Forbes Investor Team Recommends Genentech Stock, Even Though It Stopped Trading 16 Months Ago

File this away as the most amusing item of the day. I always get a kick out of some of the investment articles I see on various finance-related web sites. Now, I am sure I have made a few mistakes over the years on this blog, but never anything like what the Forbes Investor Team posted on their site today. In a piece written by John Reese of Validea Capital Management, there are four stock recommendations, including Genentech. Here is what John says about the company:

The South San Francisco-based biotech firm ($100 billion market cap) has averaged a 22.1% ROE over the past three years, has increased EPS in six straight years, and has almost three times as much net current assets as long-term debt. It isn’t cheap, selling for almost 30 times trailing 12-month earnings, but my Lynch-based model thinks it’s worth it, given its 41.6% long-term growth rate. (I use an average of the three-, four-, and five-year EPS growth rates to determine a long-term rate.) Another reason the strategy is high on Genentech: the firm’s conservative financing. It has a debt/equity ratio of less than 20%.

Of course, this is amusing because Genentech was acquired by Roche more than a year ago, in March 2009, and the stock has not traded since. I have to question this manager’s “Peter Lynch-based model” given that it flashes buy signals on stocks that do not even exist anymore. Hilarious.

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3 Thoughts on “Forbes Investor Team Recommends Genentech Stock, Even Though It Stopped Trading 16 Months Ago

  1. Who is more dumb?
    The manager who recommended an unlisted stock or the editor of the article who shrewdly removed the piece on DNA from the article yet missed this in the footnote
    “Disclosure: John Reese does not have positions in MSFT, DNA, CHRW or BDX.”

    No wonder these are called rags not even fit to be toilet paper.

  2. Voltrip on August 15, 2010 at 10:59 AM said:

    Very funny. Why not buy a stock that no longer exists. You can be sure nothing will happen with it!

  3. I think it’s better to trust the smaller media sources than trust Forbes. It looks like they are focused on the retired investors who invested into Genentech stock and still waits for it to recover

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