MRK- wise move?

[jiesen]

I dipped my toe in the MRK waters today at 26. Anyone think this is an unwise move?

[billyjoe]

Jiesen, I wish you well having bought within a cent of the low for at least 52 weeks. My concerns would be possible lawsuits . Yesterday a reporter stated that they've documented 27,000 strokes and heart attacks linked to MRK product and that MRK knew about it 4 years ago. Even if this is totally false , how long will it take to clear this up? The nearest city to me with a population of 20 some thousand already has lawyers placing ads soliciting "victims" of MRK . Multiply that by hundreds or thousands of cities and it gets scary. Maybe you can make a quick buck and get out before it's too late. This is just my opinion and I've been known to be wrong before.
billyjoe

[mrmarket]

If someone ever read the label on a VIOXX bottle that was in their friend's medicine cabinet, he will join the lawsuit. This will make Phen-Fen look like a fart.

Even if the litigation gets settled, this will hang over MRK's head like the sword of Damacles. It's amazing how far this company has fallen from the Vagelos days when it was the most admired company in America. It's really a shame.

I say this because MRK is a stock I've held in my "buy and die" portfolio for 20 years.

[Websman]

If I bought MRK right now, it would be for a day trade only...

[jiesen]

Well, I figure there's a point where the lawsuits etc are all priced in, and this may be it. How much will it take? 6, 8, 12 billion? who knows, but once it's worked out, and the sword is removed, the company should bounce back- at least to 40 or 50, if they're still paying over $1/shr dividend by then. It's not like Vioxx was the only product they had going for them.

Also, with Bush in office, I like MRK's odds against the lawyers. I say no more than $10B is lost, and not all at once. A $30B hit is currently priced in. What do you think?

By the way Billyjoe, I didn't get it at 26.00 (would have been nice) but actually at 26.15.

[spikefader]

I dipped my toe in the MRK waters today at 26. Anyone think this is an unwise move?
Well, they do say wisdom:
* is being able to recognize the significant in the factual;
* is having the ability to filter the inessential from the essential;
* is having the characteristic of not doing desperate things;
* lies in simplification;
* consists of anticipation of consequences;

But my favorite (and the one that most relates to trading) is by Theodore Roosevelt, who said,
"Nine-tenths of wisdom consists of being wise in time".

Whatever happens to your long MRK position, just make sure you're "wise in time" and use a protective stop, and be prepared for the possiblity of losing substantially more than you think possible on an enormous gap down after further terrible news.

But I take it by your "dipped my toe in'" description that it's a small position and you're not over exposed.

On the technical side, the chart screams bearishness.
This link shows Point & Figure bearish projection of $4.00 (bottom of page)
http://stockcharts.com/gallery?mrk

Good luck with it.

[New-born baby]

Jiesen,

Remember companies like Auther-Anderson? Braniff? TWA? K-Mart? What am I saying? Big companies can die. Star companies can die with bad management. MRK had bad management to put that junk on the market.

My thoughts would be: the market has finally got rid of a great weight off of its shoulders; why buy a gut-shot dog on its way down? Why not buy the cream of the cream?

I might short MRK, but I myself wouldn't buy it long when Mr. Markets says it's all about "earnings, earnings, earnings." And with a $10B hit minimum, it isn't going to show big earnings for awhile.

The truth about MRK is that many of its big winners will soon be on the generic market, and MRK will lose some big income. Furthermore, according to my study, MRK doesn't have anything great coming down the pipeline at this time. Prospects did not look all that hot BEFORE the Viiox fiasco; they look awful now.

I am not writing to insult you in any way; I am writing to say I'd jump ship Monday at 9:30 a.m.

But take that with a grain of salt; I am no Mr. Market. You'll have to make your own decisions. I am just telling you what I would do.
Very best investing to you always.

