Portfolios update
The portfolios were started on 9/28/00 (http://www.siliconinvestor.com/readmsg.aspx?msgid=14478195).
'We'll check back on these from time to time. Let's give them 6 months before declaring victors (no changes allowed). My prediction is that Hubris - SEM will solidly surpass Hubris - BT with Pariah either far ahead or far behind both.'
The 6 months has been completed.
The SEM vs. Biotech prediction was a read on a continued contraction in the economy, and on stock valuation, and that investors would be much harsher on sectors where perceived future earnings were less predictable and/or further down the road. I also believed that biotech stocks do indeed exhibit extreme herd-like behavior and that they had definitely not flushed out the absurd excesses of the bubble. The narrowness of the deviation of performance of the various stocks in the Hubris-Biotech portfolio at least partially vindicates the view that the biotechs often behave in a quite NON-specific fashion...just like every other sector.
The degree of disparity between the SEM vs. Biotech portfolios far exceeded anything I could have foreseen:
Hubris SEM... -6.2%
Hubris - Biotech...-67.5%
The biotechs have continued to implode and this has occurred whether or not Immunex-type news is present. On the other hand, the equipment sector appears to have bottomed in late November/early December and has been one of the stronger groups in the market over the past 6 months. The SEMs were up ~14% last week.
Contrary to expectations, Pariah's performance was smack in the middle of the other two:
Pariah...-30.7%
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Let' s continue these portfolios through the end of the year. We'll maintain the cost basis as 9/28/00. My prediction for the next 8 months is that the SEMs will have a tremendous run, typical of an up leg of a new cycle. IMO, the sector could easily double from this point and probably much more. Thus I predict the SEMs will be 100 -150% higher at the end of December... with the majority of the current leaders in the portfolio (LRCX, KLIC, KLAC, TER) achieving 200-300% gains. This sounds absurd...but this is the rule, rather than the exception, if the equipment sector is where I perceive it to be: at the cusp of a recovery.
I'm much less sanguine about the biotechs. While the SEMs are a cyclical industry (where four-baggers and triple-play outs are commonplace), this is not the case for the biotechs. There was a speculative bubble last year and, while the state of the industry and the quality (and quantity) of the pipeline is much improved, there remains substantial doubts about real, bottom-line earnings. This is not a enviable outlook in what will remain an extremely skittish market. While the group has just gone through a period of irrational pessimism, I see no cause for any enthusiasm at this point either. I see the sector as flat to slightly improved (~20%???) through end of the year; there are substantially better investments right now. IMO, biotechs remain a sector to avoid.
The only changes made are to the Pariah portfolio: Since PTX went belly up in the fall, we'll assume complete illiquidity and eliminate that $1500 from the portfolio. In addition, we will get rid of both DXT and SBC and place those assets into Klic (as a reflection of my view of the SEM sector in general and Klic in particular). Thus, based on Friday's closing numbers, Pariah sells SBC (proceeds $4186), sells DXT ($4000), and buys 567 shares of Klic (@ $14 7/16).
Once again, no changes allowed for any of the portfolios for the tracking period (3/26/01 -> 12/31/01)
Hubris - SEM siliconinvestor.com
Pariah - (new) siliconinvestor.com
Hubris- Biotech siliconinvestor.com
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Hubris SEM
LRCX +33.8%
KLIC +3.1%
KLAC -0.8%
TER -1.0%
NVLS -6.2%
AMAT -20.7%
AMKR -26.9%
ASML -30.9%
Pariah (old)
KLIC +3.1%
DXT -15.8%
SBC -15.8%
HDIIW -48.4%
MXR -70.0%
PTX -81.8%
Hubris - Biotech
NBSC -55.7%
NBIX -60.6%
TTP -65.1%
VRTX -66.6%
RGEN -67.8%
MLNM -67.9%
SEPR -75.5%
BTRN -81.1% |
