Special Members Only Update May 6th, 2021

****Important Update Regarding Stable Road/Momentus****

The merger is in peril of falling through unless there are enough shareholder votes to extend the merger date for three months. Anyone owning the stock as of March 22nd is entitled to vote for the extension. Right now, they are only 6% short of the required votes with one week left until the deadline.

That means that every vote counts. If the deal falls through, all outstanding shares would be bought out for only $10.03. For anyone that has not voted yet, it takes less than ten minutes. Log into a brokerage account, find the proxy and control number and vote to extend the merger date. Hopefully, that will give the company enough time to clear its regulatory hurdles and complete the merger.

 

****New Position Alert****

We initiated a position in Pfizer (ticker: PFE). The stock fell today after news that the Biden Administration backed a plan to waive patent protection for COVID vaccines.

We think the Administration is doing this as a show of good faith for the international community, but we anticipate months of negotiations that will likely go nowhere. Drug companies are motivated to create these miracle drugs because they’re profitable; disincentivizing companies by stripping patent protections is unwise. Further, freely giving away intellectual property while providing China and Russia access to scientific secrets would be downright foolish.

As for Pfizer, we believe the company has exceptional management, is slightly undervalued and pays out a 3.90% dividend (note: the stock went ex-dividend today, so we are not eligible to receive a dividend until next quarter). We don’t expect high-flying earnings growth, though the COVID vaccine and rumored pill should help boost the stock somewhat.

The stock may not move much, which is fine by us. We like the stock because it’s reliable (the company has been around since 1849), has stable and predictable cash flow and offers a safe harbor should inflationary winds pick up. We think it’s better than having too much cash, as Pfizer’s dividend and earnings growth offer protection from inflation and the erosion of purchasing power that comes with it.

We will continue to monitor the stock and may pick up some more if the price is right.

 

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