Telik, A Biotech Blow Up

Why do I avoid biotech story stocks? Just take a look at Telik (Ticker: TELK), the company announced three phase 3 clinical trial results for Telcyta, an ovarian cancer drug and they all missed their primary endpoints. Talk about a striking out three times in a row! No matter how great the phase 1 and 2 clinical results are; you want to see positive phase 3 results before even considering going all in. It really is a gamble when you’re investing based on phase 1 and 2 clinical results. So be careful…

Mad Money? Not Quite...

I just finished reading Jim Cramer's new book: Mad Money: Watch TV, Get Rich. I was very very disappointed with the book. It contains very basic information and talks mostly about the TV show. He does touch upon a few strategies, but it definitely wasn't enough. I enjoyed his other book: Real Money: Sane Investing in an Insane World. I am a fan of his TV show, but not this book. If I was to pick just one book on trading, it would be Reminiscences of a Stock Operator by Edwin Lefevre.

As Jim would say: Don't Buy, Don't Buy...



But a Triple Buy on...

Sold Some Goldman Sachs and Bought Melco

I decided to take some Goldman Sachs (Ticker: GS) off the table. I sold 20% of my position in Goldman Sachs @ $201.10 generating a net gain of 18.22%. I still like Goldman Sachs a lot and intend on holding onto my remaining position for a bit. I used the proceeds from Goldman Sachs and picked up Melco PBL Entertainment @ $21.87 (Ticker: MPEL). The company came public today and was rather tame, rising 13.42% in its initial debut. It’s a pure play on the Macau gaming market. I’m really bullish on the casino stocks in the US and in Macau. I'm also looking to add to my MasterCard (Ticker: MA) position and reinitiating a position in J.Crew (Ticker: JCG).

Tool Maker, Slow and Steady

I’ve always had a soft side for the life science tool makers. They’ve treated me well to some nice $$$. It’s currently a $25 billion industry growing at 7% annually and expected to grow to $35.7 billion by 2010 according to the December issue of the Genetic Engineering News. The major players in this industry are Sigma Aldrich (Ticker: SIAL), Techne (Ticker: TECH), Invitrogen (Ticker: IVGN) and Qiagen (Ticker: QGEN). I like Sigma Aldrich the most. They’re mostly a chemicals biz, but aggressively moving into some higher margin areas such as functional genomics. This company is very shareholder friendly. They constantly repurchase their own stock and pay a nice little dividend. So if I were to pick just one from this group; it would be Sigma Aldrich. If you want to add a little excitement with a little higher growth, I would look at Qiagen. They dominate the plasmid purification kit market and have a steady high teens plus growth rate. This sector is a safe way to play the biotech companies, but they are highly leveraged to R&D and government funding. I currently own Qiagen and Invitrogen, but looking to swap a bit into Sigma Aldrich.

House Cleaning Done!

I did a bit more house cleaning today and swept away Boston Scientific (Ticker: BSX) at $16.79 and generated a net loss of 47.82%. I used the cash from this sale and purchased Master Card International (Ticker: MA) at $100.79. I’ll continue to scale down my biotech holdings just a bit, but not at these bargain prices. The big cap biotechs are cheap, cheap, and cheap! Genentech (Ticker: DNA) trading at 30X next years earnings (30% grower), Genzyme (Ticker: GENZ) trading at 20X next years earnings (20% grower) and Amgen (Ticker: AMGN) selling at 15X next years earnings (15% grower)… Do you see the pattern? These are solid growth companies selling at 1X their growth rate. If they go any lower, it’s back up the truck time!

Choose Red or Black on the Roulette?

I decided to trim my biotech holdings a bit by selling Vertex Pharmaceuticals (Ticker: VRTX) at $44.33 and generated a net gain of 19.52%. With short term trades, I generally will take my profits when I achieve ~ 20% gain. Vertex is really a story stock and will not be profitable for several more years since they are still conducting clinical trials for their hepatitis C drug. The results look very promising so far. Anyways, I’ve been keeping tabs on MGM Mirage (Ticker: MGM) and used the proceeds from the Vertex sale to pick up a few shares of MGM at $54.73. I have a pretty strong conviction in this company after Kirk Kerkorian announced a tender offer for some shares at $55. I think the market will give MGM Mirage a nice P/E expansion when their Macau facility opens up in the end of 2007. Ok, I choose RED! Come on RED!!!

Caught The Gold Bug

I think I caught a small sniffle from the gold bug. I've decided to dabble a tiny bit in gold. TheStreet.com recently highlighted a pretty good deal from EverBank. "It's an FDIC-insured, five-year CD with an interest return that's tied to the price of gold. You're guaranteed not to lose money: If the price of gold drops over that five-year period, you'll get your initial investment back but simply will earn no interest." (Click: Here). The deadline for this offer is December 12th.

Weak Dollar = Good For Biotech?

The big cap biotechs have been in the dumps recently, but they do generate a large portion of their sales from overseas. The Street.com has a pretty good write up talking about how the weak dollar could benefit the large cap biotechs (Click: Here). Of course when I invest, I really don't focus much on the currency fluctuations, but I wouldn't mind if this will boost earnings a bit. Hey if you want to play the weak dollar with a little foreign currency exposure, check out EverBank (Click: Here).