Fermion's Biotech Investing (All Welcome)

[target2019]

Many news stories out yesterday about DOJ investigation of generic drug manufacturers. Combine that with election news...

 

[NW-Bound]

On the Web, they are calling it a "biowreck". I do not have as much as Fermion, but enough to feel the pain.

 

[NW-Bound]

So, shortly at the market open I held my nose and bought a token amount of a biotech ETF I already have. I think I already overweighted biotech relative to the S&P, so bought just a bit for the bragging right that I bought at the bottom.

Well, the sector is moving up today. It's too early to see if the gain holds, and the sector will continue to recover. Else, I just threw away good money after bad.

Darn, buying low is never that easy, yet people just never learn. When some stocks recover, they always say "woulda, shoulda", but when given the chance to buy, they just stand there, shaking in their boots.

 

[LOL!]

They also say things about catching a falling knife.

 

[NW-Bound]

There's that!

So, one has to ask "If I am wrong, is it going to be a minor cut, or getting my hand chopped off?".

 

[Fermion]

Probably everyone else will get their hand cut eventually. Big biotech has a much lower average PE than the rest of the market and I do not see a oversupply like oil to justify a long term crash. Either everyone else eventually joins the losing club with their investments or biotech will have its day.

 

[NW-Bound]

Having nearly 1/2 in cash, and little in bond, I expect to suffer cuts requiring no more than stitches, and if I am really really lucky, just band aids.

Can't afford major surgeries or have my hand reattached, not with healthcare as expensive as it is now.

 

[NW-Bound]

So, shortly at the market open I held my nose and bought a token amount of a biotech ETF I already have. I think I already overweighted biotech relative to the S&P, so bought just a bit for the bragging right that I bought at the bottom.

Well, the sector is moving up today. It's too early to see if the gain holds, and the sector will continue to recover. Else, I just threw away good money after bad. ...

So, the market fizzled out on Friday, but this biotech ETF held out for a 5% gain from where I bought. Today, the S&P went up 2.22%, but all of my biotech holdings went up a lot more.

Yep, it's like playing with fire. Not recommended for the weak hearted. Big gains come with the risk of big losses. No exceptions.

 

[Fermion]

Biotech is exploding higher premarket. I guess the reaction was predicted if we got certain results, but man if those gains hold up people who bought in recently at the "bottom" like NW are sitting pretty. I am green right now, which is awesome.

 

[NW-Bound]

Ah, it may not be enough to cancel out my loss elsewhere, such as EM. Oh well, it's better than losing everywhere.

This shows one should stay diversified. I have learned never to go "all the way" in anything, although I often overweigh depressed sectors.

 

[wmc1000]

SOLD 500 at $79.005 - still have 795 shares. All in the green

 

[NW-Bound]

I am looking to lighten up on biotechs. Just sold a covered call on an ETF.

I always spread out my trades, and do just a few contracts at a time. If it continues to go up, I will sell more calls.

 

[Fermion]

I sold some Gilead at $80, should have sold more. I re-bought at $75 today but it may go lower still.

 

[NW-Bound]

So, biotech slumps today. If this continues, my consolation is the premium from the covered call I sold last week.

Did I say that these covered calls amount to 1% of portfolio return for me in the last 12 months? They mostly expired worthless. When one's WR is 3 or 4%, every percent counts.

 

[Fermion]

I am trying to figure out year end taxes and have not bought back all of the biotech I sold.

I have about $40,000 in realized gains in bio and about $15,000 in unrealized loss (both for this tax year). If bio takes off again before end of the year I will be over the ACA limit but if I were to sell and realize the losses, my total gain would put me just about right for my subsidy.

Not sure what to do...

 

[Fermion]

Bought back 4000 of Endocyte today at $2.72

I have no idea why it is trading so low again as there is not any obvious news. Tax selling? It is trading for about 90% of cash on hand.

Selling these shares at $3.05 sometime this year hopefully.

 

[NW-Bound]

Seeing that biotech is halting its slide, I just bought to close out an out-of-the-money option call I sold less than 2 weeks ago.

Did not make a lot of money (a 3-figure sum). In fact the gain will not even cover the 3-day cost of a BnB apartment in Cinque Terre I am going rent for the trip next spring. Still, every little bit into that travel piggy bank helps.

 

[NW-Bound]

Biotechs take it on the chin today. Not just biotech but all pharmas. Aye, aye, aye...

I am up well overall, but only 3/5 of what it could be without the pharmas. Aye, aye, aye...

Will I, or dare I buy more? No, I am not selling, but I have enough to cry "Uncle".

 

[Fermion]

Every other company is allowed to make money for their investors, but not biotech

 

[NW-Bound]

You are better off making a living selling non-essential products.

I remember in 2003 reading about phone companies making $1 billion selling ring tones. Yes, simple ring tones in those days to allow people to customize their phones. It's not a matter of life-and-death, and people did not have to buy the ring tones, but they did. Ka ching!

 

[wmc1000]

At least we are seeing some positive light with GILD - although still needs to go a bit more until I am in the green. And the .47 ex-div yesterday doesn't hurt either

 

[target2019]

Tow of the pure biotechs mentioned early on in this thread are discussed (AMGN and ABBV).

The video includes a brief initial fundamental analysis on the following five fairly valued healthcare selections: AbbVie Inc. (ABBV), AmerisourceBergen Corporation (ABC), Amgen Inc. (AMGN), Cardinal Health Inc. (CAH) and Teva Pharmaceutical Industries (TEVA).

 

[NW-Bound]

Very interesting data shown for ABBV, which I have never looked at. The increase in earnings over the last 5 years was impressive at double digits.

However, when I went on my brokerage site to look at it some more, found that the free cash flow increase was only 2.2% annually.

So, what gives? I would like to understand that more.

 

[target2019]

Here is the FCF chart. I do not recall if this was in the video.

 

[Fermion]

Gilead was going up but took a hit on the chin when a jury awarded Merck some 10% royalty on Gilead's HCV drugs. Gilead bought Pharmasset and Merck bought Identix. Evidently Identix thinks it had a patent before Pharmasset although the case is far from over and will be appealed.