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Portfolio Managers Almost Unanimously Negative on Biotech Stocks
What will this mean for summer biotech valuations?
David Miller    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

April through June are the hottest months of the year for biotech stocks in terms of news flows. Most of the major scientific conferences are held in this time frame, providing investors with critical data points with which to determine valuations and recalculate odds for success. Once this gaggle of conferences passes in a couple of weeks, things slow down considerably in the sector.

Portfolio managers and research teams for biotech and health-care funds spend the majority of their time on the road during this period. Lots of chatting about positions, positioning, and portfolios occurs over various beverages in the after parties and after-after parties at these conferences.

Based upon these conversations, everyone is short biotech, has their positions hedged, has raised cash, or in some other fashion has limited their exposure to biotech stocks. One look at the charts for the iShares Nasdaq Biotechnology Index ETF (NASDAQ:IBB) and the SPDR S&P Biotech ETF (NYSEARCA:XBI) pretty much shows you when this happened. I have met no portfolio manager and have heard of no portfolio manager who expects biotech to go up over the summer.

If the market perversely charts a path of maximum frustration, what does this unanimous negative opinion on biotech stocks mean for summer biotech valuations? I don't have an answer for you, but I can tell you we discuss this every day at Alpine BioVentures.

Biotech this morning is doing well due to Merck's (NYSE:MRK) bid for Idenix Pharmaceuticals (NASDAQ:IDIX) for a hefty premium in a competitive bidding war against (apparently) Johnson & Johnson (NYSE:JNJ) and AbbVie (NYSE:ABBV). Idenix closed at $7.23 on Friday and was bought for $24.

Twitter: @AlpineBV_Miller

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No positions in stocks mentioned.

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.

Portfolio Managers Almost Unanimously Negative on Biotech Stocks
What will this mean for summer biotech valuations?
David Miller    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

April through June are the hottest months of the year for biotech stocks in terms of news flows. Most of the major scientific conferences are held in this time frame, providing investors with critical data points with which to determine valuations and recalculate odds for success. Once this gaggle of conferences passes in a couple of weeks, things slow down considerably in the sector.

Portfolio managers and research teams for biotech and health-care funds spend the majority of their time on the road during this period. Lots of chatting about positions, positioning, and portfolios occurs over various beverages in the after parties and after-after parties at these conferences.

Based upon these conversations, everyone is short biotech, has their positions hedged, has raised cash, or in some other fashion has limited their exposure to biotech stocks. One look at the charts for the iShares Nasdaq Biotechnology Index ETF (NASDAQ:IBB) and the SPDR S&P Biotech ETF (NYSEARCA:XBI) pretty much shows you when this happened. I have met no portfolio manager and have heard of no portfolio manager who expects biotech to go up over the summer.

If the market perversely charts a path of maximum frustration, what does this unanimous negative opinion on biotech stocks mean for summer biotech valuations? I don't have an answer for you, but I can tell you we discuss this every day at Alpine BioVentures.

Biotech this morning is doing well due to Merck's (NYSE:MRK) bid for Idenix Pharmaceuticals (NASDAQ:IDIX) for a hefty premium in a competitive bidding war against (apparently) Johnson & Johnson (NYSE:JNJ) and AbbVie (NYSE:ABBV). Idenix closed at $7.23 on Friday and was bought for $24.

Twitter: @AlpineBV_Miller

< Previous
  • 1
Next >
No positions in stocks mentioned.

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
Portfolio Managers Almost Unanimously Negative on Biotech Stocks
What will this mean for summer biotech valuations?
David Miller    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

April through June are the hottest months of the year for biotech stocks in terms of news flows. Most of the major scientific conferences are held in this time frame, providing investors with critical data points with which to determine valuations and recalculate odds for success. Once this gaggle of conferences passes in a couple of weeks, things slow down considerably in the sector.

Portfolio managers and research teams for biotech and health-care funds spend the majority of their time on the road during this period. Lots of chatting about positions, positioning, and portfolios occurs over various beverages in the after parties and after-after parties at these conferences.

Based upon these conversations, everyone is short biotech, has their positions hedged, has raised cash, or in some other fashion has limited their exposure to biotech stocks. One look at the charts for the iShares Nasdaq Biotechnology Index ETF (NASDAQ:IBB) and the SPDR S&P Biotech ETF (NYSEARCA:XBI) pretty much shows you when this happened. I have met no portfolio manager and have heard of no portfolio manager who expects biotech to go up over the summer.

If the market perversely charts a path of maximum frustration, what does this unanimous negative opinion on biotech stocks mean for summer biotech valuations? I don't have an answer for you, but I can tell you we discuss this every day at Alpine BioVentures.

Biotech this morning is doing well due to Merck's (NYSE:MRK) bid for Idenix Pharmaceuticals (NASDAQ:IDIX) for a hefty premium in a competitive bidding war against (apparently) Johnson & Johnson (NYSE:JNJ) and AbbVie (NYSE:ABBV). Idenix closed at $7.23 on Friday and was bought for $24.

Twitter: @AlpineBV_Miller

< Previous
  • 1
Next >
No positions in stocks mentioned.

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.

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