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It's not just oil and the MLPs - small cap biotech has been clobbered too!
Many on my screen are down 50%, 60% and more. HZNP, DEPO, TLGT, RMTI, AMAG, AKRX to name just a few. And these just aren't early stage biotechs companies with no earnings on the horizon. Most have rapidly rising earnings and revenues.
Yes, kind of ugly...not too surprising really since "risk off" rules for the moment.
This is a real opportunity...if you wanted to sift through the debris and place a wager on one or two. The urge for bigger pharma to acquire new compounds has not abated with the recent downturn, but may actually be intensified with the now more attractive pricing. Or...a basket via a fund is always available.
Seems like it, but the same quote has been said about oil stocks for well over a year now. Can't remember the poster, doesn't matter, who declared about a year or so ago that it's time to jump into energy. I don't know if you can make the comparison to HC or bio-tech companies, but catching a falling knife is always hard to do. Toss a coin.
Eventide Healthcare & Life Sciences Fund CLASS N SHARES ETNHX 17.77-0.70(-3.79%) Jan 19, 4:00PM EST Performance below does not reflect Today's loss of -3.79% so YTD -26.25 in 11 trading sessions. Popular bio fund FBIOX YTD -23.62XLE (oil sector E T F) YTD -11.84 % AMLP ( M L P etf ) YTD -23.4 SPY (500 stocks) YTD -7.75 ETNHX Trailing returns 1 day -2.89% 1 week -9.55% 4 week -21.51% 3 month -15.40% YTD -22.46% 1 year -10.84% 3 years* +20.22% Standard deviation 1 yr 28.86 3 yr 25.29 https://www.google.com/finance?q=MUTF:ETNHX&ei=BcCeVtH_LoqNmAGh5pu4Bw https://www.google.com/finance?q=fbiox&ei=Xr6eVrHmLIbKmAG_6oSwBw As of December 31, 2015:
December 31,2015 top holdings. Still full of promise.Aren't they?Maybe?Hopefully? Collegium Pharmaceutical Inc (5.56%) Abuse-deterrant treatments for chronic pain Five Prime Therapeutics Inc (4.46%) Screening human proteins to discover and develop novel drugs Ultragenyx Pharmaceutical Inc (2.39%) Bringing treatments to market for debilitating genetic diseases Loxo Oncology Inc (2.34%) Treating cancer at the genomic level with targeted chemical therapies Portola Pharmaceuticals Inc (2.30%) Therapies to treat thrombosis and other hematologic disorders TESARO Inc (2.30%) Drugs to treat cancers and reduce therapeutic side-effects Kite Pharma Inc (2.23%) Clinical-stage therapies that harness patients’ immune systems to Fight cancer DBV Technologies SA (2.21%) Patient-friendly therapies for food and pediatric allergy patients Celgene Corp (2.20%) Discovery, development and commercialization of life-changing cancer therapies Seattle Genetics Inc (2.14%) Antibody-drug combinations to treat lymphoma and other cancers
Even the most conservative of funds in this sector is suffering...Vanguard HC (VGHCX) down more than 8%, which I also own. But I'd rather own an up and coming biotech than anything in the oil patch...but, that's just me.
Can't remember the poster, doesn't matter, who declared about a year or so ago that it's time to jump into energy. -
@Mike: Possibly your reference is to Delphic Oracle's "Don't Outthink This" thread from December, 2014. http://www.mutualfundobserver.com/discuss/discussion/comment/53593/#Comment_53593 I didn't take his musings as a declaration. I think he was just questioning whether it was time to make the leap. Oil was trading around $60 then. Anyway, I've excerpted a portion of my response at the time.
I said: "Very difficult to pull off. Markets can remain irrational longer than most of us can remain solvent. The time needed for a bounce-back can be painfully long as those of us who thought Japan looked cheap in 1997 learned the hard way. It looked even cheaper a decade later. Percentages are funny things. Oil & some producers have lost 50 percent this year. That might imply some kind of floor? Nope. They can still drop another 30, 40, or 50 percent next year if they want to. It's very hard to time incremental purchases going down. Tendancy is to buy too early, than to throw good money after bad, than to get frustrated and bail at a loss before rewards are realized." (December 2014)
@junkster, the problem you are alluding to of indiscriminate falling tide for all biotechs regardless of their financial situation has to do with most of the money flowing through sector funds and ETFs which don't do much due diligence but just depend on diversification. So all of them go up or all of them go down depending on capital flow. When is the last time someone complained why all biotechs were going up even though many of them were just in clinical stage with a risk of completely going under?
