Gabelli Buys OMPI as Valeant Offers to Buy Obagi

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Mar 29, 2013
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Last week when Canada's largest drugmaker, Valeant Pharmaceuticals International Inc. (VRX, Financial), offered to buy Obagi Medical Products Inc. (OMPI, Financial) for about $344 million, stocks jumped. On March 20, 2013, GAMCO Investors’ chairman and chief executive officer Mario Gabelli bought 1,093,800 shares of skin-enhancing Obagi Medical Products Inc. (OMPI). The current share price is $19.75, with a 0% change from average.

Other investor Gurus show mixed trading on OMPI.

Obagi Medical Products Inc. is a pharmaceutical company that makes skin care products to treat common adult skin problems like acne, sun damage and wrinkles. Selling in 43 countries worldwide, the company's products include: Obagi Nu-Derm System, Obagi Condition & Enhance Systems and Obagi Blue Peel Essential Kit, to name a few.

Obagi Medical Products Inc. (OMPI) has a market cap of $344.5 million. The P/E is 21.7 and the P/S ratio is 3. The current share price is $19.75 per share, up 48% from last year.

GuruFocus performed a financial and performance check up on Obagi Medical Products Inc. and found that both the gross margin and operating margin have been in decline. Another warning is that the OMPI price ($19.77) is close to a five-year high of $19.80. A good sign is that the company’s interest coverage is comfortable. Ben Graham prefers companies' interest coverage to be at least 5. Obagi Medical Products Inc. has enough cash to cover all of its debt, and its financial situation is stable. See detailed OMPI analysis.

1364510243386.pngOMPI data by GuruFocus.com

Famed investor and commentator Mario Gabelli was named the 2011 Money Manager of the Year by Institutional Investor. Gabelli’s company, GAMCO Investors lists 792 stocks in a portfolio valued at $13.6 billion, with a quarter-over-quarter turnover at 6%. At the end of fourth quarter 2012, GAMCO Investors Inc. (GAMCO) (GBL) announced fourth quarter earnings of $17.6 million, and assets under management at $36.4 billion, a record at year-end. For revenue, GAMCO Investors ranks higher than 92% of the 13 companies in the industry. For earnings yield, GAMCO Investors ranks higher than 54% of the 13 companies in the industry.

Billionaire investors know that “youthing” products are foremost in the minds of massive numbers of maturing babyboomer consumers. See GuruFocus' feature on Nu Skin Enterprises Inc. (NUS, Financial).

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