[MEA_1956]

If it were me and I were pondering this ? I do believe I would have waited a while longer and let a solid base develope. As stated eariler who knows where the next suprise may lie. For example, CPJY.pk 4/1 split, started an up treand after the split and then dipped again. Then the bad wording on the press releases caught up with then, and there will probably be a set back or two more before they have wind at there back and a clear path to sail into.===> MEA

[jiesen]

Many thanks to all of you for weighing in on this. The fact that both $$MM and Spike are warning me about this trade makes me think twice about what I'm doing in MRK. I am definitely using a stop on this one. I'm going to ratchet it up pretty tight, and if it has me out at 9:30 Monday, so be it... But I still see a great value in MRK. I know that giants can fall, and fall big. I've seen it and felt it pretty badly myself (ELN for one!) Spike's chart pointing to a drop to $4 is a sobering thought, but I can see it happening. When uncertainty and panic take over the stock, the market's overreaction can be amazing. Hopefully, if this happens, it'll have stopped me out at 25, and let me back in at 15 (or 5!).

But I fully intend to ride these shares up to 50 and beyond. (call me crazy)

MEA: A funny thing about patience... I seem to have a lot more of it after I buy than before! I think I need to work on that.

[New-born baby]

Jiessen,

Hey, we all out here want the very best for you in all your investing, including MRK. I just don't have the guts (or foresight, perhaps) to go get it. But I hope you get it!

Still, if I got a tiny .10 profit on Monday, I'd take it!

[dlb53151]

I dipped my toe in the MRK waters today at 26. Anyone think this is an unwise move?

I jumped in at $29 and have since doubled down 2X. I am cautiously optomistic. In hindsight, there is a bit much uncertainty right now with this stock, so strap on the seat belt. I think you s/b fine at $26. Bottom line, there are probably better buys right now with less turbulence.

[mrmarket]

This could end up following the trend of the tobacco stocks. I don't see any real issues with MRK being able to sustain cash flow. Wall Street might stay away for a while, but they may end up pumping up their dividend to lure investors back.

[New-born baby]

Jiessen,

60 minutes is going to have a hit piece on MRK this Sunday night. In the program they are going to try to go after management as knowing the drug was no good. The New York Times also had a lengthy piece on it today, and they really get after MRK management. Someone somewhere scrounged up some MRK insider documents to verify "the Truth." Hang on.

I say "the Truth" because these are the same dingfods who came up with the forged documents about Pres. Bush's Air National Guard record. All you need now is Dan Rather after MRK.

[jiesen]

Dan Rather? Bring him on. I've noticed that the release of bad news about MRK is becoming less frequent now, and it isn't having the impact on the share price that it did a few weeks ago. I think it's made the base here at 26, and will hang out here for awhile, probably drift higher through any patches of no news. I'm thinking like $$MM here, and relate to the tobacco stock model as worst case scenario. Merck will continue to pay the dividend, may even increase it, and the lawsuit liabilities will be pushed back as late as possible, and probably reduced significantly in the end.

Anyway, I could be wrong, and if it breaks below 25, I'm taking my money and running.

Jiesen,

60 minutes is going to have a hit piece on MRK this Sunday night. In the program they are going to try to go after management as knowing the drug was no good. The New York Times also had a lengthy piece on it today, and they really get after MRK management. Someone somewhere scrounged up some MRK insider documents to verify "the Truth." Hang on.

I say "the Truth" because these are the same dingfods who came up with the forged documents about Pres. Bush's Air National Guard record. All you need now is Dan Rather after MRK.

[New-born baby]

Jiessen,

I just checked the price on MRK, and we're looking at 27.52. It seems your bottom fishing expedition has proved to be very, very successful. I am here to offer my sincere congratulations to you, and an apology for urging you to bail. I was wrong. Great job!

Now, if you can bottom fish this good all the time, would you mind telling us what kind of worm you are using?

[jiesen]

Jiesen,

I just checked the price on MRK, and we're looking at 27.52. It seems your bottom fishing expedition has proved to be very, very successful. I am here to offer my sincere congratulations to you, and an apology for urging you to bail. I was wrong. Great job!

