Why Alere Inc (ALR) Shares Have Surged Today

Alere Inc (NYSE:ALR) shares have spiked over 7% in mid-day trading after Bloomberg reported that Alere has asked a Delaware judge to uphold a report espousing Abbott produce summaries and notes from its due diligence calls and meetings for their previously agreed merger. Alere believes that it has (perhaps through the notes) already provided Abbott with ‘substantial written and oral’ information over the company’s sales recognition methods, and various communications with various government agencies including the FDA. Abbott had previously agreed to buy Alere Inc (NYSE:ALR) but had latter wanted to back away from the deal after the DOJ and other government agencies began probing Alere.

The two have gone to court, with Alere trying to uphold the sale, and Abbott trying to successfully terminate the merger. If Alere wins the case and there is no renegotiation of the merger terms, the stock could have substantial upside. Abbott previously agreed to buy Alere for $56 in cash per share.

What Does The Smart Money Sentiment Say?

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).

Our data shows that the smart money was pretty bullish on Alere in the fourth quarter. Of the 742 elite funds we track, 44 funds owned $997.26 million of Alere Inc (NYSE:ALR) and accounted for 29.40% of the float on December 31, versus 44 funds and $1.1 billion respectively on September 30. Ric Dillon‘s Diamond Hill Capital inched up its holdings by 5% quarter-over-quarter to slightly over 2.4 million shares.

The Bottom Line

Alere Inc (NYSE:ALR) shares are higher on speculation that its merger with Abbott is more likely to go through. For more reading, check out ‘16 Types of Healthcare Jobs In The Medical Field That Pay Well‘.


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