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Taking a little gamble on BMY CVRs
Old 11-29-2019, 12:54 PM   #1
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Taking a little gamble on BMY CVRs

The buyout of Celgene by Bristol Meyers Squibb came with a payment of $50 and 1 share of BMY for each share of Celgene. There was also a CVR for three of Celgene's late trial stage drugs which pays an all or nothing $9 if all three drugs are approved. BMY calculated the present value of this CVR at $3.80 and it now trades separately on the exchange with the ticker BMY.RT (on etrade at least). Today it was trading for $2.09 so I bought 10,000 of them in one of my IRAs.

It is something I probably would have done in my Robinhood trading contest account (maybe more like 1000) but Robinhood doesn't support them.

Anyway, it is an interesting gamble and has a pretty nice risk/reward ratio with the probability calculated at 42% overall success rate. I plan to just hold them until they climb higher to the true present value (maybe sell them for $3.50 or so). Biggest short term risk here is one of the three drugs is pulled from the trial early, but that is why I only bought 10,000
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Old 11-30-2019, 11:38 AM   #2
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Good luck. I had some of BMY.RT land in my account and sold them.
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Old 11-30-2019, 02:51 PM   #3
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Quote:
Originally Posted by jim584672 View Post
Good luck. I had some of BMY.RT land in my account and sold them.
Thanks. I very likely won't hold them until the end, but rather will sell them on a spike if/when 1 of the 3 drugs gets approval. I would be super happy just making a short term 50% on the trade, which is only having the CVR move a bit closer to the value calculated at the buyout.

We may get a bump this Dec 2 since BMY has a FDA decision coming up then. It isn't related to the CVR but I bet a rising tide would lift all boats.
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Old 12-06-2019, 06:55 PM   #4
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Well dang...up about $8,000 on that...unexpected...
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