NYT : Ex-SAC Trader Seeks to Use Cohen Testimony

Ex-SAC Trader Seeks to Use Cohen Testimony


Steven A. Cohen is not likely to testify at the insider trading trial of Mathew Martoma, a former trader at SAC Capital Advisors, but Mr. Martoma wants to use some of the testimony that the hedge fund’s owner gave in a related investigation.

Mr. Martoma is seeking to introduce deposition testimony that Mr. Cohen gave the Securities and Exchange Commission in May 2012 in an effort to show that the SAC Capital founder’s decision to make big trades in the shares of the drug companies Elan and Wyeth in 2008 was influenced more by the manager of another hedge fund than by Mr. Martoma.

The attempt by Mr. Martoma to use Mr. Cohen’s own words to prove his innocence could add an interesting wrinkle to the trial, scheduled to begin on Jan. 6 in the Federal District Court in Lower Manhattan. If the trial judge permits Mr. Martoma’s defense lawyers to introduce portions of Mr. Cohen’s deposition, it would make the billionaire investor a more critical figure in the trial, even though he is not expected to be called as a witness.

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Mr. Cohen sat for the S.E.C. deposition about six months before federal prosecutors charged Mr. Martoma with using inside information about a clinical drug trial to help SAC Capital avoid $276 million in losses in shares of the two companies. Authorities contend that Mr. Martoma, relying on nonpublic information from a doctor who was a consultant on the clinical trial for an experimental Alzheimer’s drug, recommended that SAC Capital sell a big stake it had in shares of Wyeth before the news of the drug trial became public.

But Mr. Martoma, in court papers filed late Friday, argues that Mr. Cohen’s deposition testimony rebuts the government’s allegation that his recommendation is what prompted Mr. Cohen and SAC Capital to sell its shares in Wyeth and to begin shorting, or betting against, the shares of Elan.

In the filing, Richard Strassberg, one of Mr. Martoma’s lawyers, contends that the “unrebutted sworn testimony of Mr. Cohen, SAC’s owner, makes clear that Mr. Martoma had nothing to do with that decision,” referring to the trading in shares of Wyeth. Mr. Strassberg also says that Mr. Cohen, in his deposition, largely credited Wayne Holman, a former SAC Capital trader who left to start his own hedge fund, with influencing his decision to initially put on a big trade in shares of Wyeth and then to get out of it in the summer of 2008.

“Mr. Cohen has testified that he made the decision to sell Wyeth securities in consultation with Mr. Holman (not Mr. Martoma), a former SAC health care portfolio manager,” Mr. Strassberg wrote.

The filing quotes a portion of Mr. Cohen’s deposition in which he describes Mr. Holman as “one of the great health care investors I have ever met and so I have a ton of respect for his work.”

At one point in the deposition, in response to a question from an S.E.C. lawyer, Mr. Cohen said that he had talked to Mr. Holman in July 2008 and learned that he had soured on Wyeth and was selling the stock.

Mr. Cohen also testified that he considered the trader a friend and that he and his wife socialized with Mr. Holman and his wife. SAC Capital also invested money with Mr. Holman’s fund, Ridgeback Capital Management, and Mr. Holman had a consulting agreement with SAC Capital.

A spokesman for Mr. Cohen did not immediately respond for comment. Mr. Holman, who has liquidated most of his fund’s holdings, according to the deposition, did not return a request for comment.

The move by Mr. Strassberg to introduce some of Mr. Cohen’s deposition comes as a close associate of Mr. Cohen’s, Michael Steinberg, is currently on trial on charges he used inside information while working at SAC Capital to make trades in shares of Dell and Nvidia. The Steinberg trial began just weeks after SAC Capital pleaded guilty to securities fraud charges and agreed to pay $1.2 billion to federal prosecutors and to stop managing money for outside investors.

A major witness against Mr. Steinberg, former SAC Capital analyst Jon Horvath, recently testified under cross-examination that he did not remember Mr. Steinberg ever explicitly telling him to get illegal inside information. Mr. Horvath also said that he did not recall telling Mr. Steinberg some of the information he was providing him to make trades was nonpublic corporate information.

Federal authorities have not criminally charged Mr. Cohen, but the S.E.C. has filed an administrative action against the highly successful trader, contending that he failed to properly supervise the employees at his firm.

Mr. Strassberg is asking the trial judge to either limit prosecutors from introducing evidence that Mr. Martoma played a role in SAC Capital’s decision to sell Wyeth shares, or to permit his client to counter that evidence with Mr. Cohen’s deposition.

