It’s here again.
No, I’m not referring to the NBA or NHL playoffs. (Though, as an aside, the potential return of a Canadian team to the finals in hockey for the first time in nearly a decade seems appropriate.)
It’s 13F season.
The Securities and Exchange Commission (SEC) requires firms that manage more than $100 million to file Form 13F every quarter. The deadline is 45 days after the end of March, so they’re rolling in now.
This rule applies to hedge funds and other groups that manage serious money. Some of the gurus who manage these funds have long records of solid performance. Form 13F tells us exactly what they hold. That’s why we watch these closely.
Over the next couple weeks, I will share with you some of the best findings I’ve unearthed from the first-quarter filings.
I’m excited about this week’s name…
This Stock Is a Bargain
I believe you can earn 30% over the next year in Bristol-Myers Squibb Co. (NYSE: BMY).
Bristol-Myers has had a rough go of it recently:
As you can see, Bristol-Myers has sold off.
Then, on April 26, it reported solid first-quarter earnings and raised its current-year earnings guidance by 6% to $3.35 to $3.45 per share.
But the market doesn’t seem to care…
Two drugs — cancer-focused Opdivo and blood thinner Eliquis — are driving the company’s results. From 17% of total sales in 2015, the products made up 47% of sales last year.
Analysts expect this growth to continue. One of the main drivers will be the company proving the usefulness of Opdivo to attack other cancers.
Following Experts Into This Trade
Two of my favorite gurus confirmed my thoughts on this one. They jumped into this name in the first quarter.
Wall Street legend and billionaire Leon Cooperman has run Omega Advisors since 1991. Omega established a new position in Bristol-Myers. It bought 468,000 shares during the first quarter.
The Canada Pension Plan Investment Board (CPPIB) manages CA$381 billion ($295 billion). CPPIB employees manage the fund to be sustainable.
It supports the retirements of 20 million Canadians. This was evident during the heart of the financial crisis. In the 12 months ending in March 2009, the CPPIB’s fund fell 17%. The S&P 500 Index posted a 38% loss over the same period.
I monitor the CPPIB because it knows what it’s doing. It added more than 550,000 shares to its existing Bristol-Myers stake during the first quarter.
Plus, there’s an added benefit with this name.
Insider Buying
You see, in addition to buying by gurus, I closely watch insider buying. By that, I mean open market purchases made by directors, officers and large shareholders. No one knows more about what’s happening at a firm than these folks.
A Bristol-Myers director just grew his BMY stake by 146%. Dinesh Paliwal is also the CEO of private audio company Harman International.
Paliwal bought on April 30, just a few days after the company released earnings. (The SEC doesn’t allow him to buy before.) I’ll bet he sees the same value we do.
But wait, there’s more. Can you believe it? I didn’t even mention that Bristol-Myers has increased its dividend every year since 2009. With a current 3% yield, BMY will pay you to wait while it finds other life-saving therapies.
Still, Bristol-Myers is trading at a large discount to its historical earnings multiples. Shares should rally at least 30% as they return to them.
I suggest you look into buying shares today.
Good investing,
Brian Christopher
Senior Analyst, Banyan Hill Publishing
Editor’s Note: On Thursday, May 17, Wall Street legend Paul is set to show YOU how to make more money than you ever thought possible. In fact, he’s going to show you how any investor — regardless of age, experience or net worth — can turn a small stake into a $10 million windfall over the coming years. Needless to say, Paul has a jam-packed agenda for you as he unveils his most closely guarded investment secret in what many at our Banyan Hill offices are calling “the event of the decade.” To sign up now to watch it, click here.