Now, if you can bottom fish this good all the time, would you mind telling us what kind of worm you are using?
Unfortunately no, my bottom fishing has rarely been as dead-on as this one. I'm extremely pleased to have entered MRK at 26 and still plan to bail if we see 25, but that's looking less and less likely as the days go on.

It's probably a fluke that I nailed this one, but I hope that I can do it again next time, anyway. Who knows? Maybe I am getting the hang of this whole investing thing after all...

[New-born baby]

Jiessen,

You already know I only give bad advice, so take that into account here. But how about this idea: why not move your sell stop up to 26.50, and if MRK drops, you still have a profit? I would hate to let a profit turn into a loss.

[billyjoe]

Jiesen, GET OUT WHILE YOU CAN !!! Just heard a report from FDA hearings. They mentioned the number 100,000 deaths saying an earlier estimate of 10,000 was way too low.
billyjoe

[jiesen]

All the talk of 100,000 deaths is out there already, and has been for some time. But that's all it is--- talk. The only real loss it translates to right now is the loss of Vioxx revenue. The lawsuits will come, but won't be nearly as devastating as what's currently priced in.

How many deaths have cigarettes caused? When will the lawsuits send MO to Ch. 11? Proving Vioxx caused 10,000 deaths will be quite a legal trick- let alone 100,000. And proving Merck was negligent in selling Vioxx is another trick altogether. The lawyers will have to work pretty hard for their cut this time, unless they decide to settle it early for a lot less than what's priced into the stock. My guess is there'll be a settlement in the next two years, sending the share price back over 40.

I just hope I don't get stopped out at 25 before then... I'd hate to miss out on the rebound when it happens. I may even move my stop down, with the market, as we seem to be heading that way.

[Websman]

I like your style Jiesen. That's what I call trading with guts! The volume was down a little today and not a bad drop considering todays lousy action. You may just get your rebound next week.

Webs...

[jiesen]

MRK is still braving the bad Vioxx winds.... but even after the hefty 0.38 dividend, it's up $2 from 26. I'm moving my mental stop down to 24 in part to compensate for the dividend, and also because I don't want to lose it if it gets hammered down to 25.

[jiesen]

wow. MRK's been doing better than I had hoped. I think 30 is very likely this week. If it goes over 30 soon, I'll consider selling it, and waiting for a pullback to get back in.

[billyjoe]

Jiesen,
You're making us MRK bashers look bad. Sometimes the market is like the bizarro world to me (alternate opposite dimension in 1960's superman comic books).
billyjoe

[jiesen]

yeah, well you have to go against the flow to make money sometimes...

the biggest red flags pop up for me when I hear everybody saying the same thing: "You just GOTTA do X!"

[spikefader]

yeah, well you have to go against the flow to make money sometimes...

the biggest red flags pop up for me when I hear everybody saying the same thing: "You just GOTTA do X!"But jiensen, you just GOTTA target that red arrow!!!!

[jiesen]

stop it spike, you're making me drool.

[jiesen]

yay! MRK is up another buck today.

Now I have to seriously think about taking my money and running. $32-33 is my near term target right now...

[spikefader]

yay! MRK is up another buck today.

Now I have to seriously think about taking my money and running. $32-33 is my near term target right now...Don't rush into the decision. If today's gap remains there at close of market today, then you have an island reversal - and a likely very nice strong run up - very likely to fill that huge gap. Don't do anything you're going to regret in 4-8 weeks!

[spikefader]

You have likely picked the bottom as well as I pick my nose when no-one's looking!
Here's a picture I like about your long. Good place to target? In the fullness of time you will have time to reflect and perhaps regret!
I'll shut up now :D

[jiesen]

yay! MRK is up another buck! And no, I'm not getting tired of saying that...

