<<In sum, the biotech highflyers are dangerously exposed in a market that has seen significant selloffs in sector after sector. For this reason, our firm recently has reversed its previously bullish advice to clients that invest in this sector. Smart investment is always a matter of matching risks to potential rewards. So, riding the biotech darlings further could be dangerous. Sometimes, it's necessary to leave money on the table in order to keep some in your pocket.>>
Maybe, and maybe not.
That many bios, from high highflyers to new IPOs, are over-valued is no secret at all. Now, the question is why? Why money continue to flow into bios at premium MC? Recently OSIP, NPSP, CVAS, IMNX, PDLI, HGSI,...
Can this money find other fertile land?
The overall perception is that bios perspective is better than ever. Who, in this word, can say for sure, “this 5-10 bios will be new or better AGPH, MEDI or IMNX of the past”? None!
Money is spreading over entire sector, and in the race to capture positions before *next guy*, many stock price rise into irrational territory. But, 5-10 years from now some of these seeds will grow into toll tree. Sufficient to compensate for wrong bets and still have good overall return. So, *irrational* bet now may appear as *sound* one in few years.
Bottom line, I see Barron’s article as empty shot from position of those who can not separate black from white. Everything is gray, so act accordingly. BS!
However, I am not one who will chase bios at the current level. I prefer to wait for chance (like with SUPG) when irrational strike, but this time for our benefit.
Miljenko |
