Actually, I think this stock -along with a lot of the biotechs - has turned the corner here. Paradoxically, when there seem to be no easy profits in cyclical stocks like IBM, investors will return to the higher risk names. I am approaching my breakeven point in the IRA, at which time I will add more.
The shortsellers are riding on the absurd assumption that doctors and their patients will wait for some drug in Phase II when an actual approved cure is at hand. In line with my plan to buy into the dips, I bought PCYC @ 89.24 today. Sovaldi will be THE HepC drug. Imbruvica will be THE CLL drug. In addition to the prospect of real earnings in the near future, these stocks rode up on the prospect of dramatically growing earnings in the somewhat distant future. The latter seems to have been discounted by the present market. They are valuing the prospect of INTC and CSCO growing earnings at 5% more than the possibility of GILD or PCYC or MDVN growing earnings at 100%. This is silly.
Yes, higher close three days in a row. I'll confess that I sold all but 500 shares in my IRA when it touched 89 the other day. My basis in those remaining shares is 92.88, and when it crosses that mark, I'll add more. I was watching them sel loff the IBB again today, and I thought, "C'mon, it can't be this easy!" I Went long the IBB @ 210.24, sold half @ 207.50 for a loss of $1,400, half @ 215.97 for a gain of $2,800. Then bought and sold FB on the rally,( which I figured was every daytrader's short) which worked out very well. I think the significant event today was the S&P holding at 1820 and rallying from there. From now on, I will try buying into all dips.
International sales up 54.6%. Since Xtandi has been taking share from Zytiga, the pie is obviously getting bigger.
If you don't think that those underwriters have the chump change it will take to bring this back to 24.50 by tomorrow, I think you're mistaken.
To me, this looks more like a desperate effort to resuscitate AbbVie. Flynn, the G-S analyst, says his survey indicates that some percentage of doctors (I forget the exact number, but under 20%) would CONSIDER using the AbbVie HepC drugs IF they were cheaper.
I would respectfully disagree. The idea that "You only lose money when you sell" is nonsense. The stock is worth exactly what the market currently says it's worth. If one had bought this at 5 or so (perhaps some of you have), it might be easier to maintain your equanimity in the face of a possible big tax bill. I, however, entered at about 20 and traded in and out of it, making about as much as I would have if I'd held it, but paying taxes on my gins along the way. I have been trying to catch this falling knife since 131. And I've just calculated that I've lost almost exactly as much -$45,400 - as if I'd held 1,000 shares all the way down from 131 to 86. And, despite your comforting thought that you haven't lost money because you haven't sold, your brokerage statement will tell you otherwise. I radically underestimated the depth of this correction. I shorted CLDX at 23.87 as a hedge and covered at 22.39. Right now, it's at 14. I think I'll short REGN on any rally.
I think, unfortunately, that the earnings projections are almost irrelevant. There is no hidden story here - the stock behaves like dozens of other biotech stocks. Compare the intraday chart for Friday with the same chart for the IBB, CBST, INCY, etc. and you will see exactly the same pattern: A feeble attempt at an early rally, a falloff, a second feebler rally, then a steady decline finishing with a little plateau in the closing hour. Only GILD, which was up almost 3.50 in the early rally managed to hold a small gain for the day. But this is a stock with a projected 2014 PE of 16 and a projected 2015 PE of 11. Which begs the question, "How cheaply will growth be priced?" Very cheaply, at the moment. For example, INTC, which is weathering this storm very nicely, had earnings of 1.89 a share in 2013 (non GAAP) projected to rise to 2.05 in 2015. (= +8.5%) GILD had earnings of 2.04 in 2013, projected to rise to 5.65 in 2015. (= +128%) This is obviously, in the long run, crazy. Although they are both earning about $2 right now, you are paying 2.5 X more for GILD. But, over the next two years, it's projected to grow earnings 16X faster. (The point being that the market is currently discounting growth to absurd levels.)
I picked up 500 shares of PCYC @ 90, violating my pledge to not touch it again in my taxable accounts. I have 1,000 shares in my IRA at an average price of 94.34. I lost money trading it down from 131 to 114, and again from 100 to here.
Unfortunately, the high frequency traders accentuate any weakness. If you see the bid at 91.85 and place an order to sell at that price, they will frontrun your order, selling at the best current price ahead of you and moving the bid down to 91.82. They also dampen any upward momentum by doing the reverse. At least in a stock where they place about 80% of the orders and cancel more than half of these, we are at their mercy.
Unfortunately, you were right. I went to take my wife to her doctor's appointment and left half my position in the IBB in place. It was about flat at the time. When I came back after lunch, it was down 7 points and the GILD I had left flirting with 68.50 had closed at 66.40.
The AMEX Biotech Index was down 2% at one point today. It's now up slightly. The IBB - we can imagine how many people were shorting that one - was as low as 217 and is now at 223. This, too, shall follow at some point. I bought a lot of GILD yesterday and added more early this morning. The tell was the 100 share lots crossing ahead of the bell a buck or more below yesterday's closing price. That was the headfake.
As I posted here on April 5, the notion that runaway profit taking combined with small advances in stocks like INTC and CSCO represented a "sector rotation" was nonsense. This was the smart money getting into the nearest thing to cash ahead of a major selloff.
Well, Google, which I consider the absolute bellwether for the market and the economy was down 4.11% today. GILD, which I consider the bellwether for the biotech category, was down 7.33%. I was buying it all the way down and sold half of my new shares at just shy of 66 ...a moderate loss. Based on the consensus 2015 earnings estimates, GILD carries a forward P/E of 11 at the moment. I have a personal credo that whenever the market dips more than 200 points in a day, you have to buy something. Whenever it rallies more than 200 points, you have to sell something. This is just the momentum boys playing the other side. The S&P closed at 183.50 and probably has to go much lower to satisfy the bears.
The May70 put is currently bid at nickel. Which should give you a rough idea of what your prognostications are worth.
Incidentally, IBB, the biotech ETF, is also noted as "HTB" or "hard to borrow", which means that it is also shorted to the max. Might be time to buy some.
This is all shortselling today. Otherwise you have to believe that some huge institutions woke up this morning and had a revelation: "Gosh! What are we doing with these 40 million shares of GILD? We better dump them quick!" The upside is that these shares will have to be bought back. But you can bet that it will be done artfully, with a lot of headfakes.