Mr. Cohen’s lawyers have indicated that the billionaire investor will assert his constitutional right not to testify if he is called by either side, Mr. Strassberg noted in the court filing.

It’s not clear how the judge will rule on the lawyer’s request. But the filing is of interest because it provides the first extended glimpse into Mr. Cohen’s testimony before the S.E.C., which filed its own civil fraud charges against Mr. Martoma.

The portion of the deposition included in the court filing reveals that Mr. Cohen often answered questions by saying that he either couldn’t recall something or couldn’t remember. In the excerpt, Mr. Cohen credits both Mr. Martoma and Mr. Holman with convincing him of the merits of initially going into shares of Wyeth. He also testified that Mr. Martoma was initially bullish ion shares of Elan.

Mr. Cohen also said the decision to short shares of Elan was mainly to “hedge” what remained of the firm’s long position in Wyeth.

Here is how Mr. Cohen, for instance, testified before the S.E.C. on how his fund decided to invest in Wyeth:

Q: At the beginning of 2008, did SAC have an investment in Wyeth?

A: I believe so.

Q: In the beginning of 2008 were you bullish or bearish on Wyeth?

A. I was bullish based on the recommendation of Mat Martoma and Wayne Holman. And there may have been others that were bullish; I don’t remember.

FT : Unions gear up for fight over EADS’s defence arm shake-up

Unions gear up for fight over EADS’s defence arm shake-up

When Tom Enders launched EADS’s €36bn tie-up with Britain’s BAE Systems last year it was meant to unshackle the pan-European aerospace group from Franco-German political meddling and bolster its struggling defence business.
But after months of fraught discussions between Berlin, Paris, London and Toulouse, the deal collapsed and the EADS chief executive was forced to Plan B.

Having quickly persuaded Germany and France to reduce their stakes and interference in his business, Mr Enders has now reached Section 2 of Plan B: restructuring EADS’s defence and space subsidiaries.
Adjusting to Europe’s deep defence downturn without the help of the BAE tie-up will hurt, Mr Enders has warned. Unions are already gearing up for a fight, fearing he may cut as many as 9,000 of the defence unit’s 45,000 jobs.
This week he is expected to reveal just how painful the integration of Cassidium, Astrium and Airbus Military, under the renamed Airbus Military and Space organisation, will be and where the wounds will be deepest.
Union leaders are to be told details as early as Monday before the company’s top management figures gather in London on Wednesday for EADS’s annual meeting with institutional investors and analysts.
Cuts at EADS would hit hubs in Germany, France and Britain, with Spain largely spared because it had already been consolidated, one person close to the company said.
EADS is no longer going for growth in its defence business, which brings in €14bn of the company’s €56.5bn total sales. Instead, the focus is on improving profit margins, says Marwad Lahoud, its head of strategy.
The group’s profit margins severely lag behind those of its competitors. Margins at its Eurocopter helicopter division are 5 per cent, half those at AgustaWestland, its closest competitor.
At Astrium, EADS’s space business, they are 5.4 per cent, well below the comparable margins of Thales Alenia in Europe and Lockheed Martin and Boeing in the US. EADS’s lowest margins are at Cassidian, its defence business, much of which is in electronics. Last year, Cassidian’s margins were well below its peers at 2.5 per cent, suffering from writedowns and German budget cuts.
Cassidian’s margins look even thinner when its mature, high-margin joint ventures are taken out of the equation. These include MBDA, its missiles and weapons partnership with BAE of the UK and Italy’s Finmeccanica, Eurofighter, maker of the Typhoon fighter jet, and another joint business with the two MBDA partners.
“The rest of EADS’s defence business is much less profitable and may be lossmaking,” says Nick Cunningham, analyst at Agency Partners, noting that much of the group’s lowest-margin business is in Germany, a country that spends less than 1 per cent of GDP on defence. “As a defence company, you are much better off in the UK, France and even Italy in terms of government support.”
That is why Mr Enders pushed so hard for a tie-up with BAE and the restructuring plan he will lay out this week is a distant second choice strategy.
EADS has gone through years of restructuring and job cuts. Analysts and executives expect this latest round of cuts to be less drastic and smaller than the 20 per cent reductions that workers fear. However, concerns over the consolidation of EADS sites in east and west Munich and a handful of plants in Paris are likely to prove well founded, they say.
In late November, more than 20,000 EADS workers took to the streets in German cities from Manching to Hamburg and Bremen, to protest over the coming lay-offs and plant closures.
Rüdiger Lütjen, EADS’s European staff council, says the protests were a warning to EADS that its workers would not accept cuts or heavier burdens without a fight. “It is quite clear, there cannot be any mandatory redundancies . . . employment opportunities within the company must be secured for all colleagues.”
Leaders of IG Metall, the German union, are demanding there be no compulsory lay-offs and that affected workers be secured alternative jobs within the group, whose successful civil aerospace division contrasts with its troubles on the defence side.
Germany’s powerful unions represent one of the biggest potential stumbling blocks for EADS because the company needs their approval to make major changes.
Negotiations with the unions are expected to revolve around how best to achieve savings – from lay-offs to salary freezes – with executives warning that they could delay the process, but were unlikely to stop it.
The squeeze on government spending is so tight that Mr Enders and his peers expect Europe to develop no new significant pieces of defence equipment – such as a fighter jet or aircraft carrier – in the coming 10-15 years.
Nevertheless, the UK, France and Germany in particular are keen to maintain the capability to make critical weapons domestically, prompting them to keep a close watch on any lay-offs and plant closures at EADS and other defence suppliers.
EADS has discussed its plans with key politicians and does not expect it will be foiled by national interests. Nevertheless, Mr Enders has been wrongfooted by Angela Merkel, Germany’s chancellor, once before and, as with his unsuccessful BAE-tie up, politics is likely to play a crucial role in the success or otherwise of Plan B.

