OK...... a year ago, we were pointing at the remarkable discounts available in the third-tier. Since then, the first- and second-tiers have put even more distance between the "haves" and "have nots".
That is, the third- and Mike-tiers are still sharply discounted, despite excellent performance in the "big science" small caps.
First point..... the third-tier is still highly discounted on a relative basis. But, is it discounted on an absolute basis? Is the science still cheap?
Yes. Remarkably so. By historical standards and also by what counts.... "pharma" standards.
Some situations are just plain crazy, nuts, irrational, and blotto. Look at the market cap of CMDX, and compare it ($980 million) to those of NBIX or BTRN.
The world is nuts. I guarantee that, if we can find eight more like NBIX and BTRN, we'll have a basket that will make us all very, very happy. Fortunately for us, the outside world still doesn't know how to discount research for risk...... a research premium of 50 million, for example, is peanuts for a diversified program addressing multiple large pharma markets.
This has been a GREAT rally. It has not lifted all boats equally. We have huge gaps between the tiers, huge discrepancies between reality and rationale, and certain very good companies that haven't moved much due to a lack of sponsorship or hype. That is..... while some of us are rolling in banner years, there's so much left to play. |
