Dykstra: Buying Amgen One More Time

A merger and a study put the biotech's options back in play.
Publish date:

This is a market that, quite frankly, has taken the word "bull" to a new level. I am not going to fight the tape, but what I am going to do is bear down even harder (if that's possible).

That means I will buy deep-in-the-money (DITM) calls in quality companies that I and my team believe are undervalued for a reason other than an accounting scandal or the company having broken the law. I am confident that if I stick with quality stocks that are oversold and undervalued, my DITM calls strategy will work.

Consider Feb. 26, when I purchased


(AMGN) - Get Report

. The stock moved against us, so we followed the strategy and bought more when it reached the next level of support. Then the stock moved against me again, but I didn't panic. There was still about five months before the expiration.

The strategy works, and amid all the Doubting Thomases, I stayed the course and followed the rules, emerging with another addition to our win column. On May 14, I bought Amgen again. This time, after the order was filled, the stock jumped in a single day, making it the quickest trade to date.

So without further ado, I am going back to the well with Amgen today. After the stock closed at $56.91 Monday, the company announced that it has agreed to

acquire Ilypsa, a private company developing non-absorbed drugs for renal disorders. Ilypsa is developing ILY101, a phosphate binder for the treatment of hyperphosphatemia (high blood phosphate levels) in chronic kidney disease patients on hemodialysis.

Amgen will pay $420 million in cash to acquire Ilypsa, which will become a wholly owned subsidiary of Amgen. The acquisition has been approved by the boards of directors of each company and the shareholders of Ilypsa.

Amgen has been hammered in the past three months, and hit bottom around May 10, when the FDA said Amgen needed stricter warning labels and more studies of its anemia drug. This led to the dismantling of Amgen stock.

However, on Sunday, a report was released that argued that most of the findings show that for 90% of patients undergoing chemotherapy who are prescribed anemia drugs, the drugs are safe. The health concerns are for those patients in the 10% group where their doctor has prescribed the drug but do not fit the drug's intended use profile.

I am not going to be aggressive here, as I believe the stock has to come in, so I will buy 10 October 50s (AMQJJ) for $7.90. As always, set good-till-canceled (GTC) limit orders.

Game of Life

As a former professional athlete, I understand the importance of a team. The traveling, the grief over losses, and the celebration of victories -- it's the ultimate camaraderie. One man's error can turn into the entire team's loss; one man's diving catch in center field can turn into the entire team's victory. And boy, the victories are fun. There's nothing better than the pile-up at home plate after a walk-off home run. The team -- it's like a second family.

For Jan Grzebski and his wife, their teamwork paid off after 19 years! After an accident while working on railways in Poland in 1988 put Jan into a coma, doctors gave him three years to live.

But he awoke recently to his wife, Gertrude, by his side and found his four children married and eleven grandchildren to his name. In 1988, Poland was a communist country. Jan remembers waiting in "queues" for petrol and finding stores stocked with only tea and vinegar. Imagine waking up to democracy and a market economy.

Talk about teamwork: Gertrude was Jan's greatest teammate over these past 19 years. She committed her life to caring for her beloved husband. Every hour, she changed his body position to prevent bedsores.

Despite doctors' and friends' advice to consider euthanasia, Gertrude maintained that her husband would wake up. For her, the loyalty to her greatest teammate was supreme.

Regardless of who our teammates are in life, the fundamentals and principles of teamwork are universal. They're the ones who help us overcome the losses and celebrate the victories. After all, our teammates are not only players in our lives, but also our biggest fans.

We are sometimes forced to take responsibility for our teammates' mistakes, knowing that they would do the same for us. You fall as a team, surely. But what's greater is the strength and resilience of a team to conquer obstacles and ultimately come away with a victory.

The Players Club understands the significance of teamwork and is dedicated to working with professional athletes to uphold these important principles. By guaranteeing recurring cash flow through our strategic partner, we hope to be an asset to every professional athlete's respective team and contribute to many victories moving forward.

Always remember: Life is a journey, enjoy the ride!

At the time of publication, Dykstra was long AMGN.

Nicknamed "Nails" for his tough style of play during his Major League Baseball career, Lenny Dykstra was an integral member of the powerful Mets of the mid-1980s, including the world champion 1986 squad, and the Phillies in the early 1990s.

Today, Dykstra manages his own stock portfolio and serves as president of several of his privately held companies, including car washes; a partnership with Castrol in "Team Dykstra" Quick Lube Centers; a state-of-the-art ConocoPhillips fueling facility; a real estate development company; and a new venture to develop several "I Sold It on eBay" stores throughout high-demographic areas of Southern California.