Monday, August 31, 2009

More Sequenom Rumors, True, False, Maybe?

Sequenom (SQNM) is up big today, but is there anything behind the move? Who knows. We live in a time of lies, rumors, and manipulation so act with caution. I'm still long and like some of you, I've been waiting for news on the investigation.

I don't know why it's taken so long and can only guess that they are waiting on more than an investigation, but possibly a new test. If that is the case and the new test confirms the previous test then we probably go back to 20.

We'll have to wait and see, but be careful as it seems like every day some company is the subject of a rumor that turns out to be false. Why the SEC doesn't do anything is a mystery. Let's keep our fingers crossed on this one.

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Thursday, August 27, 2009

More Biotech Ideas

With the FDA in a more pleasant mood these days, it's prudent for the long term investor to have exposure to biotech. I wouldn't go 'all in' like some people do because that's usually a recipe for disaster, but if nothing else, these are good diversifying stocks. Remember a well balanced portfolio has assets that move in different directions, so everything doesn't go up on the same day, but more importantly, everything doesn't go down together!

So here are a few names in the biotech space I'm holding. Dendreon (DNDN), Human Genome (HGSI), Arena (ARNA), Spectrum (SPPI), Vanda (VNDA), and Vivus (VVUS). I have an approach where I spread it around, which decreases the risk. Remember, these are what I call concentrated stocks, so a little goes a long way.

My reasons are varied, DNDN will be submitting their application to the FDA for their prostate cancer drug in Q4 2009 and most of the free world is sure it's a lock after seeing the data. HGSI and ARNA have released interim data on their drugs for Lupus and obesity respectively and confidence is high the remaining studies will be positive when released between September and November sometime. SPPI and VVUS are expected to release data on their cancer and obesity drugs in September. VNDA of course has an approved drug for schizophrenia and in my opinion with a market cap of under $500 million is one of the most undervalued companies on the street. For the record, I own some Sequenom (SQNM), but this isn't a biotech in the same way the others are.

DNDN, ARNA, and HGSI may be companies I hold for an extended period (2+ years), as they have great pipelines. The others are short term plays. Remember my biotech playbook says look for companies that have nice pipelines and address situations that affect large groups (e.g. diabetes, obesity, breast/prostate cancer), with small market caps (under $1 bil).

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Tuesday, August 25, 2009

The Insurers Have Left The Building

Now 'they' have upgraded Hartford (HIG). Tell us something PaperGains readers don't know. We were buying the insurers like HIG, Aflac (AFL), and Genworth (GNW) when these same analyst were saying they were all going out of business. We bought these names just a few months back at a fraction of their current prices, HIG under $5, AFL under $20 and GNW under a buck! And I'm still collecting a nice 6+% dividend yield from AFL.

Research analyst just kill me. They don't upgrade until the coast is clear and everyone already knows. Anyone paying attention to the recent news on one large investment bank knows how that works - buy in and let your big clients buy in, then tell the little guy it's safe to buy, but only after you and your favorite clients have bought.

By the way, I love Citi (C) down here. It's the next big thing.

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Monday, August 24, 2009

Market Outlook

I expect the S&P to be much higher by year end, but expect bumps in the road in mid September through early October. My reasons are as follows. Many traders who have participated in this rally are probably looking to lock in gains before year end and September/October are always scary months for people, so our bumps in the road are a result of these short timers.

I believe any dips will be shallow, as I stated in an earlier post, money managers that didn't take part in the rally need to, as they have to be way behind their benchmarks. After we get past October, most retail investors and many professionals will feel like the coast is clear, thus piling on and driving the market up. My 2 cents

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Wednesday, August 19, 2009

Buy A CD Or High Yielding Stock

I've had friends talk about buying CDs lately, but let me through this at you. Why buy a CD when rates are at best 2% for a year with a 1 year and maybe 3.25% per year with a 5 year CD when you can get 5+% elsewhere. Here are my reasons I can buy any number of household names with safe dividend yields over 5% (VZ, BMY, T, PBI, POR, SO, LLY). I really like the first 3.

If you buy one of these stocks, there are no minimums and you cash in at your discretion. Some argue that there's risk in that the stocks can decline. While this is true, if you were going to buy a 3 or 5 year CD that money would be unavailable to you and I argue at some point over the 3 to 5 years you're going to be up and more than likely up at the end of 3 or 5 years.

So you collect 5 or 6%, will more than likely see capital gains on top of that and enjoy the flexibility to take your money when you want it.

