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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Steve168 who wrote (17162)	6/6/2003 11:22:17 AM
From: Paul Senior	Read Replies (2) \| Respond to of 78510

The discount to cash is narrowing for all these type stocks. (All that I see anyway.) And of course, for many, many of these stocks, their prices now exceed the cash they have. It seems to me that if someone still wanted to be in this game (buying stocks with no debt that are selling below cash value), by default, one is led to biotechs. I've avoided these biotechs because many of the companies won't survive, and it's a race between cash-burn and product development (sales or royalty payments of some kind). I assume that buying these biotechs is a little more risky than buying telecom, IT or other cash-rich business types where there's a product that doesn't sell or a business model that doesn't work. Because often the BOD and management eventually act to conserve cash or liquidate, since they know they're not getting any more money from anyone. Unlike the cash-rich biotech companies which seem to have two functions - doing research and seeking out additional monies to fund that research. If they don't get those additional monies, these biotechs go into a further tailspin. Anyway, I'll follow your lead here Steve168, and move to some biotechs. I've bought CRXL and PCYC this morning. As is my usual practice, I want to diversify among a number of these things. Since these stocks have already doubled from lows, I'm buying even fewer shares than I ordinarily would. I have no technical expertise with biotechs whatsoever. For CRXL though I see that a recent deal with Merck may reinforce and validate some of CRXL's research, and will likely bring MRK monies to CRXL. (How much or how little was not disclosed in the press release.) And of course the horizon is always ahead with biotechs - the stocks can really soar on investors' dreams.