Monday, November 06, 2006

Hit #124 (Kos)

Kos Pharmaceuticals (KOSP) is being bought by Abbott Labs for over $3.7 billion in cash. The offer, of $78/share is a premium of 88% over my average cost of $41.47/share.

I had mentioned Kos as a target in an earlier post on possible targets for Japanese buyers. At that point, I had also written that Kos was expensive (then trading at around $70), and that I would wait for a better price. Kos shares became available at a bargain this May and June, when I started to buy.

I did not expect such a huge premium, not that I am complaining. Abbott as a buyer is also a surprise, but the market seems to like the deal, as indicated by the lack of negative reaction, despite the high price being paid.

Talking about biotechs and pharmas that become cheap, here is one to take a look at, following today's slump - Adolor (ADLR). I own shares, bought at around the current price a while ago, and have been riding a crazy wave since then. The stock, after more than tripling at one point, is back to where it started. At today's price I would be a buyer, though only in small quantities. Today's FDA scare reminds me of similar, but much serious earlier episodes involving other companies. Adolor is likely a target for its larger partner as well.

Another bet, though very speculative at this point, would be Replidyne (RDYN). I have just opened a small position in Replidyne, and will be following it closely.

Previous hit - Stellent (#123)


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