Biotech Rampage

So I’m looking over the biotech sector in Exodus this evening and it dawned on me that the higher I went in market cap (I’ve set a ceiling of $5 billion cap in Exodus for biotech. Anything higher is placed in Drugs-Major), the better the returns. Clearly, hedge funds are playing this sector, crowding it to no end. The cynic in me says to run for the hills. Then again, taking into account all the stocks in the industry, it’s “only” up 13% for the year–with many being up more than 50% over the past two months.

But this post isn’t about warnings or throwing wet towels on cool rallies. Instead, I’ve decided to provide you with the tickers of the laggards, names that haven’t performed in line with the industry.

SGEN
JUNO
ACAD
TECH
RCPT
AGIO
PCRX
BLUE
KITE
MDCO
EXAS
FGEN
CMRX
ACOR
KERX
XLRN

I’ve found that when searching for stocks with market caps under $1.3 billion, it’s more hit and miss. The returns start to really weaken under $500 million. On the large cap side, there are only a handful of down stocks, which are ABBV, GRFS, JNJ, ALXN and AZN. Other laggards include AMGN, REGN, VRTX, MRK and LLY.

Botton line: be very careful about overweighting now, especially since the run up has been frantic. But if you are going to do it anyway, follow the smart money, like I did in the past with Randall J. “Fucking” Kirk and XON. Today’s purchase of BCRX was based off the ownership of two highly respected biotech managers: RA Capital and Baker Brothers. I don’t have an edge in BCRX, aside from my arsenal of weaponized influenza.

The above names are food for thought, meant to appeal to bottom fishers, tank suckers, and the cockroaches of the sea.