As I was trying to research a little bit how to value a pipeline of drugs still in development (Actelion spin-off), I stumbled across the so-called “Contingent Value Rights” (CVRs) which are often used in Pharma takeovers.
A CVR is somehow similar to a tracking stock with the exception that the CVR often tracks a more specific item such as a single product or in case of many Pharma M&A transactions, the outcome of a certain drug development project.
Acquirers and sellers sometimes use this instrument if they cannot agree on the value of an under development drug. The idea behind is that the seller keeps the upside and the buyer doesn’t need to pay upfront for some very risky future cashflows.
Sanofi/Genzyme Lemtrada CVR
When Sanofi took over Gynzme in 2011 such a situation crystalized. This is from a 2015 NYT story:
DISCLAIMER: THIS IS NOT INVESTMENT ADVICE. DO YOUR OWN RESEARCH !!!!!!
Almost exactly 1 year ago I started my exploration into the Australian stock market with DWS Ltd. and Silver Chef.
As some readers know, I didn’t buy DWS (I only put it on my watch list) and bought Silver Chef instead. Now, 1 year later it seems to be that I backed the “wrong horse”:
DWS is up +42,5%, SIV is down -19% (in AUD). So let’s look at DWS first.
Before ultimate world domination, right now Uber seems to be in some deep trouble.
A good collection of Mungerisms by the always excellent Farnam Street blog
An epic 2016 letter from Semper Augustus with very interesting thoughts on profit margin mean reversion (h/t valueinvestingworld)
An interesting historical comparison of ship brokers Clarkson and Braemar
Joel Greenblatt interview on Wealth Track” ((h/t valueinvestingworld)
Tyler Cowen’s new book “The Complacent Class” looks very interesting
The company / IPO
Trivago is an interesting company. Founded in Germany (where succesful startups are very rare anyway), Expedia acquired the majority (61%) in 2012 for 477 mn EUR. Then, in December 2016 Expedia decided to IPO Trivago on NASDAQ at 11 USD per share (down from an initial range of 13-15 USD).
Interestingly. it is not so easy to find out how many shares are outstanding. The IPO itself comprised 30 mn shares, 20,8 mn new shares and 9,2 mn shares from the founders. Expedia didn’t sell any shares.