[Charts] Volatility Before Buyouts

Lou Basenese

Friday, December 3, 2021

It’s Friday in the Trend Trader Daily Nation… and it’s Friday in the markets.

All I can say is, “Hallelujah!” After all, with all the volatility we’ve been experiencing, I could use a little respite.

As you’ll learn in a moment, though, all this selling means weekends are about to get a whole lot busier — at least for one group of market participants.

Who am I referring to? Slow your roll and curiosity for a moment, so I can explain to all the newbies here how we do this Friday chart thing.

Each week, I curate a handful of graphics to convey some important investment insights. All it takes is a quick glance — and you’ll be up to speed and poised to profit.

Yes, it’s still possible to profit in choppy markets.

In fact, in this week’s edition, I’m sharing the single-most compelling area of the market to make money right now: buyouts.

So let’s get to it…

Bring on the Dealmakers!

You don’t need me to inform you that the markets are acting schizophrenic right now. They’re rallying violently higher (and lower) on the same day.

But what you might not know is this:

These large intraday swings, where a nearly 2% gain turns into a 1% loss for the S&P 500, is extremely uncommon. So it won’t last indefinitely.

I know that doesn’t make it any easier to endure. But suck it up, buttercup! This too shall pass. (I’m talking to myself, too, mind you.)

What gives?

Well, the market’s just trying to digest a litany of uncertainties involving inflation, Covid-19 variants, supply-chain shortages, potential government shutdowns — and the list goes on and on.

But instead of panicking about the volatility, we have to be disciplined so we can spot opportunities. And I’m convinced no bigger opportunity exists right now than investing in potential takeover targets. Particularly in the biotech sector.

Here’s why…

Fundamental Merger Law #1

As I’ve told you before, dealmaking always begets more dealmaking.

We’ve seen this fundamental reality play out in the biotech sector since August, when Pfizer paid a 204% premium to acquire a compelling biotech company and a mini buyout boomlet got launched.

And mark my words, now we’re about to experience a full-on buyout bonanza.

How can I be so confident? It’s simple, really…

The biotech indexes keep trending lower, which is making the most promising small biotech companies all the more attractive as acquisition candidates. And at the same time, Big Pharma is sitting on a mountain of dry powder to fund acquisitions.

The latest estimates from investment bank Leerink peg that mountain of cash at $500 billion by the end of next year, based on current balances.

(click image to enlarge)

Here’s the thing:

As impressive as that estimate sounds ($500 billion could fund dozens of acquisitions), it actually underestimates the total money available to make acquisitions. That’s because cash can be levered to borrow to buy more.

So if we factor in debt capacity, we’re talking about $1.7 TRILLION of dry powder that promises to be put to work.

The best news? It’s not just a handful of the Big Pharma companies that are flush with cash...

As you can see, all of the major players are locked and loaded.

(click image to enlarge)

Bottom line: We couldn’t ask for a better set-up for biotech buyouts.

In fact, I’m convinced we could be just days away from the biggest biotech buyout of the decade.

So much so, I’ve positioned my personal portfolio to unlock a potential $1.6 million profit if it does happen.

If you’d like to profit right alongside me, you can get the urgent details right here.

Ahead of the tape,
Lou Basenese
Lou Basenese


Tags: Stock Market Pharma

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