FT : New Novartis chairman rolls back Daniel Vasella’s practices

New Novartis chairman rolls back Daniel Vasella’s practices

The man who replaced Daniel Vasella as chairman of Novartis is rolling back many of the hands-on practices of his predecessor by curtailing his role at the Swiss pharmaceutical group and cutting the size of its board.
Jörg Reinhardt, who took over the helm of the world’s largest pharma group by sales in August, said that he had abolished two board subcommittees scrutinising deals and finance, and removed the directors’ influence over approval of the remuneration of several senior managers.

“We are giving greater responsibility to the executive management committee,” he told the Financial Times. “As chairman of the board . . . the most important is to make this step out of operational responsibilities to guidance and support,” he said.
The comments came after sharp investor criticism of the Novartis board at the start of this year in approving Mr Vasella’s proposed SFr72m six-year non-compete “golden handcuff” departure package, which was eventually scrapped.
Mr Vasella built Novartis over 17 years through bold acquisitions, and only split the roles of chairman and chief executive in 2010, when he offered the latter post to Joseph Jimenez while still retaining much operational influence.
Mr Reinhardt stressed that his own annual pay of SFr3.8m ($4.3m) – less than a third of Mr Vasella’s SFr13.1m last year – would include no stock options or performance-related element. “It helps you to be independent,” he said.
He also said the board would in future be shrunk from 14 to 12 members as existing directors retire, and Novartis was likely to seek individuals with commercial and emerging markets experience in its next round of recruitment.
The appointment of Mr Jimenez as CEO in 2010 triggered Mr Reinhardt’s departure as Novartis’s chief operating officer, and he took charge of Bayer HealthCare until Mr Vasella called to offer him the chairmanship early this year.
Mr Reinhardt avoided criticism of Mr Vasella and stressed he had “good relations” with Mr Jimenez. But since his return, he has overseen a strategic review that has already led to the sale of its diagnostics division, and could spark disposals of its consumer health and vaccines divisions. Mr Vasella recently cautioned against such divestments.
He said he was seeking to more tightly integrate its main three businesses – generic and patented drugs and eyecare – with new salary structures tied to performance of the entire group rather than individual divisions.
He said the board’s approval of remuneration contracts would in future be limited to those on the 11-strong executive management committee. “The idea is to clearly separate board from management responsibilities,” he said.
Mr Reinhardt said he had scrapped Mr Vasella’s “chairman’s committee” which approved all transactions valued at $50m-$500m, and its finance committee, “which wanted to be involved in operational aspects”.
However, in a sign of his own background in pharmacology and his commitment to innovative drugs, he has also created a new board committee for research and development.

FT : Lighter headwinds for China as US and EU demand boosts trade

Lighter headwinds for China as US and EU demand boosts trade

Chinese exports grew at a faster rate than expected in November, helped by strong shipments to the US and EU, suggesting that the domestic economy is facing lighter headwinds.
The government said shipments rose 12.7 per cent from a year earlier, a much higher rate than the roughly 7 per cent clip expected by analysts surveyed by Bloomberg and Reuters. Just one day after trade ministers agreed the first global trade deal in a generation, the General Administration of Customs said the cumulative trade balance for the first 11 months of the year had increased to $234bn.

