>> I am trying to learn the tools and methodology that will help me. <<
My style is to buy stuff that's pushed toward book (and/or cash, using VPHM as a cash rather than book example, turn of 2000 to 2001) and yet still leveraged. Instead of "close to book", I'll take a small research premium if there are exciting molecules in late preclinical or clinical development. I always try to find big science, which doesn't always translate to "sound" science (some companies are working with tremendous scientific breakthroughs which yet don't translate readily to "product").
The point that you're raising is exactly that which today's biotech investor MUST address. The equities structure of companies has changed at IPO -- at a point where demand was clobbered by the popped bubble, insiders were looking to bail with "more than traditional" shares and "less than traditional" goals. This post lockup slaughter was simply and elegantly predicted by a friend, Dr. Kevin Jones, a year before it happened. I got caught in it to a limited degree, most visibly in LEXG with small purchases. When and if I get caught in situations like this, I (1) look to double down, if appropriate, or (2) find comparable situations. It works..... waiting for pain and agony in big-science biotechs is almost always a route to exceptional and fast (upside) return on capital. This "riding it down short" is a relatively new phenomenon in biotech, and one now has an op to catch a ride with real ooooomph, both ways. I'm almost never short, but enjoy mistakes when they're made.
We're discussing "lockup hell" opportunities in the T/FIF thread. Morale is low re. many of these issues, and I feel that decent research can put together a portfolio which will rather safely lead to some leveraged, near-term excitement. Still trying to determine if LEXG is something worth "weighting", and honestly don't have an opinion yet.
MLNM..... room for it to go either way, near-term, IMO. I'm a true believer, five year time frame.
"Oooomph". That's the secret right now..... avoid arm wrestling situations between shorts and longs unless they're going to get explosive. Find a situation where mistakes have been made and yet where there's little vested interest in (or a great deal of fear resident in) compounding them. IMO, an "overweight" in situations like that is almost always a route to quick bucks.
IMO, you've addressed the salient issues, concisely, re. biotech investing, 4/01. |
