Why Funds Missed Facet Biotech
Biogen's bid for micro-cap stock was essentially ignored by money managers.
Now that Biogen (BIIB) has gone public with its $14.50 bid for Facet Biotech (FACT), the standard commentary is: "Well, of course, it has $14.50 in cash, so Biogen will pay more."
Just out of curiousity -- if this was all so obvious, why was the stock allowed to languish below $9 until the bid came out? Whatever happened to efficient markets?
I think there are two answers, both related to the institutional (and I mean that in both a literal and pejorative sense) approach to money management.
First, this was a micro-cap company. Big, index-return-seeking money managers can't be bothered with a $500 million company. They can't invest enough to move the needle, even if they want to.
But, you should ask, what about mutual funds that specialize in micro-caps? How did they miss out on this?
There's only one answer: They didn't buy because the other guy wasn't buying. They were still trying to match their own micro indexes. Independent analysis be damned.
This is why the individual who's willing to do their homework, who's willing to be accountable to themself, has such a huge advantage over the so-called professional money managers.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter