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Closing ACOR (Acorda) outperform

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June 05, 2008 – Comments (0) | RELATED TICKERS: ACOR

Acorda stock has responded very well to the positive Fampridine-SR results, as I predicted. However, I do expect a pullback below 28 during the ensuing quiet period prior to the NDA filing and PDUFA date. The overall market weakness and biotech pessimism have had this effect on numerous other small cap biotechs achieving drug approvals this year. Ending my Acorda pick now may ultimately have a negative impact on my CAPS score, due to the artifactual inflation of points in outperforms that were initiated at low prices. Intuitively this seems appropriate, but in fact it does not reflect the actual market. For example, if I now rate Acorda as underperform, pick it up as an outperform again if it drops to 28, and then ride it back up I will gain points in the short term but eventually become relatively negative once the price hits about 40. That's because my outperform points only reflect my most recent start price, not the original one. That's how I lost my score leader position in Progenix despite having three strong picks so far. However, I think it's better that I approach CAPS with my actual investment strategies rather than as an attempt to inflate a meaningless score which is only a weak reflection of the positive predictive value of a pick.

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