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TMFHelical (98.84)

August08 CAPS update

Recs

3

September 02, 2008 – Comments (0) | RELATED TICKERS: WLP , BARE.DL , UNH

Shame this blog has just become a monthly update on my port.  It is what I expected most would do with blogs, but I guess I had that wrong.  I'll be attending a 'future of healthcare' session in the coming weeks, so I'll be sure to blog about that at least, and also get some commentary up about the healthcare platforms of the two parties as well.  I had made it into the top 300 before the moves of this past month - mostly new picks that aren't panning out (yet?).

 

Ended - IVGN, FUJI, DNA, and PBE

 

Started - CRME, CVH, UNH, WLP, AMLN, BARE

 

Ended first:

 

I was bullish on Invitrogen (IVGN) because they seemed to have given up their serial acquisition ways and the re-focus on operations was working out.  Great company with great products, but bad investment when they were buying.  Shortly after I made the pick IVGN made an offer for Applied Biosystems (my once upon a time employer).  Now I think the combined company could be better, and IVGN may even have learned from past merger mistakes - but I'd just as soon wait and see.  When this got (miraculously?) to +5 I was out.

 

Powershares Dynamic Biotech (PBE) is a favorite index for this sector.  I'll book accuracy and re-up (forgot).  I've done this twice, so the third re-up is permanent (no need to be an accuracy hog and that doesn't really benefit so much on bullish calls anyway).

 

Fuji was red thumbed on the naiveté that their operations would translate easily to drug discovery / development.  It won't and I expect more pain for this company while it considers transition.  I may re-up this bearish pick.

 

And lastly on ended picks, a mistake.  I red thumbed Genentech after shareholders bid this immediately up over the Roche buyout offer.  I assumed that since Roche was already a majority owner, this was a fait accompli - but I was too quick to react.  Roche acted as chartered and the price was independently reviewed, and consequently rejected as too low.  No telling if Roche will offer more or simply pull out and be happy to own 'most' of DNA.  Botched arbitrage on my part - always a difficult game to play.

 

New Picks:

 

Healthcare providers.  The uncertainty in this market segment, largely due to the election cycle and the expectation that 'change' is in the air, has companies in this market segment trading at substantial values compared to their past histories.  But - history don't mean nothing if the market changes.  I think the complexity of changing the system is underappreciated and business as usual will continue for some time (we'll see), so while I missed an apparent bottom, it was time to get bullish on some of the major players like Wellpoint (WLP), United Health (UNH), and Coventry (CVH).  I want/expect a +20 on each of these in the next 12 months and then we'll see where they stand as a group.

 

Cardiome (CRME) has an anti-arrhythmia drug that will one day be approved, but the FDA is doing some foot dragging, as is their way of late.  It will get approved and the stock should react positively when it does.  The injectible formulation is partnered (Astellas) but the oral version appears effective as well and is fully owned.  May have to wait for this to play out, but very confident it will.  I would also not be surprised by a buyout offer for this company.

 

Amylin (AMLN) - to quick again.  The Byetta news is overblown in my estimation, but I should have waited for the full disclosure before going bullish on this one.  Gotta slow that trigger finger.  I expect LLY will make an offer here, but not sure when.

 

Lastly - Bare Escentuals (BARE).  A value growth play that has gotten a good amount of blog activity from TMFSarahGen.  And yes, cosmetics and wellbeing (------stretch-----) can go hand in hand, so again, this is fair game for this CAPS port.  I'm calling BARE as a healthcare / biotech selection -- loosly.

 

Sector Watch:   Healthcare REITs have had a terrific run of late.  I own HCN myself but have been cutting back on the holding recently.  I'm inclined to mark the whole sector 'underperfrom' except for one thing - quality.  These are usually great companies.  I may try to grab some green points with red thumbs when interest rates start to move up (doubt that will be soon) but mostly that is in the hope that I can get bullish on this sector again sometime.  I didn't get enough out of the current run-up.

 

TMFHelical

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