Steve,
Although I also disagree with some of David's concern, he does bring up legit. concerns, as in a volatile or down market, non-revenue producing companies, such as biotechs, are much more likely to get pounded, and some of the already solid but developing revenue producing companies are more likely to rebound more easily when the market turns back, which it might even be in the process of doing, depending on Saddam. The risk for some of the revenue producing emerging companies, such as those in tech, is that there may be less revenue coming by way of Asian countries, and more of a concern is the fact that prices in all areas have been coming down for some time(remember calculators, cd players, etc), and it decreases the ability of companies to continue growing without expanding their sales dramatically or coming up with new technologies....makes it hard to know who the leaders of the future truly are. Of course, if you pick up the right company/companies, all will eventualy work out,as they don't just go straight up, like you pointed out with MSFT.
When to pick up a company depends on your investing style...if you're a momentum investor/trader, then getting it on the upswing is the way to go, but if you're looking for long-term, than the more reasonable valuation is likely superior, as you want to help compensate some for the risk of the company not coming through by not overpaying.
As far as other biotechs with a lot of potential, it is hard to say. I know of one that you mentioned in particular...ARRS. I like their deal with SQNA, as a long-termer, although they don't seem to have anything particularly close to the market, which is a key in the short to intermediate aspect of biotech investing. Nevertheless, to buy and hold, the price might be more reasonable now.....keep in mind that if the deal with SQNA does go through, it is actually cheaper to buy SQNA right now(1.35 ratio). At the biotech forum which atis presented at a few months ago, McCamant recommended four companies in particular....chir, isip, arrs, and icos.
As Al mentioned, I like ISIP quite a bit, especially as far as their technology's potential. Helps to mediate the risk some, knowing that the potential is at least huge, so if it does come through, will be huge. Their area is antisense technology. Chiron is the biggie of the four, already bringing in revenues, and as such helping to decrease the risk further, by being a larger cap legitimately. Others with potential are VICL and IMNR, although I don't own either of these, or necessarily all of the others mentioned either. At 18 and change, CHIR is at a more fair price to consider picking some up though. ISIP hasn't dropped all that much with the market crunching of the last few weeks, which can be interpreted multiple ways, but looks to be setting its future up nicely.
I guess I'd say that some investing at this time is reasonable, but might be worth keeping some cash handy in case of war with Iraq....as much as it pains me to think of war in terms of business opportunties...morally this is disturbing, but I guess we also make profits in the market when unemployment is up and wages are down, so go figure.
Anyway, have a good evening and talk to you later. If you want to discuss any of these companies in more detail, I'll be happy to share what I know, even if some is limited, but if it's an issue to do on the ATIS thread, it might be worth doing by e-mail. Keep in mind that I'm merely an amateur myself and simply trying to keep up with what I can.
Marshall |
