Larry:
>> Looking forward to see if H&Q stimulates some recommendations. <<
I'm actually surprised that it didn't stimulate a bit more selling. We have lots of the biotech world that has had success buying after the summer and selling at H&Q. You could see it on Thursday, with irrational retreat from some stellar performers (not including PGNS, where there was some rationale, even if semi-flawed).
Stimulating recommendations? I think that most analysts try to have lots of their work done before the meeting. Also, all underwriter analysts other than H&Q's are excluded from attendance. It does often spur some institutional buying, of course.
Yesterday was great. Thanks for pointing to the bcl-2-related pop. I suspect that third-tier is going to get some attention, but that it'll still take good news to make the non-hype, solid science companies going.
O.K., getting back on thread of railing against the performance at Franklin and the need for a sector supporter (rather than basher) to administer the fund...... von Emster was back at it again as part of a luncheon panel at H&Q. Again, he tried to blame his piss-poor performance on small cap biotech rather than his own poor judgement. He's been hitting this theme since early '98, presumably due to '97 performance that was so bad that it was difficult to figure out how *anyone* could have ended up in his shoes.
He was sharing the stage with Alex Casden (Dreyfus) and John Park (Wanger). Park indicated that they were currently overweighted on the "service side" (context of healthcare, not biotech) and that, if you want VC-like returns for biotech, you should "get in when the market hates them".
That is, Park scores a 4 on a scale of 1 to 4.
Casden was also focused on bargains and science, and specifically mentioned CRGN.
That is, Casden scores a 4 on a scale of 1 to 4.
But confused von Emster pumped Zonagen and pointed to the inconsistency between the market cap added to Pfizer due to Viagra and Zonagen's market cap. He doesn't see that this argument is irrational in light of his ignoring the divergence between first and third tier. He indicated that he would not make the same mistake again and invest in small caps.
What he doesn't say is that, while he was investing in the WRONG small caps and getting his butt handed to him, others were doing quite well. It's documented here at SI.
But, because of the fact that he was running the only game in town for a pure biotech fund with decent working capital, he'd get air time on CNBC and in other forums. He'd bad mouth the entire sector, IMO merely to cover up his own performance. Again, it's all documented. The guy's performance is miserable.
Why does it upset me? Because he sells into rallies. He actually cut one short in early '97, IMO, as there was little liquidity in the sector.
Score? F.
So....... a challenge to Franklin's senior management..... recognize that your fund has underperformed to the point of embarrassment, and get a sector champion in to assess the science and valuations relative to potential. |
