In recent articles we’ve noted that, based on the price action, Biogen Idec (BIIB) is worthy of selling. Biogen continues to register new highs after first showing up on our Nasdaq 100 watch list on October 30, 2009. The performance of Biogen Idec since October 2009 has been over 135%.
It is worth noting that the last time Biogen (BIIB) was at a high on October 15, 2007, the board of directors approved a plan to put the company up for sale. Biogen retained Goldman Sachs and Merrill Lynch to act as advisors for any eventual deal. The announcement of the intent to sale the company came after-hours on Friday October 12, 2007. After-hour trading of Biogen stock pushed the price up over 18% resulting in the high for the stock the following Monday.
Our interpretation of management’s desire to sell “at the top” in 2007 reflects that they didn’t expect the price to go much higher and with a market that had plenty of liquidity the best option would be to seek alternatives. The management of Biogen was accurate in their choice and timing. Biogen stock fell by over 50% after the announcement of the sale of the company.
For current holders of Biogen stock, we’d be paying close attention to the management team for indications of a merger or sale of the company. Any indication of managment "cashing out" should provide ample insider information about the expectations going forward.
Source:
Bowe, Christopher, and James Politi. "Biogen shares soar as group considers sale." Financial Times. Saturday October 13, 2007.
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