely Run Out Before Investors Feel Secure 

Deej

4 Comments – Post Your Own

#1) On August 17, 2010 at 8:06 PM, MKArch (99.71) wrote:

This may not be the most appropriate thread but I it looks like HRG is getting set to make a big move and I'm interested in your take.

 

Mike

Report this comment
#2) On August 17, 2010 at 8:48 PM, TMFDeej (99.41) wrote:

Hey Mike.  I'm still trying to absorb the HRG news.  It's nice to see them do something with all that cash.  Whether or not that thing is good is another question.  

It looks like Falcone is attempting to sell his hedge funds' stakes, 65% in total, in Spectrum Brands (SPB) to HRG. Spectrum hasn't exactly been on my radar.  I'm not wild about anything that is exposed to the consumer in this environment. Having said that, companies that are emerging from bankruptcy can often be solid investments. 

I wonder what the reason for this transaction is?  To dump an investment that the company doesn't like on HRG and get it out of its funds?  Why not just keep the Spectrum shares where they were? 

Here's a link to an 8-K on the deal and an article about the proposed transaction from today's WSJ.

Form 8-K for HARBINGER GROUP INC.

http://biz.yahoo.com/e/100817/hrg8-k.html 

Funds Seek To Swap Spectrum Brands Shares For Harbinger Shares

http://online.wsj.com/article/BT-CO-20100817-713311.html 

Deej

Report this comment
#3) On August 17, 2010 at 10:19 PM, walt373 (99.80) wrote:

Deej, I have some info but I probably shouldn't post it here. Can I email you?

Report this comment
#4) On August 18, 2010 at 6:10 AM, TMFDeej (99.41) wrote:

Absolutely Walt.  You can e-mail me at deej8888 @ yahoo.com

Deej 

Report this comment

Featured Broker Partners


Advertisement