[jiesen]

http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh7801 6_2005-02-18_20-41-02_wbt002502_newsml

I'll be damned. MRK is going back to 45 after all...

[mrmarket]

I don't think they are really looking for any more sales out of Vioxx. I think if they get Vioxx back on the shelves, they'll be able to shoot down a lot of those ridiculous lawsuits.

"You want to sue us, huh? How can it be bad for you if the FDA lets us sell it?"

[billyjoe]

This will be good financially for many including myself, but as one who has had bad reactions to prescription drugs , I have mixed feelings. This may solve another problem by gradually reducing the number of social security recipients.

billyjoe

[spikefader]

....MRK is going back to 45 after all...
If it breaks the neckline the SHS targets 42ish. Jiesen, I hope you used a b/e stop and held through that right shoulder formation! :D

[jiesen]

If it breaks the neckline the SHS targets 42ish. Jiesen, I hope you used a b/e stop and held through that right shoulder formation! :D

nope, no stops for me here... just bought at 26 and have been holding since. I considered selling at 30 for a while, but (thankfully) decided against it. With the latest Vioxx news, I've moved my near-term target up considerably. It'd take 35-40 at least to get me to sell. 42 sounds pretty good to me though!

[spikefader]

nope, no stops for me here... just bought at 26 and have been holding since. I considered selling at 30 for a while, but (thankfully) decided against it. With the latest Vioxx news, I've moved my near-term target up considerably. It'd take 35-40 at least to get me to sell. 42 sounds pretty good to me though!lovely patience :D

[jiesen]

http://finance.yahoo.com/q/bc?s=MRK&t=5d&l=on&z=m&q=l&c=

Looks like MRK is making another move again. What do you think, Spike? Is 42 around the corner yet?

[jiesen]

Who's going to win the battle for the MRK cash?

http://finance.yahoo.com/q/bc?s=MRK&t=5d
If the chart tells us anything over the past week, it's that MRK is the favorite.

Latest trial news (and some good insight):
http://www.fortune.com/fortune/articles/0,15114,1083636,00.html?promoid=yahoo

PHARMACEUTICALS
Stark Choices at the First Vioxx Trial
The attorney for the plaintiff presented simple and emotional stories that strongly contrasted with Merck's appeals to colorless reason.
By Roger Parloff (http://www.fortune.com/fortune/author_archive?authorname=Roger Parloff&column_id=1&year=2005)
Friday, July 15, 2005


On the first day of the nation’s first Vioxx trial, in a case brought against Merck (http://www.fortune.com/fortune/fortune500/snapshot/0,14923,C858,00.html) by the widow of a man who died of a heart attack that she believes was caused by the painkiller Vioxx, plaintiff's lawyer W. Mark Lanier of Houston gave a frighteningly powerful and skillful opening statement. Speaking in state court in Angleton, Texas without notes and in gloriously plain English, and accompanying nearly ever point with imaginative, easily understood (if often hokey) slides and overhead projections, Lanier, a part-time Baptist preacher, took on Merck and its former CEO Ray Gilmartin with merciless, spellbinding savagery.

Which is not to say that Merck necessarily did anything wrong. In Merck’s responding opening statement, David C. Kiernan of Washington, D.C.’s Williams & Connolly presented a thorough, meticulous, and seemingly plausible rebuttal of Lanier’s contentions. But in contrast to Lanier, Kiernan spoke matter-of-factly of "NSAIDS" and "coxibs" and "cardiothromboembolic" events with only perfunctory stabs at translation. He seemed to read much of his presentation and illustrated it only with stodgy, corporate headshots of Merck officials or hard-to-read excerpts from documents whose meaning was shrouded in medical jargon.

The trial offers jurors a stark choice between accepting Lanier’s invitation to believe simple, alluring, and emotionally cathartic stories versus Merck’s appeals to colorless, heavy-going, soporific Reason. Lanier is inviting the jurors to join him on a bracing mission to catch a wrongdoer and bring him to justice. “You’ve got to be the detectives here,” he told them. “If this were TV, this would be CSI Angleton.” Merck, in contrast, is asking the jurors to do something difficult and unpleasant like—well—taking medicine.