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The Truth From The Mouth Of Traders

I heard one of the 'talking heads' say what's really on the minds of professionals, both the longs and shorts. From the floor of the NYSE he reports traders tell him, 'they want this market to go down so they can buy!' Too funny, as these are no doubt the same people bashing the market and instructing their minions to do the same.

Once again, if you haven't participated in the current rally then you're missing the buying opportunity of our generation.

They wonder why the short side can't put together 3 routs in a row. Because with every dip money runs in to buy, so the dips are shorter and shorter.

Beware when so called experts give a thumbs up or a thumbs down, as they are no doubt thinking about their own pockets. A while back these 'experts' had to disclose their positions and/or business relationships, now they don't even bother. I guess it's too much of a pain having to disclose that you're long or short a stock you're discussing. I believe they should have to report how much cash they are sitting own when discussing the market in general.

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Monday, August 17, 2009

Another One Of Those Days

Red across the board- stocks, metals, oil, grains, foreign currencies. There was a time when everything didn't sell off at the same time and actually that isn't suppose to happen. At least gold should be steady on days like that. Oh yes, I forgot, it's options expiration week, so all of the calls the professionals sold to non suspecting buyers have to be made worthless by Friday!

Get used to it. This is the new market, an irrational one. A winning strategy is still one where we buy good companies and hold them until our investments mature. Looking for daily or weekly hits is dangerous aside from the occasional bio-tech play.

Pick your entries wisely. Check the options that are closest to expiration. If the stock has been moving up fast and approaching a strike price that has had a lot of volume lately then there's probably a good chance someone with deep pockets is going to hit it hard sometime soon so the calls they sold don't get exercised and they get to keep the premium. Shorting has become to easy. Rumor has it a new revised 'uptick' rule is on the way.

By the way, a mature investment is one that hits your predetermined price, unless you're in it for the income/dividend, then we may hold it longer.

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Saturday, August 15, 2009

Yes, The Short Story Is Dead

The shorts took us down right away on Friday, but they weren't able to pick up any real momentum. Look at the chart and look where most everything else, (e.g. oil, copper, gold, foreign currencies, etc.) traded - down. When I see that, I think someone came out early, probably with some computer program and shorted a whole lot right away, like back in Feb and March. See my post on SeekingSigma on market correlation.

A few months ago that would have started a chain reaction, as rumors and lies would have followed and everyone else would have sold, but that didn't happen. The market actually finished with a lot of buying.

I also believe there are quite a few shorts sitting out there sweating and quite a few money managers that haven't gone long yet and are going to end up being killed by their benchmarks.

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Something Is Starting To Smell At Sequenom

How long should an investigation last? Either something is very wrong over there at Sequenom (SQNM) or it's more than just an investigation. We're moving in on 4 months and they have nothing to say. I'm hoping they are doing something more, like re-validating or looking to provide something in addition to the investigation results.

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Thursday, August 13, 2009

And So The Beat Goes On (still)

This is a pretty easy market to make money in these days and I continue to be optimistic. As long as the 'talking heads' say it won't last, I say it will. I listened to someone on tv say he expects a pull back... so he can take up more long positions. What sense does that make?

These people have said since May, the market was going to dive and here we are, moving forward. I'm keeping the course, I like my 2011 Model Portfolio, although I ditched NYX in favor of GE some time ago. Has anyone noticed Alcoa (AA) lately, and how about Sierra Wireless (SWIR), wow!.

Disclosure: long SWIR, AA, GE

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Tuesday, August 4, 2009

Is Sequenom Going To Payoff?

It's been really quiet at Sequenom (SQNM) regarding the investigation into the delay in its SEQureDx test. The company reports their second quarter on Thursday and I suspect there will be news on the investigation and test. The stock has been on fire lately and of course the message boards have been on fire.

I've got my fingers and my toes crossed on this one because if the news is good, the stock probably goes back to 20. Short interest is enormous and the company has a number of products that if brought to market could push the stock over 100 in a few years.

One more thing, if the news was bad, as in the product was no good or it was back to square one, I believe you get that news early. Clearly what went on was a bit harder to decipher and the company must be putting a plan together for re-launch. Also, if it was a bust, it would have leaked and and the stock would be at 2 bucks. That's just my 2 1/2 cents.

Disclosure: long SQNM

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The Vix

About This Blog

Where we rant and rave about the market and of course give our opinions on stocks we love or hate. We're not advisors and urge you to conduct your own due diligence.

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