Well, we were both wrong, but I was A LOT wronger than you. I was so sure that it would retreat back to 105 by today that I started to short it at 106.80. The lesson here is that which way the options move depends on who owns them. The big winners were those who bought the 100 calls a couple of weeks ago.
That was an orchestrated short raid - they threw a lot of shares in at the open and took out all the buy orders and then held it down. I also bought my first position yesterday - they have to buy those shares back eventually - but I don't expect it to rebound that quickly. As we see today, the shortsellers are buying into the rally and then selling shares to discourage you. They will pin it and churn it here around 65.50 and cover a bit of their position in the process. Should be back to 70 before Christmas, though. Folks may not need diamond bracelets from Tiffany, but everyone needs underwear and socks. That would be a 7% gain, plus the 2.5% dividend, which would be fine by me. I would also note that any stock which Cramer pumps garners a contingent of retail investors who are skittish and prime targets for this kind of shenanigan.
Their downward revision - particularly what they had to say about shorter duration of treatment - made me sell all of my position on 4/20. My own innate optimism about Xtandi led me to buy back a quarter of my position yesterday. One of the few times I was ever glad I listened to an analyst.
I had the idea that the share price would be dragged down by that huge clump of May options, so that even if earnings were good, there was no point buying this until after expiration. When this moved above 105 after earnings, I thought it would hang around 107.50 to sell the 110's.(It did briefly - by not holding a position into earnings, I missed the opportunity to take a nice profit.) But watching it get sucked down to 105 last Friday by a relatively small number of calls, I began to have doubts. If it can't get substantially above 105 by next Tuesday, I think that in the absence of news, this may end up at 100 on next Friday. Which still doesn't mean that Stan's June puts will finish in the money. I will probably add some shares on the week of May 18. Meanwhile, despite all the handwringing, GILD has survived an almost 10% drop in the IBB since March 20 relatively unscathed.
Yep. But the fact that it is in synch with the IBB lately demonstrates that buyers are biding their time. Since March 20, however, it has outperformed almost all of the major components of the IBB.
ABBV, as I'm sure you know, has made a nice gain since 3/20 and SNY hasn't really suffered PFI and MRK have also been immune. So you'd have to say there's been little spillover from the IBB. It's the high multiple stocks which have been hurt. I know ARIA has strong prospects., and without looking, I'd guess it's pulled back. I don't expect the IBB to recover strongly until the Supreme Court rules - but I seem to be the only one worried about this. I assume that you have diversified your portfolio beyond the pharma sector. I have been overweight in it for a couple of years, but I don't think I'll get that concentrated in pharmas again soon.
I went into yesterday holding a long position, sold it, bought it lower, sold it, etc. Buying my last lot @ 100.50. When it couldn't bounce off that level, I sold out. If it had found support, I planned to double up.
Unquestionably the best defensive play in pharma to this point. From its high on 3/20, the IBB is down 8.2% as of today. GILD is up 2.2%. As for the other large biotechs: AMGN - 7%. CELG -14.7%. BIIB - 19.6%. REGN - 5%. VRTX - 8.6%. ICPY - 17.2%.
Among the larger stocks I hold (or held), only INCY has been relatively stable (down less than 1%). Most of the early stage biotechs have been clobbered, with the exception of HZNP (+24.7%) and DBVT (+5.2%). The first of these is an Irish company and the second a French company.
Being a contrarian by nature, I was inclined to go into earnings holding a modest long position and kept fishing for a bottom yesterday. In spite of the relatively low volume, I could see no sign of support until 100
( where I think GILD has shown a willingness to buy back shares in the past) and sat out earnings. I used today's rally to pare back my biotech positions, since I don't think the pullback is over. In fact, until the Supreme Court rules on the state exchanges for the Affordable Care Act in June, I think the entire healthcare sector will be under pressure. I plan to stay away from the big IBB stocks and very cautiously add to my depleted positions in the earlier stage companies.
Note that the IBB is already down 10% from its March 20 high. Perhaps a lot of this has to with the upcoming (June) Supreme Court decision on what I will call The Affordable Care Act, to avoid stirring up the political posters. I added some GILD this am @102, only to watch the shortsellers beat it back at precisely that point. Volume is still very weak. Not a lot of interest in this whole sector at the moment, it seems.
At times anything other than a "Going to the moon!" or "This POS going to 0!" seems to offend people. I don't know where this is going Friday. I sold a large position just ahead of q3 earnings, then reestablished a smaller one and sold it ahead of q4. At the moment, my position in GILD is about a dollar in the black, and so I'm not inclined to take risks. It seems that everything is being shorted into earnings. Incidentally, we should recall that last year, beginning on Feb 24, biotech went into a swoon that dropped everything, including GILD, which had dazzling prospects at the time. Over the period of a couple of months, the IBB dropped about 20%. Some think of biotech as a bubble, but I think that we're living in a golden age, when great discoveries are being made. But there are times to put your head down and duck. As I said earlier, I wouldn't be in a hurry to buy any more OTIC until you're closer to even. Good luck.
PS I think this applies to all biotech stocks right now: Until recently, the general sentiment was "I've got to own this stock right away ...before it gets bought out .. before they get an FDA approval ... before it goes up another ten points!" At the moment, there are a lot of stocks worth owning, but the general sentiment is that there's no rush - they can wait a while before owning them. So you have selling by the weak hands and no buying. This affects stocks like OTIC more than most. Patience.
I have great hopes for OTIC. I like remedies for basic universal recurring maladies, such as infant ear infections. The greatest collection of 20'th century French paintings in the US is The Barnes Collection (Where is he going with this?), which is now housed in a new wing of the Philadelphia Art Institute, I believe. I saw it about ten years ago when they put it on tour. It was at the Musee D'Orsay in Paris, and the French were lined up around the block to see Barnes' paintings which had never left Merion, Pennsylvania before. In the galleries, the museum paired their best Renoir, against one of Barnes' Renoirs, their best Rouault or Picasso alongside his, etc. Barnes' paintings were better. Now to the point:
Barnes' fortune - the basis of Barnes-Hind pharmaceuticals - was a simple improvement on the silver nitrate which was routinely administered to infants to ward off eye infections. He lifted the idea from a German chemist, called it "Argyrol" and became immensely wealthy. The OTIC compound promises to be the equivalent of Argyrol for infant ear infections. I would note that two of the major holders are Orbimed Advisors (along with Baker Brothers, the smartest biotech investors) and TPG Group (no slouches). While, along with many of the smaller biotechs, this has been going down, I don't see any alarming volume trends. I am keeping it; the recent clinical results looked very strong to me. If it recovers to the point where you're even, I'd buy more. Good luck.
It's basically trading in parallel with the IBB today on low volume; which, given the upcoming earnings release, is strange. At some point, it should break loose. Let's hope upwards.
Fortunately, I hedged my AAL position with a large position in ALL (American Loose Leaf Binder), which is taking off today.
I expected to sell some of my position into strength today, but since the stock did the opposite of what I expected, I reversed field. This is a very jumpy market, ready to sell on good news and eager to take profits. Nevertheless, I am now thinking about holding a partial position through earnings.
Yep, the train rolled back into the station and tickets aremmarked down 10%. I'm climbing aboard, but if it starts to slide backwards again, i'm hopping right off.