Author Topic: PACB - Pacific Biosciences of California  (Read 5029 times)

Foreign Tuffett

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Re: PACB - Pacific Biosciences of California
« Reply #10 on: January 04, 2019, 12:40:33 PM »
Market seems to agree with that because shares hardly budge upon the news.

Market being up big is probably a confounding factor. Opened lower, but then got dragged back up to flattish.

All that said, you are surely right that the market wasn't surprised by the second request notice.


Foreign Tuffett

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Re: PACB - Pacific Biosciences of California
« Reply #11 on: January 30, 2019, 03:51:45 PM »
Based on the price action, the market is increasingly skeptical that this will close on time, or even at all.

Quote from yesterday's Illumina CC:

"And on the PacBio side, so where we are is we got the second request from the FTC as we expected. And so we are in the information gathering phase. And so the process in general is going as we expected and we still expected [sic] to be a midyear close."

writser

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Re: PACB - Pacific Biosciences of California
« Reply #12 on: February 11, 2019, 02:47:39 PM »
Not sure if it's a relevant data point but company released q4 results today. Snippet from the press release:

Quote
As previously announced, each of the Company and Illumina have received a request for additional information and documentary material, commonly referred to as a “second request,” from the United States Federal Trade Commission (the “FTC”) in connection with the merger.  The FTC’s “second request” has the effect of extending the waiting period applicable to the consummation of the Merger until the 30th day after substantial compliance by the Company and Illumina with the “second request,” unless the waiting period is extended voluntarily by the parties or terminated sooner by the FTC.  The Company and Illumina continue to expect the merger to be completed in mid-2019.  During the three months ended December 31, 2018, the Company recognized approximately $8.2 million in operating expense in connection with the Merger Agreement.

Since the announcement of the FTC second request shares traded as high as $7.40 and as low as $6.70 on basically no news afaik. Uncertainty leads to volatility. Unfortunately it also leads to hard decision making.

Still an interesting idea (I continue to hold a small position) but risky.
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Gregmal

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Re: PACB - Pacific Biosciences of California
« Reply #13 on: February 11, 2019, 02:56:49 PM »
IDK about the merger, but the business results look downright ugly. Definitely wouldn't want to own this if there's a deal break.

writser

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Re: PACB - Pacific Biosciences of California
« Reply #14 on: March 26, 2019, 11:53:37 AM »
From the Barclays Global Healthcare Conference (March, 18):

Quote
So these 5 focus areas that I've talked about continue to be fueled by research and transnational efforts. And our proposed acquisition of Pacific Biosciences would enable us to add complementary technology to our portfolio to better serve our customers' needs.

[..]

We believe this will lead to novel insights that expand the clinical utility of genomic information. We continue to expect the transaction to close in mid-2019.
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wisowis

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Re: PACB - Pacific Biosciences of California
« Reply #15 on: April 22, 2019, 05:49:35 PM »
"UK Government Investigating Illumina's Proposed Acquisition of Pacific Biosciences"

https://www.genomeweb.com/sequencing/uk-government-investigating-illuminas-proposed-acquisition-pacific-biosciences


Gregmal

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Re: PACB - Pacific Biosciences of California
« Reply #16 on: July 05, 2019, 06:04:53 PM »
I recently went long this. After speaking with a number of consultants and then doing some follow ups, essentially, the case that should and will be made is that Pacific Bio is not a business that can survive on a standalone basis. Their operating history certainly supports this, and if competition is a concern for approving the deal; seeking to exist certainly doesn't help. This issue in regards to Illumina is a lack of pure-play competitors and the winner take all dynamics within many areas of genomics. Illumina is being given a hard time because people need to cover their asses, but barring anything totally asinine, this will go through the extra reviews, but should close early 2020. At $6 entry I see maybe $1.25 downside and $2 up, with probably 90% likelihood(lazy guesstimate, certainly not an exact formula derived percentage) the deal closes or we get a nice quick bounce up that provides and acceptable IRR on it's own.
« Last Edit: July 05, 2019, 06:07:34 PM by Gregmal »

writser

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Re: PACB - Pacific Biosciences of California
« Reply #17 on: July 06, 2019, 03:07:28 AM »
Given your analysis I assume you made this a 50%+ position?
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Gregmal

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Re: PACB - Pacific Biosciences of California
« Reply #18 on: July 06, 2019, 06:46:41 AM »
~30bp.

No interest in owning PACB on a deal break for the reasons stated above.

writser

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Re: PACB - Pacific Biosciences of California
« Reply #19 on: July 06, 2019, 11:39:13 AM »
Assuming you mean basis points (bps), your sizing seems completely at odds with your analysis. I am way more skeptical about this deal than you are but my position is three times as large. The expected value of a ~90% good outcome (with a significant part of that being a deal close early 2020) is already way higher than the current stock price - even if you assume a zero in case of a deal break. But you are even more optimistic since you only see $1.25 downside. According to the Kelly criterion you should bet ~400% of your portfolio here. Even if you use 1/2 or 1/4 Kelly and dial down all your estimates you should still make this a huge position. So you talk with all the consultants, do your follow ups, do the due diligence, come up with these numbers but you only make it a 0.3% position? What causes the disconnect here? Are you a pussy? Nah, don't think so. I think that your initial post in this topic oozes far more confidence than you actually have (and implies far more due diligence than you actually have done :P).
« Last Edit: July 06, 2019, 11:46:00 AM by writser »
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.