It's not possible to invest over long periods without making some bad investments. But really bad investments should be rare. So take a moment to sympathize with the long term shareholders of Bellicum Pharmaceuticals, Inc. (NASDAQ:BLCM), who have seen the share price tank a massive 95% over a three year period. That'd be enough to cause even the strongest minds some disquiet. And the ride hasn't got any smoother in recent times over the last year, with the price 80% lower in that time. Shareholders have had an even rougher run lately, with the share price down 45% in the last 90 days.
While a drop like that is definitely a body blow, money isn't as important as health and happiness.
With just US$2,511,000 worth of revenue in twelve months, we don't think the market considers Bellicum Pharmaceuticals to have proven its business plan. We can't help wondering why it's publicly listed so early in its journey. Are venture capitalists not interested? So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). For example, they may be hoping that Bellicum Pharmaceuticals comes up with a great new product, before it runs out of money.
We think companies that have neither significant revenues nor profits are pretty high risk. There is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets. So the share price itself impacts the value of the shares (as it determines the cost of capital). While some such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Some Bellicum Pharmaceuticals investors have already had a taste of the bitterness stocks like this can leave in the mouth.
Bellicum Pharmaceuticals had liabilities exceeding cash by US$2.8m when it last reported in June 2019, according to our data. That makes it extremely high risk, in our view. But since the share price has dived -63% per year, over 3 years , it looks like some investors think it's time to abandon ship, so to speak. You can see in the image below, how Bellicum Pharmaceuticals's cash levels have changed over time (click to see the values). You can see in the image below, how Bellicum Pharmaceuticals's cash levels have changed over time (click to see the values).
In reality it's hard to have much certainty when valuing a business that has neither revenue or profit. Given that situation, would you be concerned if it turned out insiders were relentlessly selling stock? It would bother me, that's for sure. It only takes a moment for you to check whether we have identified any insider sales recently.
A Different Perspective
Bellicum Pharmaceuticals shareholders are down 80% for the year, but the broader market is up 15%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. The three-year loss of 63% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Warren Buffett famously said he likes to 'buy when there is blood on the streets', he also focusses on high quality stocks with solid prospects. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares - and the price they paid.
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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