All In on Biotech

Recently we added Dr. Joe Duarte to our research team at Smart Tech Investor, and have been very impressed with his insight and analysis. Although we realize the biotech sector has appreciated considerably during the past year and may be due for a correction, we feel the long term upside is so significant that we simply cannot afford to wait any longer to add this important component of the technology ecosystem to our coverage.

Going forward, each issue of STI will include a biotech article from Dr. Duarte, and each weekly edition of Smart Tech 50 Weekly Movers will include a sector update from him as well. In this issue’s In Focus article, Dr. Duarte describes what he terms “the new normal paradigm in biotech”, and how that will impact biotech stocks going forward. As we continue to build out our coverage in this space in the months to come we will devote a separate portfolio just to biotech stocks for Dr. Duarte to manage, in addition to our three existing portfolios.

In his Sector Spotlight piece Rob DeFrancesco discusses “Takeover Targets in Software”, which is integral to the innogration process. Innogration is an evolutionary process that constantly seeks out products that offer some sort of survival advantage, with the cash-rich mega-cap stocks on the prowl for smaller companies to acquire. But as Rob points out, sometimes a company can become so large that potential acquirers bypass it in favor of less expensive alternatives, such as the ones he notes.

In his Next Wave Portfolio Update, Rob reviews the most recent quarterly earnings for four of his portfolio holdings: Paycom Software, NICE Systems, Varonis Systems, and Nimble Storage. Hopefully you bought most of these stocks when they were first recommended, as some of them have delivered huge returns during the past year. And remember, you don’t want to “cherry pick” only one or two of these portfolio stocks, as the sector is too volatile to risk ending up with one of the few under-performers. It is better to own them all, and then slowly weed out the ones that cannot keep up with the rest.