Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Teva Ascends On Allergan Generics Purchase, Mylan NV (MYL) Withdrawal

Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) shares reached as high as $83 per share in pre-market trading Monday, or over 18% higher than the stock’s closing price on Friday, as the firm announced that it will acquire Allergan, Inc. (NYSE:AGN)’s generic drugs business. Teva Pharmaceutical, the world’s largest generic pharmaceutical company, also announced that in light of the purchase of Allergan’s generics arm, it is quitting its quest to purchase Mylan Inc. (NASDAQ:MYL).

According to Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA), the deal worth $40.5 billion will give patients easier access to affordable medicines. Allergan, Inc. (NYSE:AGN) says the acquisition of its generic drug business will help them focus on the higher-margin and higher-profit branded medicines business. Under the deal, Allergan will be paid $33.75 billion in cash and $6.75 billion in Teva stock.

Allergan, formerly known as Actavis before the latter acquired it earlier this year and took on the Allergan name, will also retain 50% of Teva’s future economics from the generic drug lenalidomide (Revlimid®). Allergan expects $36 billion after taxes from the deal. This means that also taking into account the firm’s free cash flow, it expects to virtually erase its $42 billion in debt once the deal is completed. Meanwhile, the withdrawal of Teva’s proposal to acquire Mylan Inc. (NASDAQ:MYL) comes after the latter fought the offer saying that Teva is not interested in reinvesting money in the company but rather in returning money to shareholders.

Allergan Beauty Products Avon AGN ACT AVP  lip closeup syringe skincare recovery silicone hyaluronic

evgeny varlamov /

The boost to Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) this morning also comes after it reported preliminary results that beat Wall Street expectations for the April – June quarter. The firm said that it earned $1.43 per diluted share, up 15% year-on-year and a beat of analyst expectations of $1.31 per share. Preliminary revenues for the quarter is $4.97 billion, according to Teva, also beating Wall Street expectations of $4.91 billion. Hedge funds appear to have anticipated the successive good news for Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) as they have been bullish on the company. Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) was included in 77 hedge funds’ equity portfolios at the end of March, an increase of 10 funds over the quarter. In addition, these funds held around $4.0 billion worth of stock, up by 5.4% on the quarter. However, the stock gained some 8.30% during the same period, which means that there was a slight outflow of capital.

Why are we interested in following the hedge fund sentiment? We use hedge funds’ 13F filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period from 1999 to 2012. Moreover, since the beginning of forward testing from August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 135% over the last 32 months, which is more than 84 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).

With this in mind, let’s take a closer look at hedge fund activity surrounding Teva Pharmaceuticals.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.