“There are signs that the global activity and trade cycle is gaining momentum, driven by the recovery in high income countries and China’s exporters are benefiting from that,” Louis Kuijs, an economist with RBS, wrote in a research note.
ANZ bank said strong export figures were due to better demand from developed economies. Shipments to the US rose 18 per cent, a big jump from October’s 8 per cent rise, while exports to the EU grew 18 per cent, compared with 13 per cent in the previous month.
The rise in Chinese exports comes several days after the US revised sharply upwards its gross domestic product figures for the third quarter, saying the economy grew an annualised 3.6 per cent.
Chinese imports in November grew 5.3 per cent, which Mr Kuijs suggested “solid expansion of China’s domestic demand”.
China imported 23.57m tonnes of crude and 2.8m tonnes of refined products in the month, with oil imports so far this year up 3 per cent as Chinese oil importers benefit from lower international crude prices.
Unwrought copper imports rebounded from an October dip to 435,613 tonnes, with copper scrap accounting for another 430,000 tonnes. Manufacturers are finishing out the year, with a lull in factory operations to begin in mid-January ahead of the lunar new year.
Separately, on Saturday, Chinese state media said regulators would step up efforts to make sure that companies were using foreign currency obtained for trade deals for genuine transactions.

Xinhua, the state news agency, said the State Administration of Foreign Exchange, the foreign exchange regulator, would “intensify supervision on commercial banks’ trade finance businesses to curb fake financing activities and prevent abnormal cross-border forex movement”.
China has faced criticism over the past year as export figures from its customs authorities appeared at odds with the numbers recorded by places such as Hong Kong through which many Chinese goods are re-exported.
Critics have suggested that companies were disguising capital inflows as trade invoices to help them evade China’s capital controls. Exporters also came under more scrutiny over suggestions that they were faking orders to gain tax rebates.

>>> ThyssenKrupp activist shareholder Cevian would not rule out further stake in

ThyssenKrupp activist shareholder Cevian would not rule out further stake increase

Activist investor Cevian Capital would not rule out further increasing its stake in listed German steel group ThyssenKrupp, German daily Boersen Zeitung reported. The report cited a Cevian spokesperson who declined to reveal a target shareholding figure.

Cevian increased its stake to 10.96% through the ThyssenKrupp capital increase which also saw the largest shareholder, the Krupp foundation, fall below the 25% threshold to to 23.03%.

Cevian announced it wants representation on the ThyssenKrupp board to reflect its stake, but did not reveal whether it is targeting one or two seats, the report noted. The next opportunity to vote Cevian representatives to the ThyssenKrupp board is at the AGM on 17 January.

ThyssenKrupp declined to comment on the Cevian stake increase and desire for board representation.
Boersen-Zeitung

>>> Jap. Mkt : Short selling rose to 30%of sell orders / CB Iss. at 7y Highs

Issuance of convertible bonds in Japan said to have risen from ¥292B in FY12/13 to ¥665B in FY13/14 YTD, highest level since 2006 - Nikkei
- Said to be reflecting rising confidence in higher stock prices. - Report noting the overseas institutional investors are the main buyers of these bonds.

According to the Tokyo Stock Exchange, short selling has risen to nearly 30% of all sell-orders from 22% average following short-selling deregulation announced on Nov 5th - Nikkei- Report noting that "under the new rules, investors can now short-sell at any price unless a stock has fallen at least 10% since the previous close.

(ZH) Ghost Of 1929 Re-Appears - Pay Attention To The Signals

They say those who forget the lessons of history are doomed to repeat them.

As a student of market history, I’ve seen that maxim made true time and again. The cycle swings fear back to greed. The overcautious become the overzealous. And at the top, the story is always the same: Too much credit, too much speculation, the suspension of disbelief, and the spread of the idea that this time is different.

It doesn’t matter whether it was the expansion of railroads heading into the crash of 1893 or the excitement over the consolidation of the steel industry in 1901 or the mixing of speculation and banking heading into 1907. Or whether it involves an epic expansion of mortgage credit, IPO activity, or central-bank stimulus. What can’t continue forever ultimately won’t.

The weaknesses of the human heart and mind means the swings will always exist. Our rudimentary understanding of the forces of economics, which in turn, reflect ultimately reflect the fallacies of people making investing, purchasing, and saving decisions, means policymakers will never defeat the vagaries of the business cycle.

So no, this time isn’t different. The specifics may have changed, but the themes remain the same.

