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

To: tuck who wrote (4394)	8/1/2001 1:28:29 PM
From: Michael Young	Read Replies (1) \| Respond to of 52153

I think the HMO stocks are probably near the peak of the cycle. I know they are pushing through big price increases that are helping results now and the near future. But that likely won't continue. The bill of rights probably won't have a huge impact, other than to keep the HMO's more honest in approving procedures. It might also help the drug companies force them to carry the expensive new drugs that patients will demand. MIKE

To: tuck who wrote (4394)	8/1/2001 2:16:06 PM
From: scaram(o)uche	Read Replies (2) \| Respond to of 52153

>> I've been drying out my powder again << There's a lot happening out there in valuation land. 1. Private companies are raking in money, at the same time that there's too much share supply in traded issues. Post-money valuations from some recent private rounds are -- by historical sector standards -- huge. It's not yet clear if that means that (1) we're stepping up to yet another higher valuation plateau, or (2) a whole bunch of VCs are going to be writhing in regret for about five years. One thing is certain..... there's no downside there for traded issues, and the upside, for management teams that place success above ego, could be pronounced. 2. Small caps are fighting against supply from the last window. Moreover, they seem to be attracting increased interest from those who like soft underbellies. The last time it was this pronounced? Summer of 1998. Could get ugly. In summer of 1998, we had hedge funds that were trying to short any stock that was under $6/share into bankruptcy. There was no liquidity in the sector. There is money everywhere in 2001, so I tend to think that it won't get ugly. But..... it sure does have a summer 1998 feel to it here, summer 2001. Silverman left Robbie Stephens to run a hedge fund, correct? von Emster, who was shorting some biotechs in s1998 while managing the Franklin thingie, left Franklin to run a hedge fund, correct? Etc., etc., etc. I haven't a clue which way things will break out. There seem to be motivated sellers a plenty. OTOH, there are companies that are undervalued on a fundamental basis, much less on the basis of comparison to peers. I don't know about drying out powder at this time. But, I also have little doubt that hedge fund managers feel very secure in their extended network and the power of funds poised to act from a shared strategy. If we enter another period where scientific progress is not reflecting in share appreciation, at the same time that money is flooding over private biotech (not the situation in 1998), then it'll be a real shindig. >> before this fundamental powers an uptrend in health care stocks << >> Other thoughts? << You look at a broader spectrum of "company types" than I do. I focus largely on small- and mid-cap development-stage companies with a primary focus on therapeutics. The only fundamental for these companies is the supply of viable projects and the quantity of dollars chasing them.