Unless you are an insect, Angleton, Texas, is an uninviting place to be in mid-July. It’s flat, charmless, humid, and hot. But lawyers and stock analysts from all over the country flocked here for yesterday’s arguments in the 1940s-vintage, gray-stone Brazoria County courthouse. They came because they know that the Vioxx debacle may prove to be the biggest pharmaceutical mass tort anyone has ever seen. Close to 4,000 personal injury suits against Merck have already been filed by people alleging injury from its former blockbuster painkiller. And New Jersey state judge Carol Higbee—who presides over more than 2,000 of these cases—has estimated that the number nationwide could easily grow to 100,000 or more.

The company has also been hit with well over 100 class action suits: by still more personal injury victims seeking compensation; by uninjured Vioxx users suing for consumer fraud; by shareholders suing over deflated stock prices; by employees suing over shrunken 401k’s; and by unions, health plans and other third-party payers seeking reimbursement of their Vioxx-related expenditures. Analysts’ estimates of Merck’s exposures range wildly, from $4 billion to $20 billion. And many of Merck’s insurers are contesting their coverage obligations.

Merck voluntarily pulled Vioxx from the market on September 30, 2004 after one of its own long-term studies began showing that the drug increased the risk of serious cardiovascular events in patients who took it for longer than 18 months. But critics of the drug had begun warning of such dangers much earlier, and plaintiff's lawyers even began filing suits on that theory as far back as 2001. FDA scientist David Graham—whom plaintiffs lawyers salute as a hero and drug industry lawyers deride as an alarmist—testified before the Senate Finance Committee in November that the FDA’s failure to keep Vioxx off the market was “the single greatest drug catastrophe in the history of the world.”

Whether or not the charges prove accurate, the superficial plausibility of the claims carry enormous consequences for Merck. In most states, including Texas, the plaintiff need only convince a jury that Vioxx was a substantial contributing cause of the injury—not the cause.

Lanier’s argument today was on behalf of Carol Ernst, 60, of Keene, Texas, which is about 25 miles south of Ft. Worth. She maintains that Merck killed her 59-year-old, marathon-running husband, Robert, who died in his sleep in May 2001 of sudden cardiac arrest. “The picture of health,” according to Lanier, Ernst had been taking Vioxx for tendonitis for about 7 or 8 months when he died. During the opening, Lanier projected onto a screen photos of Bob running in a race, of Bob and Carol at their wedding, of Bob and Carol competing in a tandem-bike race. “Then things changed,” Lanier said, and the image of Bob Ernst was replaced with an empty outline of Bob’s silhouette. “Bob Ernst died.”

Lanier's story line was black and white. Merck was once a good company. But that changed when Ray Gilmartin became CEO in 1994, Lanier argued, and it lost its moral compass. “He took that company and made the needle always point toward the dollar sign,” Lanier told the jurors. Merck's key moneymaking drugs were about to go off patent and it had too few new drugs in the pipeline. When the cardiovascular problems became apparent, they had no choice but to hide them, Lanier said, because “there was no plan B.” “Nothing could stop the Merck marketing machine,” he continued. (A slide displays a steamroller.) “Merck duped the FDA,” he continued. (A slide displays an image of a pair of hands manipulating three walnut shells.)

In response, Merck counsel Kiernan told the seven-man, five-woman jury that the company meticulously tested the drug, always apprising the FDA and public of all known risks, and that Gilmartin voluntarily pulled the drug in 2004 out of an abundance of caution and against the advice of many doctors who wanted to keep it available. He detailed eight years of testing prior to the drug’s FDA approval and said that while the FDA requires that a new drug be tested on only 1,500 patients, Merck tested Vioxx in studies involving 10,000 patients, of whom 5,400 took Vioxx for periods up to 18 months. Kiernan also stressed a memo issued after conducting extensive hearings by the FDA on April 6, 2005, which said that the reliable evidence still does not show Vioxx to increase cardiovascular risk to any greater degree than any other drugs of its class (like Pfizer (http://www.fortune.com/fortune/fortune500/snapshot/0,14923,C1042,00.html)’s Celebrex) or even than traditional painkillers like ibuprofen (Advil) or naproxen (Aleve).

