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

To: rkrw who wrote (3501)	4/20/2001 11:49:59 PM
From: Biomaven	Read Replies (2) \| Respond to of 52153

Avalon's has done some good research and they've been right more often than wrong. At least they don't just regurgitate the company model which is what pretty much all the other analysts do. CLTR is a good example of where they were right and pretty much everyone (me included) on SI was wrong. I've only seen one of their detailed research reports that I recall well - one on PCYC some time back. It was fairly plausible (although I disagreed with most of it) except that their "best case" scenario was an order of magnitude worse than I thought was reasonable. A non-biotech oriented hedge fund certainly would not have known that the report was fudged. The trouble with shorts and biotechs is that it is comparatively easy for someone sophisticated in biotech to construct a pretty convincing short argument on essentially any biotech. There are always enough unknowns and uncertainties that some murmurings about "the trial isn't going well" with a few spurious details will often sound convincing. One thing that I think happens is that there are a few unscrupulous hedge funds that, once they have followed a short rec (from Avalon or anyone else), promptly start bad-mouthing the company. CORR is a good example where this happened following an Avalon short. If this sort of thing happens in a stock you hold, you are out of luck. If it happens in a good stock you don't hold, then you can take advantage of the artificially depressed price to buy it. (But be prepared for a rough ride until the shorts have covered). Peter