I speculated a few days ago about the effect of moratorium on buybacks ahead of earnings. Another poster had a unique way of answering this question: He/she called GILD's investor relations people and they said that the buybacks were being done under a 105b plan and that therefore no moratorium would be necessary. This means that the buybacks were carried out under a prearranged schedule which has been filed with the SEC, I assume. This works the same way for "automatic" stock sales by insiders, and removes the possibility that any inside knowledge could be affecting the timing of sales.
Shorts provide an essential element of the market equation. When a stock you own is dropping - on weak earnings, for example - you can usually find a respite via the rally which takes place as the shorts cover. They will be the ones buying and helping to prevent the stock from collapsing. They also temper the euphoria of a rapidly rising stock. I like to own stocks with a sizable short position since, on any good news, the shorts will have to buy the stock and accelerate the uptrend. As for GILD, the short position is very small - about half the size now of what it was a year ago. It's inherently risky to short individual biotech stocks, and, aside from a few who buy puts, I suspect few try it. I also suspect that you have the weekly put buyers to thank for a good deal of that runup this morning.
Their analysts are well respected. Let's see if this can help us break through the 129 level, which has proven sticky in the past.
I agree that Xtandi will become the dominant drug in prostate cancer treatment and has strong possibilities in triple negative breast cancer. However, unlike ibrutinib, the treatment time is fairly limited for many. Searching the prostate support sites, I do find some who have been on it for years, but for most of those with rapidly rising PSA scores, it seems to lose its effectiveness after a year or two. My own opinion is that the drug will eventually be administered pre-surgery.
I got out again after a point gain - obviously, too early, but I couldn't hang around for the close. I bought some extra shares of MDVN and INCY, since these seem to me to be the closest thing to "must have" stocks among the midstage biotechs (i.e. have actual products with good prospects, actual profits, so will not need to issue more stock, and are likely acquisition targets.) Although these bounced a bit, I was disappointed at the weakness of the bounce. The fact that the major biotechs only recovered a bit in the last half hour (when the big boys stop selling to encourage the small fry) suggests to me that this biotech correction may not be over. In contrast, GILD came off its early lows and climbed consistently throughout the day. Obviously, if you are going to short these stocks, GILD is the worst short. I will be looking to trim sails tomorrow. I was forecasting another biotech correction in February and was early. But, once started, these things tend to go on longer than one expects. I made a very nice profit last year by lightening up on biotechs, then tripling my position in GILD after the selloff - it took a couple of false starts to find a good entry point .
Now I'm searching for a new stock to ride up in the recovery, whenever that is. Suggestions would be welcome.
For comparison's sake, the biotech correction last year started on February 25 when the IBB was at 275.4 and continued until April 15, when it bottomed at 207.48 ...a loss of 25% over about a month and a half. It didn't recapture the 275.4 level until August 26, six months later.
GILD fell from a high of 84.88 on Feb.25 and bottomed out a bit earlier, reaching its nadir on April 11 at 63.50, a drop of slightly more than 25%. It recovered much more quickly than the IBB, regaining the 84.88 level by June 30. During this time, the Sovaldi/Harvoni launch was clearly in the offing, so GILD was the obvious stock to hop aboard.
PS Another interesting difference between GILD and the others: GILD came off its low almost immediately and rose gradually throughout the session. Most of the others only rallied during the last half hour, which means that the large entities just stopped selling ... perhaps to set us up for another beating tomorrow.
The IBB finished down .9% today, while GILD was only down .42%. CELG, the next most resilient, was - .62%. Then VRTX, -1.31%, AMGN -1.72%, ICPT -1.98%, BIIB -2%, and REGN -2.28%. For much of the day, the IBB was at a level which would represent a more than 10% correction from the March 20 high. It remains to be seen whether this is over. And, if a rebound comes, whether the most severely damaged stocks will rebound more vigorously. Another interesting question is whether GILD was protected from the selloff because of their huge cashflow or because, unlike most of those others, it hasn't run up lately and therefore is less vulnerable to profit taking.
Today confirms my observation that GILD is an anomaly among the biotechs. The IBB is having a hard time breaking free from the 338 range, and along with it, AMGN, REGN, BIIB, etc. seem to be drifting lower while GILD rallies.
You, sir, are psychic. Actually, in my youth, I did live in a 3-story walkup on Bleecker Street.( Not the nicer part of Bleecker west of Sixth Ave., but the junky part near MacDougal.) It was actually a 5 story tenement, but I had the front apartment on the third floor. In the nineteenth century, the section of Bleecker further east, near Broadway, was fashionable. Daniel Drew, a rival of Cornelius Vanderbilt in the steamship business, and a famous short seller lived there and was known as "The Great Bear of Bleecker Street". Drew collaborated with Jim Fisk and Jay Gould to trap Vanderbilt in a short position on the Erie Railroad. Later, he tried to do it again. But this time, Gould and Fisk had set Drew up and he lost everything. His lavish pledges to Drew University went unfulfilled and he lived on his son's charity. a warning against going back to the well once too often. Drew, incidentally, started out as a cattle dealer and was semi-literate. There is a book of sayings (probably apocryphal) attributed to him, among which is "Buying stocks without inside knowledge is like buying cattle by moonlight."
Well, her English isn't that much worse than many of our native born. (For example, that Florida cop who, just before he dropped the Indian tourist to the pavement, apparently damaging his spinal cord, radioed to his backup, "He don't speak a lick of English!") Anyway, her
English is a lot better than my Mandarin. The prophecies of doom followed by "Good Luck!" may be a cultural quirk. When I drive through San Francisco's Chinatown, I often pass the "Good Luck Restaurant". I won't be eating there anytime soon.
Carolyn, I think the above proves that you are shorting the least volatile of the major biotechs. It would have been much safer - and more profitable - to short the IBB. Or, better yet, buy one of those ultrashort biotech ETF's. You will be broke by April 15 and living in a cardboard box. But Good Luck!
Well, in this case, what I call the smaller biotechs are not the ultra longshots beloved by the retail investor. In fact, some of them, like MDVN (-5.68%) and INCY (-7.41%) carry pretty hefty market caps. Among the smallest, the most stable were DBVT (-.28%), a French company, and LMNS (even), an Israeli company.
It looks like the IBB made a periodic high on March 20. From its high of that day to today's close, it is off 8.42% Over that same timeframe, GILD is off a mere 4.45%. All of the other major biotechs have done worse: CELG -10.65%. AMGN -7.25%. BIIB -12%. REGN -8.87%. VRTX -13.44%. ICPT -8.5%. The good news here, obviously, is that you have done better by holding GILD over this slump than any of these or the IBB. And Carolyn could have done better by shorting any of these rather than GILD.
I also looked at the performance of 18 smaller biotechs I hold over this period. I expected them to do relatively worse than the majors. Surprisingly they didn't. The performance ranged from TTPH (- 11.81%) to HZNP (+10.74%). I have to thank "betting__freddy", a poster here, for getting me interested in that one. Who says these boards are useless?
What exactly is in this "great pipeline" I keep hearing about. All that I'm aware of is the "one-pill-fits-all" HepC drug.
That's a fair summation of the bear case ... except for the inevitable comparison to Apple. The bull case, of course, is that GILD will crush earnings and run up dramatically. The investment banks don't know this. The analysts don't know this. The mutual funds don't know this. The hedge funds don't know this. Only a few canny individuals on this board know this.
I don't think that his poster is our old friend, akadvisor, ...unless he has undergone a strange transformation. His id seems to have added an "a", and I think I know what that stands for.