Sly Moves At Foxmeyer?By
Some pros are snapping up shares of FoxMeyer as a backdoor drug-stock play. As the nation's third-largest wholesale drug distributor, FoxMeyer is an "attractive way to participate in the drug industry's rapid growth," says portfolio manager Ron Breitweiser of Clairvest.
But the real excitement over FoxMeyer, now trading at its book value of $13 a share, is its potential as a deal stock. FoxMeyer's co-chairman is takeover pro Abbey Butler, who heads Centaur Partners, which owns 18% of National Intergroup, which in turn owns 67% of FoxMeyer. Intergroup has shopped for a buyer for FoxMeyer, which went public in mid-August at 14 1/2. But so far, Centaur has been cool to unofficial feelers from some industry majors, which apparently have not come up with the right price. Still, several corporate insiders, including Butler, have been buying shares in the open market. Speculates one investor: "Why did these insiders buy more shares after taking FoxMeyer public? The answer may be that they have become aware of a deal in the making."
Breitweiser says he wouldn't be surprised if a buyout surfaces. But even without a deal, he thinks FoxMeyer is a must-buy based on its improving fundamentals: "In about six months, the pros who buy into companies that they surmise will post a positive earnings surprise will be flocking to FoxMeyer," Breitweiser says. He expects the company to earn $1.30 a share in the year ending Mar. 30, 1993, up from an estimated $1.10 in fiscal 1992 and $1.05 in 1991. Breitweiser thinks the stock will double in a year.
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