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TMFHelical (98.70)

So What is in the Helical Port

Recs

7

November 07, 2010 – Comments (0) | RELATED TICKERS: PPDI.DL , KNDL , GHDX

 

In my last blog post I noted that I now have a real (Roth) portfolio fully invested in the healthcare / biotechnology sector.  I also worried that talking about it would be difficult and restrictive due to TMF disclosure, and couldn't note the actual contents of the port at the time (not all anyway) due to a recent inclusion of Cardinal Health.  Well, the reigns are loosened on the disclosure restrictions, so it may not be quite so impractical.  I may as well note what is currently in the port and why, though again, I won't really track it as a healthcare port until the year changes (as it was only mostly healthcare for most of this year).

Listing the holdings is putting the cart a bit before the horse, as I have not laid out the philosophy on how I will likely invest this port (or my own in general), or the sub-sectors that get consideration.  These aren't really fully fleshed out in my own mind  as yet (kinda sorta are), and again, the exercise of posting on the port is intended for just that purpose i.e. to help crystallize my thinking, musing, etc.  I continue to see CAPS as my own notebooking software, and simply don't mind that it is public (its not like you are getting my account number - LOL).

Just remember, that I am not a money manager, advisor, or in any way trained to be any of those things.  What I am is an extroverted amateur with a bit of an obsessive investing hobby (could have worse ones to be sure).

The portfolio currently has 12 holdings.  I'll likely keep it under 20, as I want to stay concentrated (and this isn't my only account after all).  10 to 15 will likely be the norm (we'll see).  I will also likely invest this a little more aggressively than other ports, since it is in the Roth, and focused.  But .. my current macro thinking is that this is a time to be invested, but more conservatively.  A time when the 'haves' should do well, and the speculations will likely struggle.  So I think this is a pretty conservative port as of right now.

The alphabetical list:

BIO .. 20sh $1952 .. Bio-Rad is a solid biotech tool maker and long term performer.  Room for tightening on operations.  Run by the son of the founder who is himself into his 60s (M&A candidate?).  I like the toolmaker sector in general, but am hesitant right now due to comparisons to past stimulus.  Middle Tier Holding.

BRLI .. 150sh $3285 ..Bio-Reference Laboratories is in the business of diagnostics and clinical laboratory services.  I like how they are embracing new higher margin tests.  Speculation due to expectation of continued growth and my own opinion that the central laboratory model for clinical services will see innovative disruptions.  But for now, the growth is solid and eventual expansion of health services should favor the business. 

CAH .. 70sh $2464.70 ..A decently valued dividend paying pharmaceutical toll both.  Expansion in care access (eventually) should benefit this company, and in the meantime they will just continue to generate profits.  Core holding.

CPHD .. 300sh $6579 ..Cepheid makes diagnostic products that look at genetic profiles.  Single gene changes by PCR.  I love the razor / blade model, how they are part of the trend to bring information nearer to the patient (but not all the way to the home), and how they entered this market by first going to infectious disease (MRSA) to establish an install base.  I may be a bit heavy here due to a very successful year for this company, but I still like it. Middle tier holding.

CVS .. 75sh $2320.50 ..CVS is another solid dividend paying value play.  Not quite so stodgy, as owning Caremark and getting on the clinic trend with Minute Clinic (love this trend) shows they are looking to grow the business in innovative but hopefully synergistic ways. Core Holding

EXEL .. 300sh $1308 ..Exelixis was bought some time back as a buy and forget biotech speculation (new drug developer, which is what most people think of as biotech).  Still OK, and with lots of chances, but I’m not sure of the legs here.  I think they should one day get a product, but it won’t be anything more than an incremental improvement in oncology in my opinion, and the market wants more than that.  Should probably look for a better ‘biotech’ speculation.  Perhaps alongside this holding.

GHDX .. 200sh $2958 ..Genomic Health makes diagnostic tools that help direct breast cancer treatment and is expanding its platform to other indications.  Array based diagnostics are not as detailed as single gene analysis tests, but can have broader applicability.  Middle Tier holding.

JNJ .. 90sh $5818 .. Johnson and Johnson is a great foundation holding, own it in my IRA as well.  There aren’t many no brainers in investing, but it seemed to me that when JNJ, one of the few remaining AAA rated companies was able to take out long term debt at rates below their equity yield, that the equity was clearly a buy (and so I did).  Love the mix, a healthcare fund onto itself.  Core Holding.

KNDL .. 300sh $2718 ..Kendle is a contract research organization that runs clinical trials for pharma.  Right now, the industry seems to be favoring the larger players and preferred provider agreements, which Kendle seems to struggle to win.  The company has a large slug of debt that they seem to be dragging their heels on refinancing (perhaps they just can’t get the terms they need to).  Speculation, but with a lot of upside should the house get in order.  The industry is recovering from the crises and pharma restructuring.  Should it continue, this will survive and hopefully flourish (or get absorbed).

MDT .. 100sh $3535 ..Medtronic is a solid large cap medical device company.  Its heady growth days are likely behind it, but it is a solid value holding in my opinion, and I favor value right now.  Core Holding

PPDI .. 200sh $5112 ..Pharmaceutical Products Development Inc is another CRO that runs clinical trials for pharma and biotech.  Serves the industry and gets paid for it, but doesn’t take on the risk of success (a little actually, but not much).  Unlike Kendle, here we have a clean balance sheet and nice dividend.  Has grown by acquisition without picking up huge goodwill – outstanding! Core holding.

RODM .. 1000sh $3160 ..Rodman & Renshaw is an investment bank.  Huh?  Well, they specialize in PIPES and reverse mergers, and still do most of their business getting funding for biotech, but are expanding as well (such as buying the OTC board).  Worst good balance sheet out there (IMO), as the assets section is filled with speculative investments.  May eventually end up in another port or sold, but counts right now as healthcare related to me.  Speculation.

Cash – only $35 and change.  $41,245 altogether, a decent sized port to follow and work with.

What isn’t in the port?  Well, I own West Pharmaceuticals (WST), Healthcare REIT (HCN), and GSK elsewhere, and they would all make the cut here, but aren’t here.  In part that is because these are all solid, and this account will generally be more speculative.

 

More later.

TMFHelical

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