Use access key #2 to skip to page content.

TMFHelical (98.70)

Helical Portfolio - The First Year

Recs

8

January 04, 2012 – Comments (0)

Return on the Year

Well, it has been an exhausting year for investors.  One that certainly tested an investors behavioral instincts, with the fight or flight switch flipping back and forth seemingly monthly.  I last updated the Helical healthcare portfolio after October, and at that time it was in better shape with a value of $60,269.67.  Those last couple of months were a struggle, but overall I can't complain with ending the year at $56,305.58, representing a return of 12.2% on 2011.  The portfolio was 9.8% cash at that time.  This compares very favorably with the S&P500 which was up just 2.04% on the year, with all of that return being in the form of paid out dividends.  Comparison to the S&P is perhaps a standard, but more important is that the account grew, since this is my Roth after all.   It is more important to outperform in down to flat years than in the high return ones in my opinion, and while this is just one year -- so far so good.   I should also note that my larger self managed IRA account that I have blogged on in the past did not perform as well, being essentially flat on the year (up ~0.2%).

The past couple of months were active in the Helical Portfolio, so while I have a few year end evaluations and exercises I'd like to go through, I'll spend this post just updateing the recent activity and present status of the account.

Return on the Year

Well, it has been an exhausting year for investors.  One that certainly tested an investors behavioral instincts, with the fight or flight switch flipping back and forth seemingly monthly.  I last updated the Helical healthcare portfolio after October, and at that time it was in better shape with a value of $60,269.67.  Those last couple of months were a struggle, but overall I can't complain with ending the year at $56,305.58, representing a return of 12.2% on 2011.  The portfolio was 9.8% cash at that time.  This compares very favorably with the S&P500 which was up just 2.04% on the year, with all of that return being in the form of paid out dividends.  Comparison to the S&P is perhaps a standard, but more important is that the account grew, since this is my Roth after all.   It is more important to outperform in down to flat years than in the high return ones in my opinion, and while this is just one year -- so far so good.   I should also note that my larger self managed IRA account that I have blogged on in the past did not perform as well, being essentially flat on the year (up ~0.2%).

The past couple of months were active in the Helical Portfolio, so while I have a few year end evaluations and exercises I'd like to go through, I'll spend this post just updating the recent activity and present status of the account.

November Activity

The Helical healthcare portfolio entered November with 16% in cash ended November at $55,132.27 with 41% cash.  After losing more than 6% in the month, some reassessment was performed and cash raising was done.  I could have been a bit more proactive here.

Sold were my entire positions in Cepheid (135sh CPHD for $4,689.01), Athenahealth (50sh ATHN for $2,764.94), and Complete Genomics (125sh GNOM for $622.98).  I also liquidated the remaining portion of Pharmaceutical Products Development Inc (150sh PPDI for $4,955.13).  PPDI was awaiting a buyout which has since taken place, so the holding was a bit of a cash proxy at that time anyway.

Complete Genomics was an easy sell. It was always speculative and with concerns that revenue growth had to outpace the per genome price drops.  It didn't.  This bears watching, but until they can show top line growth that hints that losses won't be 'forever', I'll stay on the sidelines.

Both Cepheid and Athenahealth reported quarters that had beat expectations, but just very slightly and neither stock moved on earnings.  I saw this as a sign that perhaps the market was tiring of the growth 'story' with these stocks, but delayed action.  The fully expected delay in the mandated dates for electronic health record compliance awards is likely to mitigate Athena's short term growth, but overall I still like the space.  I am also increasingly annoyed by what seems to be excessive self serving by the management here.  Cepheid was a hard decision, as I've had a long profitable affair with this one.  There are potential catalysts as well as they may soon have a co-approved companion diagnostic to go alongside with their historical focus on infectious disease tests.  I am not sure though that PCR will be the platform of choice in the future, so perhaps time to book gains and look at others in the space. I had been paring this back a bit all year, though often prematurely.

December Activity

In December I began buying again.  I do struggle still with sitting on cash for any length of time, but have gotten more comfortable not being 'fully invested' over the years. 

 

On 12/7 I added to the ICON Plc position (100sh ICLR for $1,632.99) and rebought Cardinal Health (100sh CAH for $4,195.99).  I had sold CAH in June at a modestly higher price and while I would have loved a cheaper price, I am content to be back in this relatively low risk space.  I continue to think that the drug distributors are potentially invasive companies that were once content to take on and make profitable the low margin distribution business, and are now looking up market to more profitable business aspects with their logistic and IT expertise - a now classic Christensen-like invasive model.  I chose to get back into Cardinal vs. going with McKesson, but it was not a clear decision, and I may chose both in the future.  McKesson is showing more signs of moving up market of late.

 

On 12/15 I bought back into Genomic Health (200sh GHDX for $5,182.98) and also purchased health care provider Wellpoint (100sh WLP for $6,425.59).  Like with Cardinal, I had sold Genomic Health back in June as part of a cash raise (looking at my June post, I indicated a partial sale, but it was a full sale, I believe I confused Genomic Health and Complete Genomics when noting what I still owned).  I felt that until their new tests were to get to market they could be ignored for a short time, but I was late getting back in.  The sale on June 13th was for $25.3 per share, and the rebuy on 12/15 higher at $25.88 and there were opportunities in the fall to own this under $20.  Essentially, I am favoring Genomic Health over Cepheid moving forward, and will likely increase my position on weakness.

 

I always felt that I wanted to own a healthcare provider, particularly a larger more established one, as the mandate for health insurance got closer.  In the interim, I thought these companies would struggle with the removal of the payment caps and inability to deny on pre-existing conditions.  I didn't give the management enough credit apparently, and this concern was widespread enough that the companies were overly cheap.  Companies like WLP and UNH had a very strong early 2011, but the later half of the year gave another opportunity to get in.  Wellpoint isn't priced for any growth, with forward P/Es in the single digits, but the larger more established firms should be best positioned for the difficult task of competing on exchanges.

 

Outlook

 

I enter 2012 much like 2011, with low expectations.  There could be the opportunity for double digit returns if Europe doesn't blow up, but I think it will -- or at least it will continue to look that way.  I plan to be aggressively defensive in 2012 i.e. still own higher risk securities, but with a quick trigger and a focus on money management.

 

I'll look back at 2011 more in additional posts.

 

Helical Port Holdings

(% of port on 1/5, includes nice recent increase in MAKO)

AFAM   200 share  5.8%

BRLI   200 share  5.7%

CAH    100 share  7.2%

CVS    100 share  7.3%

GHDX   200 share  8.9%

HCN     50 share  4.7%

ICLR   300 share  8.9%

JNJ     60 share  6.9%

MAKO   200 share  9.9%

MR     100 share  4.5%

ROCM   300 share  4.4%

SGEN   150 share  4.3%

WLP    100 share 11.9%

Cash              9.6%

 

TMFHElical

Home Coverage Fool

 

P.S. - I'll likely add money to this account soon (didn't in 2011), and start talking both CAGR and IRR in 2012 if I can figure out how.

0 Comments – Post Your Own

Featured Broker Partners


Advertisement