I have also mentioned earlier that doing sufficient due dilugence on these companies is beyond the capability of most retail investors or even funds because of the games they play and the difficulty of judging the health of their pipeline and prospects. Most of them are one trick ponies with a lumpy all or nothing return for their products and the availability of cheap money has prevented the larger ones from building a diversified and healthy pipeline since valuations for acquisitions has exploded.
Yep. Tough going. But our energy investments have been small. 80% of portfolio is buy and hold. Hard asset range withiin that is 7-10%, divided-up among a commodities, gold, and real estate fund. Those 3 combined can't exceed 8% of total. Rather than rebalancing into them, we've simply taken recent distributions from other areas.
In the 20% that's not buy and hold, I've added gradually to PRNEX for over a year. Obviously hasn't worked as hoped. (Lost crystal ball years ago.)
Best to you Mike and others - regardless of the investing path
In Thursday’s (Jan 14th) memo, “On the Couch,” I mentioned the two questions I’d been getting most often: “What are the implications for the U.S. and the rest of the world of China’s weakness, and are we moving toward a new crisis of the magnitude of what we saw in 2008?” Bloomberg invited me on the air last Friday morning to discuss the memo, and the anchors mostly asked one version or another of a third question: “does the market’s decline worry you?” That prompted this memo in response.
The answer lies in a question: “what does the market know?” Is the market smart, meaning you should take your lead from it? Or is it dumb, meaning you should ignore it? Here’s what I wrote in “It’s Not Easy” in September and included in “On the Couch”:
Especially during downdrafts, many investors impute intelligence to the market and look to it to tell them what’s going on and what to do about it. This is one of the biggest mistakes you can make. As Ben Graham pointed out, the day-to-day market isn’t a fundamental analyst; it’s a barometer of investor sentiment. You just can’t take it too seriously. Market participants have limited insight into what’s really happening in terms of fundamentals, and any intelligence that could be behind their buys and sells is obscured by their emotional swings. It would be wrong to interpret the recent worldwide drop as meaning the market “knows” tough times lay ahead.
Comments
This is a real opportunity...if you wanted to sift through the debris and place a wager on one or two. The urge for bigger pharma to acquire new compounds has not abated with the recent downturn, but may actually be intensified with the now more attractive pricing. Or...a basket via a fund is always available.
Eventide Healthcare & Life Sciences Fund CLASS N SHARES
ETNHX
17.77-0.70(-3.79%)
Jan 19, 4:00PM EST
Performance below does not reflect Today's loss of -3.79% so YTD -26.25 in 11 trading sessions. Popular bio fund FBIOX YTD -23.62XLE (oil sector E T F) YTD -11.84 % AMLP ( M L P etf ) YTD -23.4 SPY (500 stocks) YTD -7.75
ETNHX
Trailing returns
1 day -2.89%
1 week -9.55%
4 week -21.51%
3 month -15.40%
YTD -22.46%
1 year -10.84%
3 years* +20.22%
Standard deviation 1 yr 28.86 3 yr 25.29
https://www.google.com/finance?q=MUTF:ETNHX&ei=BcCeVtH_LoqNmAGh5pu4Bw
https://www.google.com/finance?q=fbiox&ei=Xr6eVrHmLIbKmAG_6oSwBw
As of December 31, 2015:
December 31,2015 top holdings. Still full of promise.Aren't they?Maybe?Hopefully?
