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Biotech / Medical : Biotech Shorts
XOMA 32.98-0.7%Oct 31 9:30 AM EDT
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To: (no name provided) who wrote ()1/19/1997 1:39:00 AM
From: Mark Nelson   of 61
 
Biotech shorts. Good idea for a thread. The intro to this subject starts with: "Hype and overvaluation are common in biotech stocks."
The overvaluation part is what makes short selling biotechs pretty risky. That is to say, they can go up pretty far further than most peoples' rational analysis would expect. It's really hard to guess a suitable entry point. One thing is certain. With the present level of money flowing into mutual funds we should expect to see more than a little "irrational exhuberance" with some of these stocks. In biotech, the so-called "first tier" would stand to receive more of the attention of the funds but, for the most part, that exhuberance stands to be, at first glance at least, more rational. They do have at least some revenues after all. It makes shorting them a hard call. However, I have a friend who is doing pretty well with an AMGN short position.
Onward,
Mark
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