Monthly Archives: March 2017

Added some more Novo Nordisk (NVO) and a merger arbitrage play

With most markets trading at huge trailing P/E valuations due to capital flight, expectations of corporate tax cuts in the US and bubble blowing, it’s getting pretty hard to find companies to add to my dividend growth portfolio. I’m considering to build up some cash reserves but while I have no problem with letting my stocks compound silently without making any adjustments, I find it hard┬áto just pile up cash to wait for opportunities.

In recent weeks I made two purchases:

  • 25 more shares of Novo Nordisk (NYSE:NVO). The company has a rough year ahead but is still a free cash flow machine, with zero debt and operating in a market that’s bound to grow as obesity and bad eating habits will not disappear. With a P/E ratio of around 15.7 it made a lot of sense to add some more shares to this position. ┬áThis may be my last purchase of this company for a while as this position as getting fairly large versus the overall size of my portfolio.

novonordiskmarch

  • 8 shares of Actelion (VTX:ATLN). This company isn’t really part of my dividend growth portfolio as it’s more of a merger arbitrage play. Johnson & Johnson (NYSE:JNJ) is in the process of taking over this Swiss biopharma company. JNJ offers $280 cash per share and shareholders also get one new share of “Idorsia”, a new R&D company that will house Actelion’s promising drug pipeline. It’s sort of a merger arbitrage play with a lottery ticket. The deal is expected to close in May and I will be watching this closely. There’s some currency risk for me because the offer is in USD but if the offer remains attractive closer to the end date I may invest a lot more capital in this. The ideal scenario for me is to get the Idorsia shares for free plus a little bit of cash.

Did you buy any shares recently?

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