Collegium Pharmaceutical Inc (5.56%) Abuse-deterrant treatments for chronic pain
Five Prime Therapeutics Inc (4.46%) Screening human proteins to discover and develop novel drugs
Ultragenyx Pharmaceutical Inc (2.39%) Bringing treatments to market for debilitating genetic diseases
Loxo Oncology Inc (2.34%) Treating cancer at the genomic level with targeted chemical therapies
Portola Pharmaceuticals Inc (2.30%) Therapies to treat thrombosis and other hematologic disorders
TESARO Inc (2.30%) Drugs to treat cancers and reduce therapeutic side-effects
Kite Pharma Inc (2.23%) Clinical-stage therapies that harness patients’ immune systems to Fight cancer
DBV Technologies SA (2.21%) Patient-friendly therapies for food and pediatric allergy patients
Celgene Corp (2.20%) Discovery, development and commercialization of life-changing cancer therapies
Seattle Genetics Inc (2.14%) Antibody-drug combinations to treat lymphoma and other cancers
http://eventidefunds.com/our-products/#!healthcare
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@Mike: Possibly your reference is to Delphic Oracle's "Don't Outthink This" thread from December, 2014. http://www.mutualfundobserver.com/discuss/discussion/comment/53593/#Comment_53593
I didn't take his musings as a declaration. I think he was just questioning whether it was time to make the leap. Oil was trading around $60 then. Anyway, I've excerpted a portion of my response at the time.
I said: "Very difficult to pull off. Markets can remain irrational longer than most of us can remain solvent. The time needed for a bounce-back can be painfully long as those of us who thought Japan looked cheap in 1997 learned the hard way. It looked even cheaper a decade later. Percentages are funny things. Oil & some producers have lost 50 percent this year. That might imply some kind of floor? Nope. They can still drop another 30, 40, or 50 percent next year if they want to. It's very hard to time incremental purchases going down. Tendancy is to buy too early, than to throw good money after bad, than to get frustrated and bail at a loss before rewards are realized." (December 2014)
I have also mentioned earlier that doing sufficient due dilugence on these companies is beyond the capability of most retail investors or even funds because of the games they play and the difficulty of judging the health of their pipeline and prospects. Most of them are one trick ponies with a lumpy all or nothing return for their products and the availability of cheap money has prevented the larger ones from building a diversified and healthy pipeline since valuations for acquisitions has exploded.
Problem is I bought SLB a few months after when "oil just had to start an uptrend." I'm down about 20+% on that one.
Good luck on your recent energy fund purchases Hank. I hope it turns around for you - and me.
Yep. Tough going. But our energy investments have been small. 80% of portfolio is buy and hold. Hard asset range withiin that is 7-10%, divided-up among a commodities, gold, and real estate fund. Those 3 combined can't exceed 8% of total. Rather than rebalancing into them, we've simply taken recent distributions from other areas.
In the 20% that's not buy and hold, I've added gradually to PRNEX for over a year. Obviously hasn't worked as hoped. (Lost crystal ball years ago.)
Best to you Mike and others - regardless of the investing path
From Howard Marks (Oaktree Cap) Memos from Howard Marks 01/19/2016 © 2007-2016 Oaktree Capital Management, L.P. All rights reserved.
My buddy Sandy was an airline pilot. When asked to describe his job, he always answers, “hours of boredom punctuated by moments of terror.” The same can be true for investment managers, for whom the last few weeks have been an example of the latter. We’ve seen bad news and prices cascading downward. Investors who thought stocks were priced right 20% ago and oil $70 ago now wonder if they aren’t risky at their new reduced prices.
In Thursday’s (Jan 14th) memo, “On the Couch,” I mentioned the two questions I’d been getting most often: “What are the implications for the U.S. and the rest of the world of China’s weakness, and are we moving toward a new crisis of the magnitude of what we saw in 2008?” Bloomberg invited me on the air last Friday morning to discuss the memo, and the anchors mostly asked one version or another of a third question: “does the market’s decline worry you?” That prompted this memo in response.
The answer lies in a question: “what does the market know?” Is the market smart, meaning you should take your lead from it? Or is it dumb, meaning you should ignore it? Here’s what I wrote in “It’s Not Easy” in September and included in “On the Couch”:
Especially during downdrafts, many investors impute intelligence to the market and look to it to tell them what’s going on and what to do about it. This is one of the biggest mistakes you can make. As Ben Graham pointed out, the day-to-day market isn’t a fundamental analyst; it’s a barometer of investor sentiment. You just can’t take it too seriously. Market participants have limited insight into what’s really happening in terms of fundamentals, and any intelligence that could be behind their buys and sells is obscured by their emotional swings. It would be wrong to interpret the recent worldwide drop as meaning the market “knows” tough times lay ahead.
The rest of this memo will be about fleshing out this theme (meaning you can stop reading here if you’ve had enough or are short on time).
https://www.oaktreecapital.com/insights/howard-marks-memos