Dan Loeb thinks Amgen could be worth $US249 per share, or 80% more than current levels.
In afternoon trade on Thursday, shares of Amgen were up as much as 4.5% after Loeb mentioned the company in a presentation at the Robin Hood Investors Conference.
Sources confirmed to Business Insider’s Julia La Roche that Loeb discussed the company at the conference.
In his latest filing with the SEC, Loeb’s Third Point was shown to be holding 450,000 shares of the company.
But in his third quarter letter to investors, also released on Tuesday, Loeb discussed his Amgen stake in more detail, and said that he is now one of the company’s largest shareholders and has spoken with the company’s management.
Loeb writes that Amgen, “has all the hallmarks of a hidden value situation, one of our favourite investment themes.”
Loeb adds that he believes the market, “underappreciates how disruptive some of [Amgen’s] new products will be,” and says his conviction is bolstered by discussions with Third Point’s newly creates Scientific and Medical Advisory Board.
Loeb also writes that Amgen should consider separating into two standalone businesses, a mature company comprised of legacy assets that is valued based on its dividend yield, and a growth company valued based on the potential in its drug pipeline.
Loeb believes that this structure could create almost $US249 in total value over two years, which is 80% upside to current prices.
“[Amgen CEO] Bob Bradway and his team have been open-minded an receptive to our ideas to date and we firmly believes that the company is at an inflection point,” Loeb writes.
Including Tuesday’s spike in shares, Amgen stock is up more than 25% year-to-date.
Here’s the intraday chart of Amgen shares on Tuesday.