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Biotech / Medical : VD's Model Portfolio & Discussion Thread -- Ignore unavailable to you. Want to Upgrade?

To: Dan O. who wrote (4670)	4/20/1998 1:40:00 AM
From: Peter Singleton	Read Replies (2) \| Respond to of 9719

So, Dan, and this goes for Bernie as well, am I correct in hearing that you choose hold LGNDW over LGND given a set $ amount you want to invest in the company? For example, if you want to hold $100 in your portfolio in Ligand, you'd choose LGNDW, not LGND. If this is the case, you must be very confident that the downside risk is small, and the upside potential is high. Am I correct that this is implied in your decision? You're paying a premium to hold the warrants, and increasing your leverage. That's a pretty aggressive bet on Ligand. It's one I might be inclined to support on the one hand because of the strength of their pipeline ... on the other hand, predicting price movements of individual biotechs in the short or intermediate term is a black art. As I've learned more than once ... : ) So, my question again, you must see limited downside, and substantial upside, to be willing to increase your leverage on your Ligand position. And you've done so factoring in a) the possibility of unexpected bad news from Ligand ... or what the market would interpret as such, b) the possibility of the market continuing to value the company well below its intrinsic value for a long time, c) the potential for a steep sell-off in the overall market. I'm not questioning your decision, just want to understand it. By way of disclosure, I have a significant holding in LGND, and no LGNDW. Peter