Chrees’ wild world of investing
I figured it’s a good time to look at my stocks again and muse out loud as to what’s good (some), what’s bad (more), and what’s ugly (too many). In looking back over this list, I can hear Jim McKay intoning “the agony of defeat” and picture the skier wiping out. Keep in mind these are random thoughts and my investment approach entails a lot of risk. This is only a portion of my investments, but the piece that gives me a lot of fun. If by ‘fun’ you mean watching one of your stocks move 30% down for no good reason…
The ugly
Let’s start with the bad ones first. CV Therapeutics (CVTX) is down about 50% from where I bought it. Questionable management decisions, heavy dilution, slow drug adoption and a (willfully?) misunderstood trial have combined for a perfect storm to drive the price down. Is it still worth holding? Possibly. The MERLIN trial might give them label expansion on Ranexa next year. If things go moderately positive I’d say the stock could see mid-$30s by the end of next year. Definitely not my original timeframe, but possibly a good entry point here in the pre-teens. Risky, but I think worth holding.
Cortex (COR) had a major setback when the FDA placed a hold on their trials due to questions on their animal data. The stock plummeted 50%, which means it is back to my buy-in point. Everything I have heard and read on the hold leads me to believe it will be lifted soon, which will lift the stock back to prior run-up levels. Of course more and more investors are anticipating that so the stock price has been edging back up already. I see this stock in high single digits in a year if no business partnering is done, pre-teens if a major pharma participates. The technology is interesting and (I think) promising.
The bad
Northfield (NFLD) has been my one exception to the wisdom of not falling in love with a stock. I think the potential here is enormous, but they have a lot of hurdles to clear first. And that was before The Wall Street Journal put out several hit pieces on the company and a U.S. Senator questioning their clinical trial procedures. Despite all that, they have finished the trial and now await the results. If approved, I think adoption of the product will go slower than many anticipate but that stills gives incredible upside. Everything rests on the trial results and how they are interpreted. I’ve seen too many primary endpoints obtained but poor stock-price results.
Oncolytics Biotech (ONCY) has seen a 50% drop in price during the year, but I’m still in the money. I expect the price to fluctuate wildly on this one over time, so I’m not too worried when I see this happen. The technology, while risky, appears very promising. My biggest worry is whether their current management is the right team to see this to fruition. It’s a radical technology that I think will see a lot of resistance, but if early clinical data can be sustained as future trials go along it could pioneer a new approach.
The falling knives
I’ve bought three stocks when I thought the market overreacted to bad news and hammered the stock price down. Fortunately all three are in the money for me, but unfortunately not at significant amounts. We’ll see if that changes.
NMT Medical (NMTI) had some disappointing news just after being touted by Kramer. I didn’t agree with his projections, but the products have potential. I’m going to hold it a while longer and see where it goes.
ViroPharma (VPHM) had bad news from the FDA on the possibility of generics entering the market sooner than current rules allow—it only sells one drug right now, so that would hurt it tremendously. However good news from early trial results on their Hep C candidate that they are developing with Wyeth will boost the stock over time. That being said, if you can’t spin good news from a Phase I trial, you’re not doing your job. I think this was another Kramer recommendation that went south on bad news just afterwards—this one may have the biggest potential of all. Again, I think the market grossly overreacted to the FDA message and it should be back up to the $20s again soon.
Neurocrine Biosciences (NBIX) may be the biggest knife, or biggest fall I’ve tried to catch. Going from the $70s down to single digits, this one entails a lot of risk but potential decent reward as well. The FDA noted that certain levels of their insomnia drug couldn’t get approved and Pfizer pulled out of their co-development deal. Their pipeline still looks promising to me, and from these levels could see doubling or tripling of price with just a little good news. We’ll see if the trials and FDA provide that news.
The good
Yeah, there actually has been some good news. Alexion Pharmaceuticals (ALXN) made me a nice profit as the stock actually did exactly what I thought it would do. I sold it around the $35 level and it has floundered there for a while. It is starting to move up again on anticipation of positive news, but I don’t see it sustaining much higher prices long-term. It may be a good short term play, but I’m avoiding it for now.
A co-worker of mine mentioned Atari (ATAR) and I bought when it dipped below 50¢, dumping it when it hit 75¢ for a quick 50% return. I’m keeping my eye out for another such opportunity but won’t be disappointed if it doesn’t arise.
The wildly speculative
As if most of the above aren’t wildly speculative enough... I took a position in Adherex Technologies (ADH) yesterday. If GlaxoSmithKline fully options in on one of the licensing deals, this should go up 4x. Don’t put your kid’s college fund on this one, though.
