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Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

More than 200 million people worldwide suffer from some form of diabetes. Patients with type 1 (juvenile) diabetes can’t make insulin at all and need to inject it their whole lives. Type 2 diabetes — the kind you get from eating too much and not exercising — is now much more common. Today, more than 26 million Americans have diabetes and another 79 million have pre-diabetes. Experts calculate that by 2050, one in three American adults will suffer from the full-blown disease. Nor is this a problem limited to us American fatties. As China, India and the rest of the emerging world adopt Western lifestyles and diets, diabetes is surging there as well.

As a result, treatment of diabetes through insulin has emerged as one of the world’s great growth stories. Although it’s been around for a long time, insulin — along with its modern synthetic versions — remains the most potent drug for a disease that is reaching epidemic proportions. Worldwide insulin sales have quadrupled in the last decade to $15.4 billion. As diabetes specialist David Nathan of Massachusetts General Hospital observed, “The market for insulin is almost endless. It is going up and up and up. It is not even close to the peak.” 

Four years ago, NVO Chief Executive Lars Rebien Sørensen refocused NVO on insulin and other injected diabetes pharmaceuticals. That bet has paid off handsomely. Today, NVO is the world’s largest insulin maker, having sold $7.1 billion of insulin last year. Even in the United States, it has overtaken former market leader Eli Lilly.

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Last year, the company’s overall sales ($11.25 billion) were up 13% and are projected to grow at an 8% to 10% pace as far as the eye can see. In 2010, net profit increased by 34% and earnings per share (diluted) increased by 38%. No wonder Nordisk stock has gone up fivefold in the last decade. And just last week, the stock broke out to the upside, hitting record highs.

So buy Novo Nordisk A/S (NVO) at market today and set your stop at $109.50. If you want to play the options, I recommend the June $120 calls (NVO110618C00120000), which last traded at $6.60.

Portfolio Update

Alliance Resource Partners LP (ARLP) rose another 2.36% this past week. With your remaining options up 118.75%, you still have some big outstanding profits in this position. With coal continuing to power ahead, ARLP remains a BUY.

Cognizant Technology Group (CTSH) ended the week flat. Cognizant beat Q4 earnings estimates by a nickel, earning 70 cents per share. Its revenue rose 45% to $1.31 billion, beating estimates of $1.28 billion. Despite the recent weakness in the Indian stock market, with the stock back above its 50-day moving average, CTSH is back to a BUY.

Denison Mines Corp. (DNN) jumped 4.55% last week. Denison announced that it won’t meet its annual uranium production target in 2010. Paradoxically, this is good news, as it supports the rising spot price of uranium, which now is above $70. DNN remains a BUY.

ELEMENTS Rogers Intl Commodity Agri ETN (RJA) rose another 2% this past week. Bad weather in key places around the world has savaged the global grain crop, as soft commodities continued to hit record highs. That’s bullish for RJA and it remains a BUY.

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Bank of Ireland (IRE) ended the week flat. The country’s next finance minister repeatedly has said that Bank of Ireland should be given every chance to fend for itself as its situation is not as critical as the other banks. With the stock still under its 50-day moving average, I am keeping IRE at a HOLD.

Ivanhoe Mines (IVN) was flat this past week. Chief Executive Robert Friedland announced that Ivanhoe has made major “Tier 1” copper discoveries in the Democratic Republic of Congo and South Africa. IVN remains a BUY.

Melco Crown Entertainment Limited (MPEL) dropped 2.45% this past week. The company will announce earnings on Feb. 22. With the stock flagging a bit, but still above its 50-day moving average, this play on Asia’s Las Vegas remains a BUY.

National Bank of Greece SA (NBG) ended the week where it started. A back-of-the-envelope calculation suggests that once Greece’s situation normalizes, NBG is at least a $7 stock. Trading above its 50-day moving average, NBG remains a BUY.

Sina Corporation (SINA) was up another 2.27% this past week. The most frustrating thing about this stock is its refusal to pull back so that I can recommend more options. Now up 79.60% since I first recommended it in October, “China’s Twitter” remains a BUY.

Spreadtrum Communications, Inc. (SPRD) rose another 3.15% this past week. With the technology sector humming along, this bet on Chinese semiconductors remains a BUY.

Silvercorp Metals Inc. (SVM) ended the week slightly up. This past week, SVM announced record silver production of 1.52 million ounces, a 25% increase compared to the third quarter of fiscal 2010. Its sales hit a record of $51.8 million, up 66% from a year ago. Its net income reached $29.7 million, a 140% increase. Trading a hairsbreadth above its 50-day moving average, SVM is now a BUY.

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Transocean Inc. (RIG) dropped 3.45% this past week. The company’s board is seeking shareholder approval for a dividend of about $1 billion, payable in four quarterly installments. The payments would be made in June, September and December of this year, as well as in March 2012. Trading above its 50-day moving average, RIG remains a BUY.

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Most of your positions in Global Stock Investor took a breather this week, even as attention directed towards Egypt and the riots there began to wane. Emerging markets, with the broad exception of your holdings in Asian markets like iShares MSCI Malaysia Index (EWM), iShares MSCI Taiwan Index (EWT) and iShares MSCI South Korea Index (EWY), as well as Market Vectors Russia ETF (RSX), continue to underperform.

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