The Street.com's coverage of biotech has clearly been closely connected to professional shorts. Herb Greenberg writes the most prominent short column in the country. He's had some real successes, notably LHSPQ recently, and makes no bones about the fact that his regular sources are professional shorts.
I don't follow him closely, but can recall raising a loud alarm about SEPR when it was in the 30s, which even with SEPRs recent problems was not a good bet.
As a hedge fund manager, Cramer has close connections to the shorts world, and he has been the leading exponent of the Biotech Bubble theory lately, along with his biotech columnist Gabe Hoffman. Hoffman has become the anti-biotech columnist, spreading gloom and doom about the sector. The only mildly positive thing I've seen from him is that now that INCY and CRA are trading for only twice their cash value, they might be OK to buy "for a trade."
Newer addition Lissa Morgenthaler [didn't she used to sing with the B-52s? <g>] does champion the sector, to be expected when her biotech fund had a chance to be the #1 performing fund in the U.S. for 2000. But Aaron Task, another prominent columnist, only mentions biotech to warn of the bursting bubble.
Cramer writes a "Buzz and Batch" series, a fictional account of momentum funds fixing the market by forcing up prices of hot stocks. He mentions some of the better performing biotechs, implying that that is happening to them. He names Vertex, Sepracor, and Millennium. I believe these are more stocks that the pro shorts are attacking than stocks that are being "marked up."
In a recent piece he admitted that he didn't know anything about the values of most individual biotechs, it was just clear that they were all so overvalued. I'd suggest he look at the high-flying tech stocks he bought for his fund [until his recent retirement] if he wants to see some overpriced garbage.
Though the bubble boys certainly had some success in the two days after the Fed rate cut, Cramer was also urging his followers to buy tech stocks with both fists, not very profitable advice. e.g.:
The Fed Rate Cut Matters Now
By James J. Cramer
1/5/01 8:21 AM ET
Another hedge fund luminary, SI's Illustrious and Rather Reverend Mr. Pink, is not a fan:
Message 14590111 [Quoted in full:]
shows you how stupid cramer is and he is very stupid and a terrible investor. His track record is the worst.
He also advertised how he covered his amzn short in the 80s...The ultimate capitulation and the time that Mr. P$nk, in His infinite wisdom put on the trade.
Mr. P$nk
Cramer now says that biotech is through, dump your biotechs. I would have to disagree, I think the good biotech stocks are based on real value, not momentum.
I don't pretend to understand the current market or economy, and certainly stocks could go lower, but I've done very well buying biotechs when they are unpopular, following the unequalled advice found on SI.
I also believe that pro shorts make their money in two ways: by shorting and driving down stocks in a bear raid, then covering and reversing, going long on stocks that they have driven below reasonable value, continuing to publicly attack the stocks while they buy, of course.
People who manipulate the market can make money if they can make stocks move, and we've seen a whole lot of movement lately.
Shorts have made a lot on biotech in the past, and they continue to plague the sector. Plague because they don't generally attack poor companies, they attack strong companies that have stumbled, or companies that have gone up a lot so they 'must' be overvalued.
Message 11995501
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