In fact, the stock market is right now tracing out a pattern eerily similar to the lead up to the infamous 1929 market crash. The pattern, illustrated by Tom McClellan of the McClellan Market Report, and brought to his attention by well-known chart diviner Tom Demark, is shown below.
Excuse me for throwing some cold water on the fever dream Wall Street has descended into over the last few months, an apparent climax that has bullish sentiment at record highs, margin debt at record highs, bears capitulating left and right, and a market that is increasingly dependent on brokerage credit, Federal Reserve stimulus, and a fantasy that corporate profitability will never again come under pressure.

On a pure price-analogue basis, it’s time to start worrying.

Fundamentally, it’s time to start worrying too. With GDP growth petering out (Macroeconomic Advisors is projecting fourth-quarter growth of just 1.2%), Americans abandoning the labor force at a frightening pace, businesses still withholding capital spending, and personal-consumption expenditures growing at levels associated with recent recessions, we’ve past the point of diminishing marginal returns to the Fed’s cheap-money morphine.

All we’re doing now is pushing on the proverbial string. Trillions in unused bank reserves are piling up. The housing market has stalled after the “taper tantrum” earlier this year caused mortgage rates to shoot from 3.4% to 4.6% between May and August. The Treasury market is getting distorted as the Fed effectively monetizes a growing share of the national debt. Emerging-market economies are increasingly vulnerable to a currency crisis once the taper finally starts.

The Fed knows it. But they’re trapped between these risks and giving the market — the one bright spot in the post-2009 recovery — serious liquidity withdrawals.

But the specifics of the run up to the 1929 crash provide true bone-chilling context for what’s happening now.

The Bernanke-led Fed’s enthusiasm for avoiding the mistakes that worsened the Great Depression—- a mistimed tightening of monetary conditions — has led him to repeat the mistakes that caused it in the first place: Namely, continuing to lower interest rates via Treasury bond purchases well into an economic expansion and bull market justified by low-to-no inflation.

(Side note here: As economist Murray Rothbard of the Austrian School wrote in America’s Great Depression, prices dropped then, as now, because of gains in productivity and efficiency.)

Here’s the kicker: The Fed (mainly the New York Fed under Benjamin Strong) was knee deep in quantitative easing in the late 1920s, expanding the money supply and lowering interest rates via direct bond purchases. Wall Street then, as now, was euphoric.

It ended badly.

Fed policymakers felt like heroes as they violated that central tenant of central banking as outlined in 1873 by Economist editor Walter Bagehot in his famous Lombard Street: That they should lend freely to solvent banks, at a punitive interest rate in exchange for good quality collateral. Central-bank stimulus should only be a stopgap measure used to stem panics, a lender of last resort; not act as a vehicle of economic deliverance via the printing press.

It’s being violated again now as the mistakes of history are repeated once more. Bernanke will be around to see the results of his mistakes and his misguided justification that quantitative easing is working because stock prices are higher, ignoring evidence that the “wealth effect” isn’t working.

Strong died in 1928, missing the hangover his obsession with low interest rates and credit expansion caused after bragging, in 1927, that his policies would give “a little coup de whisky to the stock market.”

(Barron's) Buy the Asset Sellers

Buy the Asset Sellers

Revenue growth may be hard to come by these days. Look for companies with assets to sell or businesses to unload.

It's not easy to find bargains when U.S. stock prices have soared while revenue growth has slowed, especially since companies that are still growing quickly look expensive. One solution: Look for companies that can grow by shrinking—companies that can fetch higher stock prices by selling off underperforming assets and putting the cash to good use. Consider Dow Chemical, Royal Dutch Shell, General Electric and Time Warner .

The Standard & Poor's 500 index is up 27% this year, but its underlying revenue increased just 2.9% during the third quarter. Companies that are increasing revenue at a double-digit pace go for a median of 20 times this year's projected earnings. Weed out those whose revenue is up on acquisitions or rebounding from depressed levels, and what's left are true fast-growers with much higher prices, like Chipotle Mexican Grill (ticker: CMG) at 50 times earnings; Whole Foods Market (WFM) at 33 times; and Netflix (NFLX), Amazon.com (AMZN), and Salesforce.com (CRM), all more than 100 times.

