by Travis Johnson, Stock Gumshoe | August 13, 2021 5:25 pm
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Source URL: https://www.stockgumshoe.com/2021/08/friday-file-another-high-yielder-to-light-up-the-portfolio/
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Thanks for the great summary after another meh week.
I sold AbCellera (ABCL) just before it popped 20 percent Friday and bought Merck spinoff, Organon (OGN).
I was stunned by Organon’s “first” quarterly earnings and the announcement of a roughly 3.5 percent dividend. I’m curious if they’re mining the stock market” as we called it in my days in the gold fields?
I haven’t looked at Organon, but that’s sure a cheap spinoff. Barron’s has a piece on them here: https://www.barrons.com/articles/merck-spinoff-organon-is-supercheap-and-it-just-set-a-3-7-dividend-yield-51628774679
Dear Travis, Thanks for all the great infos…can you highlight GAN for me again please. I’m in since you still rated around 20 as a buy. Now we’re at around 14. Where do you see this go medium to long term? Appreciate your view.
It really has shit the bed.
I was very involved in the Schering/Organon merger in 2007. During that process, I got to know the women’s healthcare business quite well. I also received quite a few organon shares when the spinoff went public a few months ago. After it dipped a bit after the spin off, I purchased more and plan on keeping it for quite a while. I am looking forward to my first dividend check!
Implanon, now Nexplanon, was a challenging product with a very regulated training process that a clinician had to go through before he could actually use the product. I tore apart the old process and built a brand new one so if Doctor was trained on Friday, here’s proof of training was processed, confirmed and posted to our specialty pharmacist before Monday morning. He could purchase and start using it in his/her practice ASAP. I am confident that that training process was terribly disrupted during the pandemic which would’ve reduced new clinicians use of an innovative product. As things improve, I would expect to see this business grow and grow.
The fertility business was a focused little sales and marketing organization that first Schering and then Merck never quite figured out how to manage effectively. It also had a challenging supply chain and patient use regimen. Luckily, It also had a passionate sales and marketing organization that managed to keep its head down during those two mergers and is now back where it started, kind of. I believe this part of the business has huge potential now that it sits in the organization where women’s Health care is at the center.
I was lucky to work closely with Carrie Cox, who was the president of the Pharma business at schering, and is now chairman of Organon. Carrie was passionate about giving people the opportunity to critically look at every part of the business, find better ways to proceed and implement them. Her approach rippled throughout the business. It was a lot of fun working at schering during this decade as we challenged every part of operations and made things just work so much better. I believe under her leader ship, that Organon might be able to have similar success in the years ahead.
I am going to hold onto those shares that came out of my Merck investment; which was earned year after year as part of my bonus plan. The other nice thing about having a big foundation to my investment portfolio with such a stable business is that it allows me to take a lot of chances with the rest of my portfolio. I learned a lot from this website and Travis ideas and analysis!
I hope this background about Organon is helpful to you
Excellent background, thanks for sharing your expertise and insight!
Thanks, Travis, for another well-written update and a balanced view of what could go right and wrong. I like your continued focus on quality companies but not at any price for more shares. Your comments regarding TTD, U, DFH, and BAM were especially relevant to me.
Thanks estevado. We live in interesting times.
AFC Gamma (AFCG) — Error: The security entered is restricted from trading.
I guess everything’s restricted from trading on the weekend 🙂
Haven’t seen any halts or restrictions on AFCG. Which broker is not permitting a trade?
Travis, Leonard Tannenbaum sounds like a “stand up guy”. Any concerns there? Interesting old article.
https://www.google.com/amp/s/www.forbes.com/sites/antoinegara/2016/02/09/fooling-the-right-people-some-of-the-time/amp/
His history makes me a little nervous that this REIT could be managed for the benefit of the external manager (his management company), like the BDCs he ran appeared to be at times.
There’s a lot more profit margin to go around with this business, at least for now, but that’s why I didn’t commit for 5 years… I want to see how shareholders are treated and whether he leads the REIT as a shareholder and CEO, or as the external fee-earning manager.
Travis, can you tell me when the YSACW warrants expire?
I believe they’re standard, but would have to check to prospectus to be certain. Standard SPAC warrants expire five years after the business combination is finalized (but do also have early redemption clauses, typically triggered if the stock is above $18 for a few weeks, so you can’t just ignore them until expiration)
Thank you Travis for the detail on AFCG AFC Gamma. I followed you on IIPR and PW, and show nice gains. Today I also invested 0.5% of my portfolio in AFC Gamma. Also good to know you stopped out / sold Metromile, i did a month or so ago, and i am still holding on to GSHD Goosehead – of which i did switch my auto, homeowners, umbrella – from one of the major 5 insurance carriers, over to Goosehead in April.
Thanks for all the great infos…can you highlight GAN for me again please. I’m in since you still rated around 20 as a buy. Now we’re at around 14. Where do you see this go medium to long term? Appreciate your view.
There’s a bit of a sentiment shift here as they continue to push out profitability to the future — analysts now think they will not be profitable this year, versus a prior expectation of 19 cents in EPS for 2021, and I assume that’s mostly because of rising spending on their rollout and because the margins on their Coolbet business are not as good as the B2B iGaming platform.
What GAN reported, however, is mostly the same thing they preannounced in July (which I wrote about here, about a month ago: https://www.stockgumshoe.com/2021/07/friday-file-never-go-down-inflation-investments-and-some-price-updates/#gan), so I have a hard time being particularly worried.
Other than my worry over the fact that the market disagrees with me quite strongly, which is always an uncomfortable place to be — usually the market is right.
We’re pretty close to my stop loss level now, so I’ll re-address if we get there, and I’m going through the numbers and trying to reset my thinking about the business now that the business model has shifted pretty dramatically in this past quarter, so I’ll include some updated thoughts in the Friday File, if not before. I’ve been in disagreement with the market on GAN quite a few times over the past year, so maybe I’m just not looking at this company properly… but I am pretty stubborn, and the valuation is now much lower than we typically see for a company with strong revenue growth and solid scalability in a growth sector.