Kiernan also emphasized a potentially pivotal aspect of the case: The pathologist who conducted Bob Ernst’s autopsy concluded that he had suffered from longstanding, undiagnosed hardening of the arteries, and that his sudden cardiac death had actually been triggered by an arrhythmia—an irregularity in the heart beat—rather than by a blood clot (thrombosis). All the questions surrounding Vioxx and other drugs of its class have focused on their alleged propensity to promote blood clot-related events—thrombotic heart attacks and strokes—while none have linked it to arrhythmias, Kiernan claimed. About 200,000 Americans each year suffer sudden cardiac death due to arrhythmias, Kiernan said, and hardening of the arteries is what most commonly triggers them.

In his own statement, Lanier had glossed over that distinction, insisting that Ernst “died of a textbook Vioxx problem,” and suggesting that Ernst had had a thrombotic heart attack, and that the autopsy pathologist couldn't have detected it using the techniques she used. In an interview, Lanier explains: “Ninety percent of heart attacks have an arrhythmia. The two are not mutually exclusive. We will also show that Merck knew Vioxx increased risks of arrhythmias.”

Kiernan closed by noting that seven of the high-level Merck officers most involved in the case—including the former and current research chiefs, Edward Scolnick and Peter Kim—used Vioxx personally. He asked jurors to consider whether these officers would knowingly conceal serious safety issues with the drug.

That this difficult case will be decided by a Brazoria County jury was Lanier’s choice. In 1998 Lanier won a $115 million verdict here for 21 steel workers in an asbestos case tried before the same district judge, Ben Hardin, who is presiding over the Ernst case. (The case was later reportedly settled for about $15 million.) Last year, however, Lanier lost a case in the same courtroom.

Though Brazoria County was once considered a plaintiff's paradise, its demographics have been changing. During jury selection dozens of prospective jurors voiced hostility to abusive lawsuits and expressed queasiness about awarding damages for touchy-feely injuries like “mental anguish.” (Lanier, however, appears to have been able to exclude most of them from the final panel.)

At the same time, nearly half the prospective jurors instantly raised their hands when Merck counsel Lowry asked if anyone considered Vioxx unsafe “simply” because the company had pulled it from the market. Many also raised their hands when she asked if its removal of the drug from the market “means that the company didn’t do enough research.”

If the company hoped to win points with the public for erring on the side of safety—its stated public rationale for having pulled the drug—the wager may have been naïve.

[spikefader]

http://finance.yahoo.com/q/bc?s=MRK&t=5d&l=on&z=m&q=l&c=

Looks like MRK is making another move again. What do you think, Spike? Is 42 around the corner yet?I'm a bit late replying to this post, but right now, it looks good. I think holding with a stop at 29.00 is the way to go.

For people looking for an 'in', buy a dip to 31.00 and stop at 29.00, risking 6.4% to make 36%, r/r of 5.6. Not the best, but I think a solid play.

[mrmarket]

I dipped my toe in the MRK waters today at 26. Anyone think this is an unwise move?


Up about 33%...not bad at all.

[jiesen]

Yeah, would have been great if I'd had the guts to stick with it past the $253M verdict against them, but I sold that day at 28. Still a 10+% profit with dividends included, but I do believe I sold too hastily on that one.

[Runner]

This one has been doing very well as of late. MRK chart not looking bad!!

[jiesen]

damn, I really should have held onto that MRK. That ugly first blow ($250M verdict) just threw me for a loop.