However, fast growth isn't the only path to handsome stock returns. Companies can increase their profit margins, boost their overall growth rates or reduce risk by selling assets that have been holding them back, and putting the cash toward debt reduction or larger dividends. The results are often lucrative for shareholders. A 2008 study published in the Journal of Finance found that over the long term, U.S. stocks in the market's bottom decile ranked by recent asset growth outperformed those in the top decile by 13 percentage points a year. A 2012 paper that focused on international markets reported similar findings. So while rising stock valuations may be better news for sellers than for buyers, buyers can improve their prospects by seeking out reasonably priced companies with plenty to sell.

For instance: Last week, Dow Chemical (DOW) announced it will sell chlorine, epoxy and other commodity businesses with revenue of $5 billion, or nearly 10% of total revenue. Since 2009, Dow has already sold businesses with revenue of about $10 billion. After the latest divestiture, three-quarters of the company's revenue will come from high-margin businesses, according to Deutsche Bank. The sales have reduced payroll costs and helped Dow more than double its spending on dividends and share repurchases over the past three years. The stock yields 3.3%. Earnings per share are expected to increase 21% this year, to $2.29, and to grow even faster next year, hitting $2.84. That puts shares below 14 times next year's earnings.

WHEN SELLING ASSETS, it helps to have buyers who are willing to overpay because their motivations extend beyond profits. Countries such as China, Indonesia, and South Korea are keen to reduce dependency on foreign oil and diversify savings away from low-yield Treasury bonds. So far this year, government-controlled energy companies have scooped up assets worth $94 billion, JPMorgan reported in late November. That's 12 times what they spent in 2006 and 78% higher than last year.

Meanwhile, many big oil firms remain stuffed with under-developed assets ripe for spinning off. Royal Dutch Shell (RDS.B) has targeted $15 billion in sales over the next two years, or 7% of its recent stock market value, but JPMorgan says it holds twice that much in non-core assets that could fetch good prices. Shares of Royal Dutch go for nine times earnings and yield 4.9%.

[image]
In September, Barron's wrote that General Electric (GE) shares look likely to shine after more than a decade of underperformance, based in part on the company selling off financial operations that don't directly relate to its industrial businesses (Sept. 23, "GE: Not Too Big to Grow"). Last month, the company said it will sell up to 20% of its North American consumer finance business in an initial public offering next year and distribute the rest to stockholders. Shares of GE are up 12% since our story, versus 6% for the S&P 500. They still look affordable at 15 times next year's earnings forecast. One reason is the 2.8% dividend yield. Another, according to Barclays, is that changes in profit margins are one of the best predictors of stock performance for industrial companies, and GE leads its peer group by that measure. One of its goals is to drive operating margins for its industrial businesses 0.7 percentage point higher this year to 15.8%. Last quarter, it reported a 1.2 percentage-point increase.

It's a worrisome sign when companies build grandiose headquarters; think of the Sears Tower in Chicago, now called the Willis Tower, finished in 1973, before a long decline for the retailer. It's probably a good sign, then, that Time Warner is reportedly unloading an ultra-posh retail and office development in Manhattan that holds its headquarters—to a group that includes Singapore's sovereign wealth fund. The company also plans to spin off its publishing business next year. What's left will be lucrative television and film properties, including Home Box Office, Turner Broadcasting System and Warner Brothers Entertainment. After the sale, about 35% of revenue will come from subscriptions and only 20% from advertising, and earnings per share should grow by 15% a year on falling corporate overhead and rising fees from TV affiliates, according to Morgan Stanley. Shares go for 16 times next year's earnings forecast.

Novartis CEO Says Acquisitions Possible: Schweiz am Sonntag

+------------------------------------------------------------------------------+

Novartis CEO Says Acquisitions Possible: Schweiz am Sonntag 2013-12-08 10:50:22.866 GMT

By Elena Logutenkova Dec. 8 (Bloomberg) -- Novartis can spend $4b-$6b each yr on dividends, acquisitions, CEO Joseph Jimenez says in interview with Schweiz am Sonntag. * Says co. can spend $2b-$4b per acquisition in pharmaceuticals, eye-care and generics * Acquisitions for smaller divisions would be smaller: Jimenez * NOTE: Novartis sets $5b buyback as it seeks faster growth * NOTE: Novartis willing to Sell Roche stake * NOTE: Novartis starts strategic review of units, would consider $10b deal, Chairman Joerg Reinhardt said in Aug.

For Related News and Information: First Word scrolling panel: FIRST<GO> First Word newswire: NH BFW<GO>

--Editors: Amy Teibel, John Viljoen

To contact the reporter on this story: Elena Logutenkova in Zurich at +41-44-224-4101 or elogutenkova@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at +33-1-5365-5063 or fconnelly@bloomberg.net