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Biotech / Medical : Biotech Valuation -- Ignore unavailable to you. Want to Upgrade?

To: tuck who wrote (2428)	12/31/2000 9:16:32 PM
From: Biomaven	Read Replies (3) \| Respond to of 52153

At year-end, as is traditional, here are some thoughts on the last year. OSIP heads TSC's list of the year's best performing stocks (with MC over $1 billion): thestreet.com I sold about 1/2 my OSIP during the year, but it's still a top-10 holding for me. I missed CTIC altogether, although I owned it for a while last year. I've never followed IMPTH, which, now that I look at it, might provide a nice munch for MLNM. And now for some retrospective on what I did this year: Here are my top holdings (in order) as we close out the year: SEPR MLNM NPSP NBIX ALXN OSIP VRTX ITMN FRX IGEN ABGX CVTX HGSI AVIR CRXA (via CLTR) CELG BTRN AZA Note this weighting reflects a considerable hysteresis effect - they are mostly stocks that have gone up a bunch and I haven't yet trimmed much. Hence they are by definition mostly stocks that have done well. (Remember you don't hear about the dolphins that carried the struggling swimmers in the wrong direction - out to sea ... <g>). So realize that this is not necessarily the ranking you would see if I had to build a portfolio from scratch today. However they do reflect my overall investment policy - find good stocks and sit on them, for many years if necessary. If I only had seen my portfolio twice - at the beginning and end of the year, I would have been very happy indeed. Unfortunately the runup through March 7th and subsequent crash as well as the decline at the end of the year lend a considerable overtone of "should-have" to my year. So what lessons do I take away from the year? First, I didn't have the flexibility to fully discard my overall Warren Buffett-like approach to investing (buy and hold and never ever take a short-term gain) in the face of an unsustainable bubble. Instead of dumping my GLGC at the unreasonable prices Rick has been talking about (which would have produced mostly a short-term gain), I dithered and sold only 20% of them as well as some covered calls. Ditto for a big bunch of other "hot" stocks, many of which I held all the way up the mountain and down again the other side. I didn't dump my biotech stocks after the Clinton/Blair drop because I "knew" that what they had said was being misinterpreted, and that when the market realized this the stocks would come back. Of course it should be noted that the decline actually started a week before the speech; the lesson being that when stocks are unreasonably priced it doesn't take a real event to precipitate a decline - any excuse will do. On the plus side, I did take considerable advantage of some short-term craziness - indeed by far my biggest realized gains in the year were from short term plays in KDUS (thanks, Rick!) and NERX (when they "cured cancer"), and to a lesser extent, ARIA. I also had some decent short-term gains from selling calls on the BTK index a few months back, although of course these did not make up for declines in the rest of my portfolio over this period. On the long-term side, I took nice gains in CELG, MLNM, GLGC, OSIP, NPSP, CBST, MOGN, PCYC, VRTX, VGIN and STEM. Aside from not cashing in my chips when I should have, what other mistakes did I make? My biggest single error was a misguided play on the BXM merger when I wrote some puts based on a misreading of an early ambiguous report of the deal, and didn't admit my error and exit quickly when I found out the correct details. IGEN proved an error as well, although this is a stock I am sticking with. With GLIA I miraculously ended up about even, but only because of some smart trades after its first debacle. I had a number of small scale disasters - for example CGPI, LEXG, NABI, NEXL, FOCL and TGEN were all closed out with more than a 50% loss. Fortunately these were all small holdings for me. Finally, there was the SEPR unpleasantness resulting from the Prozac II debacle. This is one where I don't think I did anything wrong despite it having a bigger negative impact on my portfolio than any other single thing - I simply got blindsided by the sort of event that comes with the territory. Unfortunate, but not really a learning experience other than to drive home the fact that any single biotech stock is risky. So overall, a year that was for me in actuality a great deal better than it presently feels like. Uncle Sam will be quite happy with me come April 15th. <g> Finally, my sincere thanks to all the contributors on this thread. We have a really great bunch of contributors and I hope we can all continue to make SI the center of the informed biotech investing universe. Happy New Year and my best wishes to all for a profitable 2001 in biotech investing! Peter