The Iconoclast Investor

Here’s an investment idea, taken from J. Royden Ward, editor of Cabot Benjamin Graham Value Letter.  The idea is Sanofi-Aventis (SNY).

Headquartered in France, Sanofi-Aventis is the world’s fourth-largest pharmaceutical company.  It’s got 85 products in its drug pipeline, so you know it will have lucrative future.  The dividend yield is a plump 6.2%.  And just last Friday, a judge ruled that Sanofi-Aventis’ patent for Plavix, a blood-thinner that’s been the second-best-selling drug in the world for the past two years, was still valid, and that Apotex has no legal grounds to market a generic version of the drug.

Now, you could just run out and buy SNY here, and that might work out fine.  After all, the stock has fallen from 50 to its present level of 30, and I’m thinking there’s a good possibility for a major market rebound in early January.

But that wouldn’t be true to the Benjamin Graham investing system, which says you should only buy a stock when it’s trading at a price that is so low that you get a margin of safety.  And the Maximum Buy Price that Roy has set for SNY is 24.75.