Getting "hit" is an understatement. At the close:
BIIB -3.10%. ICPT - 5.83%. VRTX - 3.99%. REGN - 1.38%. AMGN - 3.29%. CELG - 3.37%.
Some of the smaller "hot" biotechs did even worse: CLVS - 9.04%, JUNO - 10.24%. CLDX -15.85%. HZNP - 6.93%. etc.
Once again GILD (- .73%) behaves a lot more like JNJ (-.49%) than the other major IBB stocks. It looks like it will be positioned to sell the 110 calls later this week, which should take us up to 107 or so. I don't think this means anything in regard to the earnings, however, and I don't think we'll be immune from this wave of profit-taking.
Well, as I said, I hope they have nice furniture. Those Herman Miller Aeron chairs really hold their value.
I have a general rule: When you own a stock based on a particular premise (e.g Mydicar is effective.) and that premise is disproven, take your losses and move along. The only ones making additional money from here on out are the lawyers. The trouble is, there are no deep pockets to sue. Those two directors who each held stock worth 0ver $30 million not long ago now own stock worth about $5 million ... and they'll be needing a lot of that for legal bills.
I sold in the premarket, reasoning that the retail shorts would be more eager to cash in. I believe that the largest part of the short position is a hedged position of the longs, who have no particular urgency to cover.
I obviously put too much stock - just a little, actually - in the FDA Fast Track Breakthrough Therapy designation. From now on, I will take them less seriously.
I sold in the premarket, reasoning that the retail shorts would be eager to take their profits. I was surprised that I got about 3.56. They must have nice furniture.
I also trade within my IRA and, since you can sell without worrying about the tax consequences, find I often sell too soon. Conversely, in my taxable accounts, I often hold onto a winning position too long and harvest losses too quickly. Of course, the ultimate position is a winning one which will appreciate taxfree for years and that you hold until you croak. Actually, I usually find I do better in my wife's account, which I naturally pay less attention to. Sometimes we overthink things.
A website I use for this stuff (and will not name to avoid being deleted as SPAM) shows heavy shorting action in the first two days of last week, tapering off sharply on the final three days. My calculations put 4/15 shares short at 38% of the float, so I'd estimate no more than 42% now. Still, this is astonishing in face of the fact that two directors, Pfizer, and two funds hold over 9.6 million shares and Institutional holders and mutual funds hold about 13 million shares...which would total a lot more than the float (in fact, virtually all of the shares outstanding). In any case, the ownership is so concentrated that they could easily shut down shorts if they wanted. So I conclude that a lot of the shorting is merely hedging on the part of these major holders. If the results are encouraging, the retail speculators who are riding their coattails could get badly hurt very quickly.
In the case of smaller, more speculative pharmas particularly, I have a different view: As long as the potential for a major advance is there, sideways movement - or even a loss - is acceptable to me. (up to a point - if the stock falls because their basic premise turns out to be mistaken, I take my loss and bail) Since I am seeking long term capital gains, I view 9 months of relatively flat performance as adding value: I am now within 3 months of a time when the stock can appreciate with much more favorable tax consequences. Since I have already taken my gains on GILD, I am dabbling in trading it now. But after the May options expire, I can see taking a new long term position.
Cordari is fickle. He was chasing that short up, and on Wednesday he was anticipating it going under 100. Thursday he was planning to wait until Monday to go long again. Then today he changed his mind and decided not to close his short today. I think that was a mistake, since to my mind, it's unlikely to go below this level next week. I put a buy order in at 103.82 today and went to lunch. I would have been very surprised if it didn't fill. I will probably add some more next week, thinking it will advance above 107.50 ahead of earnings. I will definitely sell at least half before earnings, but am undecided whether to bail completely. I think the huge imbalance in May options is a problem and will make it very difficult to hold above 103 as May 15'th approaches. After that, it may be safe to go back in the water, but I would still see no reason at this point to make GILD a keystone of a portfolio.
(Continued) the Medicaid and CHIP expansion, as well as the ACA (Obamacare), which haven't exactly been a bad thing for the pharma industry. (If you don't believe this, wait until you see what happens to the IBB if the Supreme Court limits Obamacare.) And, as a result of this, he has always garnered major campaign contributions from various medical and hospital interest groups. (A particular friend has been the American Podiatric Association - maybe he is on the take from Doctor Scholl) Now, of course, he has announced his retirement and doesn't need all those pharma campaign contributions. He is obviously planning on a new career as a lobbyist/consultant for the HMO and PBM lobby and is positioning himself as The Consumer's Friend.
Henry Waxman was the best friend the pharma industry ever had. First of all, he was the principal author and sponsor of the Orphan Drug Act, which essentially said that if you came up with a medication for an oddball disease, the government had to pay for it. Without Waxman, no BioMarin, no Celgene, etc. Second of all, he and Orrin Hatch produced the Waxman-Hatch Generic Drug Act which, while it seemed to rationalize the approval of generic drugs, actually provided the manufacturers with much greater patent protection. He was also the principal author and sponsor of the Ryan CARE Act, which guaranteed that the government would pay for HIV treatment. Without this, there would be no Gilead as we know it. Finally, he was a major backer of
If O'Neill has even a shred of self-respect ,I would expect him to offer a rebuttal. Waiting.
I am guessing that his will languish here, but will put the 110's in play next week. Which would take this up to the 107.50 -108 area. I will buy some at the close on Friday. I really like this company and would make a more serious commitment after the expiration of the May options.
Since O'Neill's recommendations are producing a - 72% return at this point, this suggests that if you were to put $10,140 in CLDN here, there is the possibility that this might become $36,140. which would recoup all the losses created by following O'Neill.
In the interest of fairness, pointing out that he was not 100% wrong, but only 90% wrong. Which, in this game, is wrong enough to make you broke,
Let's summarize this: If you had bought 1,000 shares of each of the stocks which O'Neill recommended at the time he recommended them, you would have invested $36,140 and lost $26,600. Leaving you with $10,140. During a time when the IBB doubled. What a guru.
Hmm. Incoherent supporters. My point was that this guy has been consistently wrong. Picking a biotech stock had been like shooting fish in a barrel. O'Neill has managed to miss the barrel. By my rough calculation, if you had invested money in the IBB when he had first begun to offer recommendations, you would have doubled your investment. If you had followed his recommendations, you would have lost more than half of your investment.
I don't mean to suggest that Blair O'Neill is unqualified to evaluate biotech stocks. In his Seeking Alpha profile he says, "Currently pursuing a Computing Engineering degree, but I enjoy the constant learning that comes with investing in biotech companies."