Biogen - Over and Out...

I just saw Biogen's press release regarding a third MS patient using Tysabri was diagnosed with PML. Apparently this patient was using Tysabri alone and not in combination with Avonex. This is not good and Tysabri's chances of coming back to market is pretty much nil. This is a good example of the cockroach theory: If you see one bit of bad news; there's a chance more bad news will follow. Also a good example of never average down! I held onto the Biogen position because I believed that Tysabri alone would not cause PML. I was wrong, so now it's definitely time to cut my losses and move on.

It's been so... hectic at work. You can tell when I find things stressful, I just go to McDonald's for lunch. Yeah, it's a weird way of relieving some work stress. McDonald's is so convenient, they even accept credit cards now!

An IPO - Ticker symbol PSP

Well, believe it or not I took today off from work so I could get my hands on a Sony PSP. The demand for this item reminds me of a hot IPO. Sony could have priced this gadget much higher and people would still have gobbled it up. I got mines at a Best Buy and they actually have good deals on the games($5.00 off each game and if you purchase two games, you get an additional $10 Best Buy Gift card). This beats all the other price gouging PSP packages out there.

I really believe the PSP has the potential to be a category killer. Sony makes little if anything on the actual PSP device. The money maker is in the software and movies. They get a bit of the action on every game and movie sold. A high tech razor blade business. I'm actually considering making a small investment in Sony. Will do a bit more research...

Fun Investment Books

I just finished reading Wall Street: The Other Las Vegas by Nicolas Darvas. It's an investment book, written in the 1960's. He basically made his fortune by trading in stocks that were breaking out. If you want to learn more about his technique, I would suggest you read his other book: How I Made $2,000,000 in the Stock Market. I learn a lot from reading the old / classic investment books. As you read the old books, you realize that many of the rules still apply today. History often repeats itself and human psychology does not change...

Good Old Genentech

Just when you thought it was over for the biotech sector, Genentech delivers some good news. Their Avastin drug is effective against lung cancer. Analyst are already estimating potential sales of $500-$700 million for the company in the lung cancer market. I own a few shares of Genentech in my Roth IRA, I just wish I had more! Well this is exactly what the biotech sector needed, some good news. I'll take this any day...

My Non-Retirement Portfolio

Well, here's a quick snap shot of my non-retirement portfolio. As you can see it's a very concentrated portfolio. Companies such as Invitrogen (IVGN) and Qiagen (QGEN) were purchased on the day of the IPO. I mainly invest for the long term and trade very little. When I started investing, I over traded and realized that a lot of the gains vanished through transactions costs and taxes. So now, I mainly buy and hold growth stocks (strong eps and growing free cash flow).

Ticker	% of Portfolio	% Return
BSX	4.52%	+4.71%
FSH	1.13%	+10.56%
GENZ	57.37%	+197.26%
IVGN	4.02%	+330.42%
JNJ	2.64%	+19.94%
LVS	1.73%	+58.59%
BIIB	2.87%	-46.48%
CYTC	0.84%	-21.05%
MSFT	1.07%	-36.61%
QQQQ	1.40%	+33.95%
QGEN	11.39%	+226.43%
PFE	5.29%	-7.62%
CASH	5.74%

Old Oil Memories

I've never had much luck investing in the oil companies. For example, in 1997 I purchased Diamond Offshore Drilling (DO) near the top. At that time analyst were reporting that oil drillers were in a secular growth phase. The deep driller rig rates were going through the roof. And you can guess what happened next. The Asian currency crisis erupted and the oil stocks just collapsed.

The recent run up in the oil companies brings back the old memories. It's very tempting to jump in and participate in this run up, but it feels like 1997 again. Just about everyone is bullish on the oils. I've learned my lesson before and I'll take a pass on the oils for now. I'm probably wrong, but history has a weird way of repeating itself.

No new trades yet, I'm still building up my small cash position (currently ~6% in cash).

Johnson & Johnson (JNJ)

It's nice to see JNJ making a new all time high. I was debating whether or not to sell my JNJ position. My original intention was to take profits with a 20% gain. I'm impressed by the strength in JNJ stock. There's probably more upside. So, I'll hang in there for now...
What worries me is that everyone is starting to get bullish on JNJ.

Biogen Idec / Tysabri - not good

I've just finish reading this weeks issue of BioCentury and they had an excellent in depth write up on Biogen / Tysabri. Not many positives at all... For example, "... physicians contacted by BioCentury were unanimous in their reluctance to use the drug again - except perhaps in urgent salvage cases - unless it could be definitely shown that Tysabri monotherapy will not cause PML." Biogen's pipeline is rather thin with only a couple of Rituxan phase III studies (i.e. RA studies). According to BioCentury, Biogen Idec's three year revenue / EPS growth rate falls to a projected 9% for revenues and 15.9% for earnings. The company is currently trading at 23x this years earnings and 20x next years. This looks a bit expensive to me. Even if Tysabri comes back, it will not generate significant sales until the physicians become comfortable with the safety data and that could take several years. Now it's time to consider cutting my losses and move the cash to better uses. A position in Biogen Idec is dead money.

Left Behind in the Rally

The market shot up with the good employment numbers. Unfortunately, my portfolio did not participate in this rally. This is what happens when you don't diversify. My portfolio is heavily over weight in the pharma / biotech sector. This sector is still affected by the negative news from Merck, Pfizer and Biogen. It will eventually come back into favor, but it's going to take some time. Johnson & Johnson is the only pharma that's making any good progress; it hit a 52 week high today. I wish I had more JNJ in my portfolio...