Our panelists give you the scoop on all the inside business information before you hear it anywhere else in The Informer segment:
David Asman: Dennis, drugs of the future. What do you have for us?
Dennis Kneale, managing editor: The “Forbes 400 Rich List” is out this week. A billionaire in the magazine controls a company called American Pharmaceutical Partners (APPX). This week, maybe, or next week, new drug trial results come up that could make this stock pop. Most cancer drugs, before they get to the target, they lose half their power. The body breaks them down. This company has created a human protein envelope to tuck the cancer (search) drug inside it. By the time it gets to its target it’s twice as effective as it used to be, and this same envelope, you might be able to use it for other drugs.
David Asman: But will it lead to profits?
Dennis Kneale: The stock is expensive. Buy it and hold it for 2-3 years, and maybe you’re going to make some money.
Mike Ozanian, senior editor: Absolutely. Great company, great drugs, the stock’s tripled this year, it’s at about $40, I think. I might wait for it to pull back a little bit until I bought some.
David Asman: Victoria, let’s go to you. Mergers: we heard about this Peoplesoft (PSFT) merger, with JD Edwards (JDEC), how’s it working out?
Victoria Murphy, senior reporter: It’s working out pretty well from what I hear, and the integration is not as complex as one might think. But I think investors, hi-tech investors, have been a little distracted lately, by Larry Ellison’s [chairman and CEO of Oracle (ORCL)] bid to take over Peoplesoft. I think this provides a buying opportunity for Peoplesoft. Let’s think about Craig Conway’s (president and CEO of Peoplesoft) ego for a second. He really wants to stick it to Larry Ellison. He used to work for Larry; Larry’s trying to take over his company. The best way to stick it to Larry is to have a great quarter, bump the stock up, and then it becomes too pricey for Larry.
David Asman: OK, so the grudge match will lead to better stock price. What do you think, Dennis?
Dennis Kneale: Victoria has a nice idea, but I might rather buy Oracle, because if they win Peoplesoft, the stock’s stronger, and if they don’t get it, the stock goes back up.
David Asman: OK. Mike, we were just talking about rich people, you can’t always get into these big funds that they’re in, but you know what some of those funds have. What are they?
Mike Ozanian: Sequoia fund (SEQUX), great fund, one of the best performers of all time, buying shares recently of Mohawk Industries (MHK), which makes floor coverings and carpeting.
David Asman: Sequoia fund is one of these rich people’s funds, and one of the things in it is Mohawk.
Mike Ozanian: Accumulating a lot of Mohawk recently, very profitable company, very little debt, cheap stock, buy it.
Dennis Kneale: You know, the only thing I know about floor coverings is what I walk on, but I would trust Mike Ozanian.
Makers & Breakers
Mike Norman, president of the Economic Contrarian Update: MAKER
I like the pharmaceuticals sector. It’s a little bit defensive, this stock, this company has some very good drugs, Allegra being one of them. They have a partnership going on with Merck (MRK) right now. The stock is cheap on a relative basis, and I just like the sector. I think it’s going to do very well.
David Asman: Jim, could you ever like a stock that’s based in France?