The GBMB in review, part I
I decided to look back at the first twelve months of GBMB to evaluate how the strategy could be improved over the next twelve months. I was surprised to find that I had made more than 30 GBMB picks, although I only ended up buying about 20. I looked at the prices when I reviewed the stocks (PR), buy thresholds (BT), the actual buy prices (BP), the nadirs after I bought (N), my sell prices (SP), and the peaks after I sold (P). The results, naturally, are extremely painful.
I’ll start by reviewing the stocks I bought and sold:
Myriad Genetics (MYGN) – PR 24.3, BT 23, BP 22.3, N 20.9, SP 25.3, P 25.5. I did exceptionally well with Myriad, buying (BP) relatively close to the bottom (N) and selling (SP) extremely close to the top (P). Not only that, I picked them up again at 18 after they gapped down and sold them at 21 (further below the next peak of 23.71, but also before they retraced to 18).
Molecular Insight (MIPI) – PR 2.04, BT 2, BP 1.9, N 1.19, SP 3.8, P 4.5. Another excellent outcome, although I see this as one of my worst GBMB mistakes. I doubled my investment by selling appropriately on a manipulated spike. The company is now bankrupt and worthless. Whew!
Amicus (FOLD) – PR 3.87, BT 3.7, BP 2.9 & 2.1, N 1.95, SP 3.32 and 2.6, P 7.09. Ouch, this will prove to be a recurrent pattern. I confused the issue on Amicus by buying in two separate installments and did fairly well calling the bottom, especially on the second buy. I sold way too early and left about $15000 on the table. I think Amicus’s continued rise is counterintuitive, but Portefeuille called it and I should have listened.
Repligen (RGEN) – PR 3.59, BT 3.5, BP 3.25, N 3.15, SP 3.63, P 5.34. Again, I did a good job calling the bottom and bailed out way to early. $9000 of potential gains lost. The share price plunged back to my original buy level on a negative catalyst in early March, but this was a predictable binary which I could have easily avoided.
Intermune (ITMN) – PR 10.65, BT 10, BP 10.4, N 8.66, SP 11.58, P 46. My real mistake here was buying at a price above the GBMB threshold. Why did I do that? The nadir ended up being much lower. I don’t blame myself for the entire $67000 in gains left on the table here, since I couldn’t have predicted the European approval of pirfenidone. But I could have held out another month and sold over 15. Once again, I was so happy to be in the green after being in the red that I got trigger happy.
Rigel (RIGL) – PR 7.27, BT 7, BP 6.49, N 6.37, SP 7.21, P 8.8. I missed more potential gains here, but I called the bottom perfectly and made my gains in about three weeks. I would have had to hold through some minor retracements to reach the peak price, and then have been lucky to sell before the share price drifted back down to 6.5.
Optimer (OPTR) – PR 10.07, BT 10, BP 7.95, N 7.78, SP 9.7, P 13.13. Another example of a hasty ill-advised sell on a perfectly selected stock. I nailed the bottom and grabbed a profit after two months despite the fact that events were unfolding exactly according to my investment thesis. Missed gains are now at $7000 and counting.
Exelixis (EXEL) – PR 4.89, BT 4.5, BP 3.69, N 2.88, SP 4.7, P 12.45. Wow, hard to believe that Exelixis was under 3 just eight months ago. Amusingly, I sold the day before they began their voracious upward climb on positive data for XL184. In my defense, the data could have been negative and the share price would have gone back in the toilet. But it wasn’t. Missed potential gains of $23000.
Biodel (BIOD) – PR 4.2, BT 4, BP 3.95, N 3.34, SP 3.65, P 5.68. This was a special situation in which the peak actually occurred before my sell. I made a different kind of error here, where I held on for new highs despite a retracement from the peak. I assumed that the highest share price would occur shortly before the Linjeta PDUFA, which was incorrect, and eventually sold for a loss just before the PDUFA. At least I didn’t get decimated by holding through the PDUFA. Somewhat later I recovered my losses buying Biodel at 1.75 and selling it at 2. A day after I sold, some analyst made a fuss about the company being undervalued and the share price spiked to 2.75. Sigh.
Arena (ARNA) – PR 1.62, BT 1.6, BP 1.6, N 1.27, SP 1.51, P 2.38. Another special situation, where I had to ditch out before the PDUFA or risk losing my whole stake. I waited and waited for the share price to jump but had to take a small loss. I could have come out a winner if I sold on the actual PDUFA date before the decision, but it wasn’t worth the risk. The share price peaked much higher on irrational speculation after the FDA rejection, but I can’t blame myself for missing out on that.
Alnylam (ALNY) – PR 13.59, BT 12, BP 10, N 8.96, SP 11.28, P 11.78. For once my itchy trigger finger strategy paid off. I sold my initial stake after a large jump on the last earnings statement, which after careful review did not seem justified. For once I was correct, as the stock rapidly gave up all of that day’s gains and then some. I was able to get back in with a larger bet at 9.5, which I’m feeling quite good about.
I’m starting to get horrendously bored with my own blog post, which is a bad sign. I think I’ll leave the reviews of the GBMB stocks which I bought and still hold, and the ones I never bought, for another day. So far, even if some of my stated buy thresholds are a little high, my actual buy prices have been really good. My problem over and over again has been selling too soon to lock in small gains.