Biogen Company Review
Portfolio Volume = 1 share ~5.29%. The cost at the time of writing is $308.9
The company is quite large - capitalization is $55 billion, with a low P/E = 10 even for biotech, the last few years have been growing by 9% on average annually in terms of profit, ROE is simply amazing - above 40% (with revenue of 14.37 billion, net profit = 5.889 billion). Biogen has a very good margin of safety, and with the current panic around the virus, its stocks have fallen much less than the broader market. However, according to forecasts, the company’s profit and revenue will practically not grow in the future, the most optimistic forecast is +30% for profit in total for 4 years, and even then I would not really count on it. The maximum that can be expected in the best case scenario, in my opinion, is a return to the stock's highs around $460.
Do I now recommend buying Biogen at the current price? No. Why did I take it into my briefcase? I bought a share at $230 on May 7, 19, since 1⃣ the company in March lost 30% of its capitalization on news of a failed test result for one of the drugs (despite the prospects for further profits from this "failures" have remained virtually unchanged), 2⃣ May 2, 2019 company stocks worth ~1 million. dollars was bought by CEO Michel Vounatsos, and then on 05/03/19 for 27 million. $ at the market price was purchased by the Sarissa Capital fund. I plan to keep stocks for ~3-4% of my portfolio; at current prices I don’t see any point in buying more. That's all about Biogen, then let's talk about the topic related to the purchase of stocks of BIIB and other companies, which I will talk about in the following posts.
Why do insiders buy stocks?
First of all, an insider is an employee of the company, a member of the board of directors, in general, someone who knows the kitchen from the inside, or is a close and interested person. As a rule, insiders are pure sellers and this is normal, since sometimes employees are not paid in money at all, but only in stocks (options), so they are essentially forced to cash out in this way. Often CEOs sell large stakes when a company goes public in order to lock in some of the profits after years of work and investment in the company, which is also normal. You should only be wary if the company's stocks are dumped in large quantities by several insiders at once - this may be a sign that not everything is in order in the company.
So, with sales clear, why are they buying? As a rule, no one forces them to do this at gunpoint (I hope 😊) and there is only one reason - they invest personal money in the hope that in the future (short-term or possibly long-term) the stocks will rise. So, if this guy (or non-guy 😂 who works for or even manages a company is now buying stocks worth lams of personal funds, maybe he knows something that I don't? 😏. Actually, this is the answer to the question why I bought Biogen stocks.
Also, an even better signal is the purchase of stocks at about the same time by several insiders, and it is desirable that these are private individuals (managers/CEOs/just employees), and not funds, since the placement of funds by the latter, in my opinion, does not indicate confidence in future prospects as eloquently as the purchase by some hard worker of stocks of the company in which he works for the amount of his annual salary.
And yes, another very important point - the mere fact of buying stocks by an insider is not a concrete reason to buy stocks. Even the CEO of the company is the same person as you, and he can also make mistakes at the favorable moment of entry. For example, Elon Musk bought $10 million worth of Tesla stocks at $767 a month and a half ago, and frankly, I wouldn’t want to repeat 😬 after him. Remember that buying stocks by insiders can be a good additional signal, but you also need to analyze the company's performance separately.
Attached graph:
1) Dynamics of the Biogen share price
2) Dynamics of revenue and profit, from 2020 - forecast values
3) Earnings per share, from 2020 - forecast values.
Ideas
April 1, 2020