Goldman Small Cap Research - November 5, 2018
Every once in a while, we see an unusual situation and write about it to alert you to it. Today is one of those days. Normally idea would not be of a diversified health care stock that went from $2 to $25 (before settling back) in about a month. But, in this situation, there are interesting circumstances regarding a big stock dividend and an aggressive M&A strategy to match its R&D pipeline. News about an unusual dividend came out this morning and prompted this email. Against this backdrop, we issued a research report and an interview with the CEO this morning. Let me introduce it to you…
Almost overnight, Generex Biotechnology (OTC – GNBT) could go from also-ran to a firm generating revenue at an annual run-rate of hundreds of millions annually. The Company just closed on an acquisition that has generated $100M or more annually in recent years and is primed to grow dramatically as it begins to offer its services in 30 states, versus 3 this year.
There are more deals in the pipeline. Generex plans to become a diversified health care firm that utilizes cash from its high growth M&A targets to help fund its R&D in the areas where an unmet need exists. These include diabetes, breast cancer, prostate cancer and others.
The Company is collaborating with a Canopy Growth-invested firm to explore using one of its delivery system offerings for medical marijuana patients in Canada.
Generex announced a 20:1 stock dividend with a record date of Friday (which means investors must own the stock by Tuesday or Wednesday to be eligible to receive it). While there is likely to be a re-adjustment in share price as a result, the current market capitalization, compared with its likely revenue next year (via M&A) and underlying value of its portfolio, appears to be at a major discount.
The recent Generex Biotechnology (OTC – GNBT) Research Report is included below: