Friday, January 27, 2006

More Amgen??

Yup, I picked up some more Amgen (AMGN) yesterday @ $71.89. I've been eyeing Amgen all week and yesterday was the perfect opportunity to build a full position in the stock. Now, I'm going to hang onto this for a bit and see what develops. There's definitely lots of uncertainty surrounding the company: 1) earnings were pretty much in line and did not beat, 2) potential generic competition from Roche and 3) delay of the panitumumab (colon cancer) clinical trial results. Now this morning we have the herd mentality in operation, all of the brokerages are downgrading the stock. The brokerage ratings are a lagging indicator. Their downgrades are signaling a potential bottom and to sell here is a big mistake in my opinion.

Wednesday, January 25, 2006

Pharma Rotation

It definitely looks like it’s time to rotate back into the big pharmas. They have very attractive dividend yields and any tiny hint of good news; the stocks just take off. Bristol Myers (BMY) reported today and beat the estimates by a few pennies and the stock shot up 3% on very heavy volume. This is always a good sign! They reiterated a sluggish 2006, but the market has already priced that in and is looking for a 2007 turn around. So far we’ve had Pfizer (PFE), Bristol Myers and Abbott Labs (ABT) beating estimates. I like all of these companies, but I would be hesitant about putting any money in Johnson & Johnson (JNJ) here. Like a high stakes poker game, JNJ folded and Boston Scientific (BSX) ended up with Guidant (GDT). JNJ needs to show the Street that they have a strategy to boost their top line growth. Guidant was their answer, but not anymore... Everyone is assuming that they’ll go after St. Jude Medical (STJ) now, but we’ll have to wait and see. I have my doubts about that.

So what would I do? At this point, I would favor the pharmas over the biotechs. All the good news is pretty much factored into the biotechs, but there’s still a lot of pessimism in the big pharmas. I'm not selling any of my biotech holdings, but I would initiate positions in the pharmas. It's finally their time to shine a little bit!

Tuesday, January 24, 2006

Johnson & Johnson + Guidant?

Will Johnson & Johnson (JNJ) increase its bid for Guidant (GDT)? Time is running out and they have until 12:00 midnight to make a revised offer for GDT. My gut tells me that JNJ will not up its offer. I think the market is also betting that JNJ pulls out of this bidding war. If you look at the daily chart, Boston Scientific (BSX) rallies strongly towards the end of the day. BSX stock will continue to rally if it acquires GDT. But looking at JNJ’s disappointing earnings report today, they really need GDT to boost their revenues. Well, we’re four hours away from the big decision.

Saturday, January 21, 2006

A little Caution...

A nice correction, huh? I have to admit so far the companies reporting have issued disappointing 2006 guidance. I’m sure many of the companies are issuing more conservative guidance than usual so they can easily beat it, but I really think there’s a lot of uncertainty about the economy for 2006. There’s the recent spike in oil prices, but more importantly there’s the inverted yield curve. The inverted yield curve is telling me that the economy will be slowing in 2006. The stock market is forward looking and I believe it is starting to price in a slowing economy. The recent earnings reports and guidance just reinforces this notion. So what have I been doing? Not much except for my Roth IRA contributions. I still have a nice cash position for new opportunities. Believe it or not, I really like the big cap pharmas right here. So much bad news is priced into these stocks that any piece of good news will send these stocks up. An example of this was Pfizer’s (PFE) earnings report. This one still has more room to go. We have some more big earnings reports coming up: Amgen, Johnson&Johnson, Microsoft, etc… Overall, this correction is just a small blip in the big picture, as I don’t see a dramatic economic slow down…

Thursday, January 12, 2006

Big Cap Biotech = Dead Money

The biotech rally is going to take a little rest. On Monday, Genzyme released Q4 revenues that were below expectations. Their 2006 revenue guidance was pretty much as expected with the earnings per share estimates on the softer side. Genentech released their Q4 numbers on Tuesday and it met expectations. That’s not enough for a company like Genentech that has always beaten their numbers. My take on this… The big cap biotech’s are pretty much dead money until we get the Q1 results. I think the companies issued very conservative estimates for the upcoming year. I’m going to wait and see the Q1 results before doing anything. On the other hand, I like the action of the techs and may put some new money there…

Tuesday, January 10, 2006

Employee Stock Purchase Sale

I've started to sell some company stock for the condo downpayment. Our company just completed the Q4, 2005 employee stock purchase. I sold the shares today and netted a 85% total return. I still have two more quarters remaining with this favorable price. The sales from the employee stock purchase plan and the 5% initial downpayment will provide ~ 1/3 of the funds for my total downpayment. I hope to raise as much cash as possible without selling any stocks other than the ones from the stock purchase plan.

Monday, January 09, 2006

Good Companies To Work For = Good Investment?

Fortune Magazine just published the annual list of the 100 best companies to work for 2006. To check out the full list: Click here What's interesting is that my portfolio contains 4 companies on the list. They are: Genentech - #1 on the list, Amgen - #39, Microsoft - #42 and Genzyme - #51. So back to my question: Are companies on this list good investments? I think so... If I have some free time, I'll look at the returns as a group for the 100 best companies to work for and compare it to the return of the S&P 500. I bet that the 100 best companies will generate a higher return than the S&P 500. Just a hunch...

Saturday, January 07, 2006

Biotech Week

Next week is going to be a big week for the biotech’s. On Monday, there's the JP Morgan Healthcare Conference. This is one of the more important conferences with plenty of market moving news. Genzyme (GENZ) is expected to report Q4 revenue numbers at the conference. The consensus estimate for Q4 is $630 million in revenues and earnings per share of $0.61. Analyst will be focusing on Renagel, Cerezyme and Fabrazyme sales. There are some concerns with Renagel sales falling below consensus and foreign exchange exposure risk. Analyst expressed the same concerns with the Q3 numbers and Genzyme just blew them away. I guess we'll see on Monday. The other big biotech reporting next week is Genentech (DNA). Everyone is expecting a blow out number from Genentech once again. The consensus estimate for Q4 is $1.85 billion in revenues and earnings per share of $0.34. Both of these companies will set the tone for the biotech’s...

Note: I have positions in both Genzyme and Genentech.

Friday, January 06, 2006

Condo Update

Here's an update on the condo construction. Progress... There's now a giant hole in the ground. I still have to wait over a year before construction is complete. In the mean time, the year long wait will allow me to save up for a good down payment. I've only put down 5% with the developer with the goal of putting down another 20-25% when construction is complete. I'm just not too crazy about having a big mortgage. I simply hate debt!

Thursday, January 05, 2006

2006 Roth IRA

My first financial task for the New Year was just completed. I contributed to my Roth IRA and completed the purchases today. I divided the contribution into two mutual funds. I purchased the Fidelity Japan Smaller Companies Fund (FJSCX) and more of the Fidelity Contra Fund (FCNTX). The Japan Smaller Companies fund is definitely high risk, but I believe we are in the early stages of the Japanese recovery. And what more can I say about the Fidelity Contra Fund? It's just a great all around fund! Task #1 is completed, now onto to task #2, which is to raise cash for the condo downpayment.

Monday, January 02, 2006

1 in 20 Are Millionaires?

Well, that's what the article claims... A story in our local paper claims that 1:20 households in the Boston area are millionaires. Click here
I really think the figure is a bit high. The survey primarily looks at the wealthy suburban towns surrounding Boston and downtown Boston. The data is definitely skewed to show a high number of millionaires. It's still an interesting read to see how they came up with this conclusion. Hey, I wouldn’t mind being the 1 out of 20, but I’m not there yet… Hopefully one of these days!