Quick Win by the Algorithm: MDVN High Short-Term Return

Quick Win by the Algorithm

Medivation Inc. (MDVN)

On August 15, 2016, the I Know First algorithm had given a bullish signal of 25.94 for the ticker MDVN with a predictability indicator of 0.19. As the algorithm had correctly predicted within the Health Care package, being that MDVN quickly experienced a rise in share price of 21.81% in a short 7 day period. During that time, on August 19, 2016, the algorithm had given an even more specific forecast regarding MDVN, for a 3-day period. The algorithm had again correctly predicted within the Health Care package, being that MDVN quickly experienced a rise in share price of 19.69% in a mere 3-day period.

The forecast, in general, is color coded, green meaning bullish and red meaning bearish. A bright green, as shown below, signifies that the algorithm is very bullish. The signal is the number flush right in the middle of the box and the predicted direction (not a specific number or target price) for that asset while the predictability (bottom left-hand corner) is the historical correlation between the prediction and the actual market movements. In other words, the signal represents the forecasted strength of the prediction while the predictability represents the level of confidence

Quick Win by the Algorithm

Medivation, Inc. (MDVN), a biopharmaceutical company, focuses on the development and commercialization of medical therapies to treat serious diseases in the United States. It offers Xtandi for the treatment of post-chemotherapy metastatic castration-resistant prostate cancer (CRPC) patients.

The main reason behind the immense stock rise can be mainly attributed to the recent Pfizer buyout deal, valued at $14 Billion. Pfizer will be buying MDVN with existing cash, at $81.50 per share, which would be a 118% premium above current value. This would demonstrate a huge premium for investors, as well as beating the French drugmaker Sanofi’s similar offer at $52.50 per share.

MDVN has been poached for some time now, specifically for their cancer drug, Xtandi, a globally for sale approved drug; which was expected to generate approximately $1.33 Billion in annual sales alone, according to Medivation. Many large pharmaceutical companies such as Pfizer have been searching to enter the oncology arena for somet ime now, and the purchase of Medivation will allow Pfizer to grow its oncology division.

Additional factors that had helped the stock gain initial traction, was a year on year increase of 18%, a total of $595 Million, in reported revenue; regarding Xtandi, the sought out cancer drug.

Quick Win by the Algorithm

Therefore, from August 15, investors have been hoping for a buyout for Medivation, whose main revenue stream lies with Xtandi, the sought out drug. The price discrepancy between the 7-day period and 3-day period, caused by various momentum and share volume shifts, dictated the specific overall return.

The future is looking bright for MDVN investors, prior to the buyout announcement, who will soon enjoy a high premium on their shares.

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This forecast for MDVN was sent to current I Know First subscribers on August 15th, 2016, and August 19th, 2016.