Well, those are the major ones. Now we’ll see how my speculations do. Again, this is only part of my investments, but the ones I have fun seeing if they pay off. Returns for the year? Q1 up 10%. Q2 down 20%. Q3 to date, up 8%. So I’m almost back where I started the year, but with biotechs back in favor and trial data upcoming we'll see how these move in the last 4 months. I'm buckled up.
The ugly
Let’s start with the bad ones first. CV Therapeutics (CVTX) is down about 50% from where I bought it. Questionable management decisions, heavy dilution, slow drug adoption and a (willfully?) misunderstood trial have combined for a perfect storm to drive the price down. Is it still worth holding? Possibly. The MERLIN trial might give them label expansion on Ranexa next year. If things go moderately positive I’d say the stock could see mid-$30s by the end of next year. Definitely not my original timeframe, but possibly a good entry point here in the pre-teens. Risky, but I think worth holding.
Cortex (COR) had a major setback when the FDA placed a hold on their trials due to questions on their animal data. The stock plummeted 50%, which means it is back to my buy-in point. Everything I have heard and read on the hold leads me to believe it will be lifted soon, which will lift the stock back to prior run-up levels. Of course more and more investors are anticipating that so the stock price has been edging back up already. I see this stock in high single digits in a year if no business partnering is done, pre-teens if a major pharma participates. The technology is interesting and (I think) promising.
The bad
Northfield (NFLD) has been my one exception to the wisdom of not falling in love with a stock. I think the potential here is enormous, but they have a lot of hurdles to clear first. And that was before The Wall Street Journal put out several hit pieces on the company and a U.S. Senator questioning their clinical trial procedures. Despite all that, they have finished the trial and now await the results. If approved, I think adoption of the product will go slower than many anticipate but that stills gives incredible upside. Everything rests on the trial results and how they are interpreted. I’ve seen too many primary endpoints obtained but poor stock-price results.
Oncolytics Biotech (ONCY) has seen a 50% drop in price during the year, but I’m still in the money. I expect the price to fluctuate wildly on this one over time, so I’m not too worried when I see this happen. The technology, while risky, appears very promising. My biggest worry is whether their current management is the right team to see this to fruition. It’s a radical technology that I think will see a lot of resistance, but if early clinical data can be sustained as future trials go along it could pioneer a new approach.
The falling knives
I’ve bought three stocks when I thought the market overreacted to bad news and hammered the stock price down. Fortunately all three are in the money for me, but unfortunately not at significant amounts. We’ll see if that changes.
NMT Medical (NMTI) had some disappointing news just after being touted by Kramer. I didn’t agree with his projections, but the products have potential. I’m going to hold it a while longer and see where it goes.
ViroPharma (VPHM) had bad news from the FDA on the possibility of generics entering the market sooner than current rules allow—it only sells one drug right now, so that would hurt it tremendously. However good news from early trial results on their Hep C candidate that they are developing with Wyeth will boost the stock over time. That being said, if you can’t spin good news from a Phase I trial, you’re not doing your job. I think this was another Kramer recommendation that went south on bad news just afterwards—this one may have the biggest potential of all. Again, I think the market grossly overreacted to the FDA message and it should be back up to the $20s again soon.
Neurocrine Biosciences (NBIX) may be the biggest knife, or biggest fall I’ve tried to catch. Going from the $70s down to single digits, this one entails a lot of risk but potential decent reward as well. The FDA noted that certain levels of their insomnia drug couldn’t get approved and Pfizer pulled out of their co-development deal. Their pipeline still looks promising to me, and from these levels could see doubling or tripling of price with just a little good news. We’ll see if the trials and FDA provide that news.
The good
Yeah, there actually has been some good news. Alexion Pharmaceuticals (ALXN) made me a nice profit as the stock actually did exactly what I thought it would do. I sold it around the $35 level and it has floundered there for a while. It is starting to move up again on anticipation of positive news, but I don’t see it sustaining much higher prices long-term. It may be a good short term play, but I’m avoiding it for now.
A co-worker of mine mentioned Atari (ATAR) and I bought when it dipped below 50¢, dumping it when it hit 75¢ for a quick 50% return. I’m keeping my eye out for another such opportunity but won’t be disappointed if it doesn’t arise.
The wildly speculative
As if most of the above aren’t wildly speculative enough... I took a position in Adherex Technologies (ADH) yesterday. If GlaxoSmithKline fully options in on one of the licensing deals, this should go up 4x. Don’t put your kid’s college fund on this one, though.
Well, those are the major ones. Now we’ll see how my speculations do. Again, this is only part of my investments, but the ones I have fun seeing if they pay off. Returns for the year? Q1 up 10%. Q2 down 20%. Q3 to date, up 8%. So I’m almost back where I started the year, but with biotechs back in favor and trial data upcoming we'll see how these move in the last 4 months. I'm buckled up.
posted by Dwight at
9:34 AM
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