You wrote,
"But rationally, if you succeed in finding that one company that has made a legitimate breakthru, you are now betting on its direct competition within the sector. Economically, this makes no sense."
I don't think so......I have 20% of my portfolio in MSFT and 80% in HGSI, INCY, CRA, MLNM, DNA, AFFX, GERN, UTHR, TTP, INCY, MYGN. These issues were selected based on conversations with people inside or very familiar with these companies. 2/3 of those are momo play. I firmly believe that only those with solid R&D that will benefit from the genomics database will survive in the long run. Almost all of thse issues will run wide in the near future. However, at least 50% of them will not live up to their advanced billings and crash within the years to come. Among them the one that crashes hardest will be CRA. However, its crash will actually benefit the whole sector in the long run. INCY has the R&D that will at least make its lofty valuations a bit sense. CRA has no R&D to support the backfire that will come eventually. And any decent scientist will tell you the quality of R&D its mother company does. Don't bet on any revolutionary discovery from PEB and in the long term, CRA cannot generate its revenue from its mother company when suddenly the Street is demanding revenues and earnings. If NIH forces open access to the database, INCY will not experience the disaster that will face some other issues.
cheers,
larry! |
