Stocks and Sectors

Pharmalot submits:

After months of waiting, the final and complete results from a study about the Meridia diet pill are now available in The New England Journal of Medicine and the findings are as bad as what was suggested by the preliminary data released last November. The SCOUT study, which was financed by Abbott Labs (ABT), the company that sells the pill, shows Meridia raised heart attack and stroke risk in patients with pre-existing heart disease (read the abstract).

The study examined nearly 10,000 people 55 and older with pre-existing cardiovascular disease, type 2 diabetes or both, who were given Meridia or a placebo. They also participated in a diet and exercise program. On average, Meridia was taken for more than three years and the risk of a heart attack or stroke was 16 percent higher. Those taking the diet pill, which has been on the US market since 1997, were not more likely to die of cardiovascular disease, although it’s worth noting the drug is known to increase blood pressure and heart rates.

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Saj Karsan submits:

Investors love companies that generate high returns on capital. Companies that can do so sustainably are destined to grow shareholder value, as they can grow earnings while rewarding shareholders at the same time. But some companies that generate excess returns can be traps that can cost shareholders dearly! Only if the business falls within the investor’s circle of competence can he ascertain whether the company can continue to generate high returns.

Consider Access Plans (APNC.OB), a marketer of various consumer health and insurance products. The company has a book value of just $13 million, but it generates about $1 million in after-tax income per quarter.

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Dividend Growth Investor submits:

Medtronic, Inc. (MDT) develops, manufactures, and sells device-based medical therapies worldwide. This dividend champion has raised distributions for 33 years in a row.

Over the past decade this dividend stock has produced a negative total return of 2.20% per year. The company was grossly overvalued in 2000, ending the year at a P/E of 68 which explains the poor returns over the past decade.

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Pharmalot submits:

File this under back to the drawing board. The Superior Court of Pennsylvania has decided that lawsuits filed by 14 women against Pfizer’s (PFE) Wyeth and Pharmacia units over links between breast cancer and hormone replacement therapies were incorrectly dismissed by a lower court. And the ruling could restore as many as 1,000 mass tort lawsuits to the docket in Phildelphia Common Pleas Court.

At issue was whether Elizabeth Coleman could have reasonably known that her breast cancer was linked to one of the HRT meds she was prescribed prior to the 2002 disclosure by the Women’s Health Initiative showing the drugs can cause the afflication. A lower court determined Coleman should have known or had reason to investigate such a link even before the WHI study was released. The ruling backed Pfizer, which argued a two-year statute of limitations in which to file a lawsuit had epired.

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Jackson Thies submits:

Company Description:

MedCath Corporation (NASDAQ: MDTH) is a healthcare services provider, focusing on high acuity conditions, specifically the diagnosis and treatment of cardiovascular disease. In March 2010 MedCath announced a strategic alternatives review to explore the sale of the entire company or the sale of individual hospitals and other assets. Since beginning the strategic review process, MedCath has announced the sale of the majority-owned Arizona Heart Hospital for $32 million and their minority stake in Avera Heart Hospital of South Dakota for $20 million. The sale of their minority stake in Avera is expected to net approximately $16mm after taxes and closing costs.

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Wealth Daily submits:

By Brian Hicks

Last Saturday, the New York Times ran a rather lengthy piece on the Alzheimer’s epidemic. The article came on the heels of the high-profile failure of Lilly’s (LLY) late-stage AD drug, Semagacestat.

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Benzinga submits:

By Roger Nachman

Don’t people buy stocks because they think the stocks will go up in value?

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Accuray Incorporated (ARAY)

F4Q2010 Earnings Call Transcript

August 31, 2010 5:00 pm ET

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Kurt Brouwer submits:

Investor sentiment for stocks is at a very low level, but some well-known investors are taking positions in stocks. According to the video below, Warren Buffett and Berkshire Hathaway (BRK.A / BRK.B) just added significantly to Berkshire’s already large stake in Johnson & Johnson (JNJ). In addition, Buffett is buying other healthcare related stocks such as Becton Dickinson (BDX).

Stanley Druckenmiller, who just closed his very successful hedge fund, bought Wells Fargo (WFC). And, Druckenmiller and George Soros both bought Internet technology firm Akamai (AKAM).

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Tom Lydon submits:

Citizens of developing countries are getting richer. That newfound wealth is a major opportunity for health care ETFs, and that fact hasn’t been lost on big pharma.

As the emerging market middle class grows, so will health care resources and companies. Kevin Grewal for Seeking Alpha reports that a report released by UBS indicates that developing nations are expected to account for $550 billion of annual drug sales per year by 2020. This may account for more than 70% of all drug sales growth and pushing China and Brazil ahead of France, England and Germany when it comes to market size.

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