EFTA02456385.pdf

From: Richard Kahn Sent: Tuesday, August To: jeffrey E. Subject: Biogen Headlines coming across =rom WSJ that MRK/AGN have expressed =nterest in BIIB (link). BIIB is =9%. stock at 3:27pm is 330.90 you own 2,O95 shares in =FL account with cost basis of 119.55 unrealized =ain 442,822 Richard Kahn HBRK Associates Inc. 575 Lexington =venue 4th Floor New York, NY 10022 Begin forwarded message: From: =/b>"Ens, Amanda" Subject: =/b>RE: BAML =C...Thoughts on Positioning/Flows...Fear of Missing Biotech (FOMB)? - =uy the MLDIFOMB Basket Date: =/b>August 2, 2016 at 2:59:54 PM =DT To: =/b>Richard Kahn Cc: Jeanne Brennan Headlines=coming across from WSJ that MRK/AGN have =xpressed interest in BIIB (link). BIIB is +9%. While NO price has been discussed in the article, this comes on the back =f the recent announcement that the CEO will be retiring from the =ompany in the coming months & recent newsflow which has been =ositive (SMA data). EFTA_R1_01559578 EFTA02456385 Please let me know if =ou'd like to discuss any takeaways from the recent CFO roadshow =hat our analyst hosted (see link) as our sector specialist was up in Boston for the meeting. M&A is one of the =rimary reasons why we're BULLISH on Biotech — more in =he write-up from yesterday on the Fear of Missing Biotech Basket —=MLDIFOMB. From: Ens, Amanda Sent: Monday, August 01, 2016 2:53 PM To: 'Richard Kahn' Cc: 'Jeanne Brennan' Subject: BAML HC...Thoughts on =ositioning/Flows...Fear of Missing Biotech (FOMB)? - Buy the MLDIFOMB =asket Please find =elow some thoughts from our healthcare sector specialist that I thought =ou might find interesting. Please let me know if you'd like to =iscuss further. The latest Active Managers' Holdings update =link to note) offers a =resh opportunity to revisit positioning/thoughts within the Healthcare =ector, especially in the wake of our DC Conference back in mid-July (in which =he biggest takeaway in my view was lack of pricing regulations in CY17 =E2 see link to Ying's note) & recent marketing through various =egions. While I'd =till characterize positioning within the sector (among dedicateds, HFs, =Os) as in a relative holding pattern (although now an UW relative to =istory — see Chart 14 below), I do believe that =entiment/positioning within Biotech specifically is ripe for an improvement/correction over the coming =onths (XBI still down 30% from the Jul-15 highs). The general =ense I've picked up is a genuine Fear Of Missing Biotech...=hat I'm calling FOMB. Just 6 months ago the debate was IF you could own =iotech (given people were questioning the NT viability of the =pace)...this has largely shifted towards WHEN/WHAT NAMES to own in the =roup. ==> While I =hink the large caps will lead the group higher (evidenced by ALXN, =ELG, BIIB moves), I'd recommend BUYING our customized/optimized =iotech basket — MLDIFOMB (can be found on Bloomberg). =his basket is based on the XBI but strips out non-traditional names that happen to be in the =ndex. 2 EFTA_R1_01559579 EFTA02456386 While the November =lection is likely to cause volatility given Healthcare remains a =ontroversial topic, I do believe Biotech will outperform =ear-term & while it could be impacted on a Hillary win, it =s my view that drug pricing is NOT likely a focus in CY17. Let me know if you =99d like to discuss Below I've included some useful charts =round positioning & the always popular EPFR data. Latest Active Managers Holding Update — Link to Research Note; Link to Chart 5 Biotech no longer the #1 OW within the =ector...in fact relative weighting in the sector has come =own materially over the past several months. &=bsp; Most "Overowned" Names =n HC — UNH, BIIB 5 Most OW Stocks — ALXN =note that this is a Top 10 OW amongst ALL stocks in SPX), ILMN, BSX, =RTX, REGN [Note ISRG, BIIB, HUM, CI have fallen from the top 5J S =ost UW Stocks — DVA, UHS, PDCO, CNC, LH [Note HSIC & =KI have fallen from the bottom 5] Most =oncentrated Ownership — ALXN, DVA, BSX, MNK, ISRG EPFR Data on =ealthcare Flows 3 EFTA_R1_01559580 EFTA02456387 latest S&P 500 =elative Value Cheat Sheet - link to Note Sell Side =ndicator - Link to note With the latest Sell =ide Indicator rebounding slightly off a three-year low, the first =ptick since Feb but still indicating a "Buy" (). =he indicators expected 12m return is +21%. Daniel Lundquist Healthcare Specialist Sales Global Equities Bank of America Merrill Lynch One Bryant Park I New York, 10036 I United States The power of global =onnections" 4 EFTA_R1_01559581 EFTA02456388 Find all Conference =vents via the Following Link: https://gems.bankofamerica.com <https://gems.bankofamerica.com/> Disclaimer: This material was =repared by Sector Specialist Sales personnel of Merrill Lynch and is =ubject to the terms available at the following link: http://corp.bankofamerica.com/business/smb/landing/emaildisclai=er/americas/global-markets This message, and any attachments, is =or the intended recipient(s) only, may contain information that is =rivileged, confidential and/or proprietary and subject to important terms and conditions =vailable at http://www.bankofamerica.com/emaildisclaimer <http://www.bankofamerica.com/emaildisclaimer> . If you are not the =ntended recipient, please delete this message. 2041542 Amanda Ens Director Bank of America Merrill Lynch Merrill Lynch, Pierce, Fenner & =mith Incorporated One Bryant Park, 5th Floor, New York, =Y 10036 The power of global =onnectionsn' 5 EFTA_R1_01559582 EFTA02456389 This message, and any attachments, is for the intended =ecipient(s) only, may contain information that is privileged, =onfidential and/or proprietary and subject to important terms and =onditions available at http://www.bankofamerica.com/emaildisclaimer. If you =re not the intended recipient, please delete this message. 6 EFTA_R1_01559583 EFTA02456390