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TMFHelical (99.10)

Helical Port October Update

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November 05, 2011 – Comments (4) | RELATED TICKERS: ATHN , CPHD , AFAM

October was another active month for the Helical Portfolio.  I laid out the full port in the September update, so will focus on just the changes in October and thoughts on a few earnings reports.

The portfolio ended October with a value of $60,269.67.  This is a ytd gain of  > 20% (not too shabby, especially in a mentally challenging year).  To be fair, it is lower today ($28282.17), and I will keep an eye on it and potentially be reactive should it fall 6% form the start of the month (below ~$56,500).  Cash is just over 16% at $9,817.22.  There were a number of buys, and a few sales that brought cash levels back up.

First the sales.

I sold a good chunk of my position in PPDI, 200 of the 350 shares (150 left).  PPDI has accepted a buyout offer at $33.25, so the rest will be sold soon as well.  There was the potential of another bid during October which brought the price to near $33.25, and I sold at $33.0915.  The review period is now closed, so I'll take the rest off the table soon.  I'd like $33.18 or so, and have cash so I can be a bit patient.

I also sold my Exelixis.  This was a tougher call.  I sold the full position of 300 sh at $7.0733.  I could have gotten better, but the sale has since proven very advantageous.  In October, EXEL announced very positive  trial results for its lead drug in treating thyroid cancer, giving the stock a boost.  But .. the bigger money indication is prostate, and the company was waiting on an FDA review of a special protocol assessment for that indication.  The protocol wanted pain and related endpoints, but not survival, and was aggressive.  I sold 'on the news' of the trail.  Should the SPA have been accepted this would have been the wrong move, but I lacked confidence it would be due in part to other drugs showing survival improvements in prostate cancer recently.  The FDA did not accept the SPA (the trial can proceed, but it won't 'necessarily' be adequate for approval), and the stock has since tanked.   Good 'Blink' on my part.  I may revisit, but there is no rush (as in years).

I bought EXEL in March of 2007 initially ($135sh at ~$9.32) and added in April 2010 (165sh at ~$6.32).  Overall that is ~$200 loss and a long timeframe.  Such can be biotech investing.  Overall, I think developmental oncology companies have become less attractive over the years.  A buyout would not be a surprise from here.

There were 4 buys.  I added another 100 sh of Almost Family and now have 200 sh.  This company continues to struggle with an ever reducing reimbursement environment, but is well managed and in a growth industry, at least so far as need is concerned.  Decreasing margins could make this a value trap, but the business itself won't vanish, so I think it worth the risk.  I rebought Bio-Reference Laboratories (200 sh).  The price is still cheaper than the ~$21.82 I sold this (150sh) for back in mid-June.  Low conviction here, and from an overall portfolio risk consideration, I may be better off with a company like LabCorp.  I'll have to think about that.

Two new positions were Rochester Medical (ROCM) and ICON Plc.  I picked up 200 sh of ICON (ICLR) on 10/17.  This CRO had suffered last quarter as its big hard won relationship with Pfizer was initially costly.  But the industry has been a fertile ground for private equity (Kendle and recently PPDI) and there are projections for growth.  This Irish by location only firm looked too opportunistic to pass up.  I've owned Rochester Medical before.  This catheter manufacturer has a few product advantages, but little else.  Here too, buyout may be in the cards sometime (founder in his late 60's).  Operationally, this company seems content to be a minor player, so it is a low conviction holding.  With decent gains already from the 10/17 buy of 300 sh at ~$6.88, it may not be long for the portfolio (a dumb luck trade?).

Two earnings notes stood out for me.  Risk holdings Cepheid and Athenahealth both 'beat estimates' but just modestly and the market kind of shrugged at them.  Both may well be long int he tooth.  I have long liked Cepheid, but it is not likely the 'platform of the future', and a company like Genomic Health (which I have owned but don't now) could well be the better holding for me.  I still think electronic medical records (athena) will be a growth area for a few years, but this may be an adoption dip, as later rounds of 'meaningful use' have seen their adoption dates extended.  Athena does seem focused more on the smaller customer segment (as opposed to Cerner or Quality Systems), so adoption here may be smoother.  I'll give a little slack, but don't want to see my current gains in this holding evaporate (mental stop loss?).

Overall, I've been more active this year, and had more success than I expected.  I'd love it to continue, but have the mindset that it won't.

TMFHelical

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4 Comments – Post Your Own

#1) On November 05, 2011 at 11:29 AM, TMFHelical (99.10) wrote:

To be fair, it is lower today ($28282.17), and I will keep an eye on it and potentially be reactive should it fall 6% form the start of the month (below ~$56,500).

Should read 58282.17.  Where are editors when I need them (oh yeah, I have none). 

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#2) On November 05, 2011 at 1:40 PM, portefeuille (99.60) wrote:

Post-crash the EXEL position of my "fund" still makes "the top10 gains" list (see comment #92 here) and is currently the 9th largest position (I think, see comment #93 of that post). Maybe you should adopt buying/selling in tranches, a procedure that for some reason most people around here appear to dislike ...

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#3) On November 05, 2011 at 1:44 PM, portefeuille (99.60) wrote:

9th largest position

and 3rd largest biopharma position behind DSCO and ALGETA:NO, so I obviously think it is not such a good idea to currently not have any EXEL shares in a biopharma (sub)portfolio currently ...

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#4) On November 05, 2011 at 2:07 PM, TMFHelical (99.10) wrote:

portefeuille,

Good for you with EXEL.  That is quite an accomplishment since EXEL has rarely been lower over 10 plus years than it is right now. I have no interest in owning a high percentage of this company.  It did make for a good long term speculation, but less so today than it once did in my opinion. I believe that compared to 2007, EXEL has less risk, but less potential as well.  My mistake was not selling it sooner, not missing its cycles.

I think a good case can certainly be made for owning it now, post crash, particularly if it gets bought out.  If it does not, no hurry.

This is not a biopharma port, it is healthcare.  Biopharma speculation will rarely have much of a presence. It is also not my largest account, so while I do accummulate and sell a few holdings in portions, A 'full' portion here is a bit like a tranch for me overall.  I'm not opposed to the consideration at all.  It works better I think in portfolios with many 'test' positions than those looking to stay concentrated. 

TMFHelical 

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