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☕️ Novo Nordisk down 50%, time to buy?

May 16, 2025

Howdy 👋

Can we finish the week in the green with 5 straight days of upside?

Loads of people will tell you “no” but I think it’s a definite maybe.

My research shows that 5-day streaks tend to happen 2-5 times a year but – and this is important – happen in clusters typically associated with birthing new bull markets. Examples included ’57-’59, ’82-2000, ’09-2020.

What’s interesting about this is that a) 5-day rallies are more common than people recognize and b) often precede solid one-year returns, typically 10–20% aligning with the average annual return of 10.13% or higher in strong years (e.g., 1958: +38.06%, 1995: +34.11%, 2013: +29.6%).

Does that mean it’s a foregone conclusion this time around?

No and, in fact, it’d be naïve to think so.

Still, the markets have very clearly made a pivot for the upside which means that the only obstacle is how much FUD – Fear, Uncertainty and Doubt – remains.

To a point I’ve made many times….

Markets reward knowledge, not guesswork.

Here’s my playbook.

1 - UNH puts exploding (as suggested) on news of DOJ probe

I told you earlier this week that UNH was in serious bandini and suggested puts – a bet the stock will decline - as a way to capitalize on the chaos that I suspected was coming. (See #3).

I mighta been on to something.

Shares of UnitedHealth Group (UNH) took a ~10% nosedive Thursday after The Wall Street Journal reported the company is now the target of a criminal fraud investigation by the Department of Justice.

The focus?

Alleged manipulation of Medicare Advantage billing — a business so profitable, it’s practically become the private insurer’s golden goose. (Read)

Surprised?

Again, I’m not.

This is the same company that’s been using “unexpected medical costs” as a fig leaf for a string of earnings missteps, slashed guidance, and a CEO exit so abrupt they had to yank the former boss out of retirement like it was a fire drill.

Now we learn the feds are digging into whether UNH padded its Medicare Advantage payments by upcoding, phantom diagnoses, and — get this — billing for services that may not have even happened.

As an aside, I’ll be shocked — shocked — if UNH is the only player in this game.

In fact, I can think of a half a dozen other companies off the top of my head that could very well have some variant going including one where we personally recently experienced exactly the sort of behaviour that UNH is allegedly engaged in.

I’ll be watching three things:

DOJ’s next move: formal charges or just a slow burn?
Contagion to names like Humana (HUM) or CVS/Aetna — they’re swimming in the same waters
Politicians love a villain, and this one’s got a balance sheet

Speaking personally, let’s see if the regulators have a spine. Healthcare should be a strategic national priority, not a quarterly profit engine run by companies that ghost you when you ask where the money went.

Trade idea: Putskies on a choice like IHF or specific companies for more juice – this is gonna take a while to play out and that, in turn, means plenty of opportunity for those on the right side.

Dividend hunters should be wary for obvious reasons, imho.

2 – Survival Games 2.0

Yesterday I told you about Dick’s and Foot Locker teaming up to fend off Amazon and Nike. (See #2)

Today it’s Charter and Cox, two legacy cable giants, talking merger. (Read)

Don’t be fooled.

This isn’t about “growth” or “synergies” or whatever MBA buzzword bingo hits the wire. And it sure as heck isn’t a strategic masterstroke nor – as billed - a bold move to fend off the streaming hordes, the fiber disruptors, and the wireless stampede.

It’s about survival.

Just like dinosaurs once roamed the Earth, cable companies used to dominate the living room. Now they’re scrambling to keep streaming from eating their lunch — and their bandwidth.

Keith’s Investing Tip: When titans merge, it’s rarely a power move. More often, it’s panic with a press release.

Trade Idea: Skip the dinosaurs. $NFLX, $AMZN, and $AAPL could soon be the only game(s) in town as the streaming wars continue. While you’re at it and lest you think I’m kidding, remember that I repeatedly said to avoid choices including FUBO like a channel clicker that’s outta batteries. It was a post COVID media darling that traded at $48+ in early ’21 but is now… drum roll please… $3.02, a loss of –93.71%.

Buy the best, ignore the rest!

3 - Novo Nordisk down 50% - time to buy?

Novo Nordisk just announced that CEO Lars Fruergaard Jørgensen is stepping down — a move that should raise eyebrows for anyone watching the $100 billion-and-growing obesity drug market. (Read)

Call it what you want — a “transition,” “succession planning,” or “just time.” But when the captain jumps ship while the company’s market cap is down over 50% since mid-2024… it’s not hard to read between the lines.

Behind the scenes:

Wegovy sales are lagging, and Q1 came in soft enough to force a full-year forecast cut.

Compounded drugs (read: cheap, copycat alternatives) flooded the U.S. market while the FDA shortage loophole stayed wide open.

And Eli Lilly’s Zepbound has been stealing market share with a better clinical profile — and better marketing, too.

Now Novo’s board is scrambling, bringing in Foundation Chair Lars Rebien Sørensen as an “observer.”

My $0.02… the company is regrouping at the top, probably trying to calm the ship without scaring the Street.

The obesity drug market is expected to explode past $100B/year by 2030. That’s not just a gold rush — it’s a pharmaceutical arms race.

Winning in this space isn’t just about clinical trials anymore but, rather, supply chains, pricing power, insurance coverage, and who’s first to market — at scale.

I could make the case that it’s time to buy or at least snap up a few speculative shares, calls or even LEAPs.

Before you buy Novo, though….

Ask yourself if it’s a stock with “zero to 1” potential or just another “n+1” making better mousetraps. And if you have no idea how to make that choice, you might find One Bar Ahead® helpful. My favorite “Zero to 1” choice has risen 523.76% off 52-week lows and – I submit – could double again from here.

4 – Nvidia: Play the game but don’t get burned

Nvidia has stated it will not share GPU designs with China, following reports that the company is planning to open a research center in Shanghai amid recent U.S. export restrictions. (Read)

They’re threading a very fine needle.

Nvidia wants to expand in China — badly — but without tripping any wires in Washington.

They’ve got to satisfy shareholders looking for growth, regulators looking for national security, and customers on both sides of the Pacific looking for next-gen silicon.

The Shanghai center, according to reports, won’t be involved in chip design or architecture. Instead, it’ll focus on optimizing existing AI products, exploring adjacent markets like autonomous driving, and recruiting local Chinese AI talent — all while keeping core intellectual property and fabrication offshore.

Uh-huh, but I digress.

MyPOV: This is a classic case of play the game, don’t get burned by the rules. Nvidia’s not giving up its crown jewels — but it’s trying to plant a flag in a market it knows it can’t afford to lose.

And why would it? The company’s still sitting on a >90% market share in advanced AI chips.

You know what to do. And if you don’t, I’ll be here if you need me.

5 – The ultimate “Zen Out”

Those of you who have been reading along with me for any length of time know I am a consummate gearhead… if it’s got wheels and a motor, I’m down for racing, riding and driving in the countryside with my bride.

This catches my attention.

We’ve got loads of light-bike trails around here and this could be a super fun way head for the hills – literally.

What’s not to like?

Vintage café racer vibes. Electric stealth. Zero gas. Great price point. 🏍️⚡

The 2025 Beachman ‘64 blends old-school cool with new-school tech — a 3,000w hub motor, steel frame, regen brakes, and up to 70 miles of whisper-quiet range. And yes, it seats two — so bring a friend. 😀

On a serious note, the EV revolution won’t be all sedans and SUVs – so it’s important we consider developments like this one a steppingstone to human mobility.

Meanwhile…. https://beachmanbikes.com.