InvestingDaily.com

Account Information

  • My Account

    Manage all your subscriptions, update your address, email preferences and change your password.

  • Help Center

    Get answers to common service questions, ask the analyst or contact our customer service department.

  • My Stock Talk Profile

    Update your stock talk name and/or picture.



Close

Cancer Stocks Are On the Move

By Jim Pearce and Rob DeFrancesco and Joe Duarte on March 7, 2016

All three of our Special Situations Portfolio “cancer stocks” – companies that are on the cutting edge of developing revolutionary treatment for some of the worst forms of cancer, were in the news recently. And almost all of the news was good, with all three stocks moving up smartly as a result. Here’s a quick rundown:

Argos Therapeutics (ARGS) announced this morning that it has arranged a private placement offering of up to $60 million in common stock and warrants to a syndicate of institutional investors. Although this series of transactions will have the ultimate effect of diluting its existing common stock, it should ensure that the company will remain liquid through the end of the current testing phase of its AGS-003 “alpha cell” cancer treatment. It is worth noting that one of the participants in this transaction is China BioPharma Capital, suggesting that it is positioning itself for distribution rights in China for this drug once it receives FDA approval. At the end of last week ARGS closed above $5.50 for the first time since last October, and has more than doubled in value since the beginning of this year.

Juno Therapeutics (JUNO) released its fourth quarter and 2015 year-end operating results last week. The news was mostly good, including over $1.2 billion in cash at the end of the year with a “burn rate” (negative cash flow) of less than $200 million annually in terms of operating cash flow. That should buy plenty of time for its cancer treatments in trial to fully play out, and so far the first clinical milestone for it CD22 CAR T-cell treatment has been reached. Over the past week its share price has run up from $38 to $43 mostly on the strength of this news.

ZIOPHARM Oncology (ZIOP) also released fourth quarter and year-end results two weeks ago which included “encouraging data” from its Phase 1 brain tumor study and from its Phase 1b/2 breast cancer study. Both of these treatments use its Ad-RTS-IL-as+veledimex gene therapy to encourage production of Interleukin 12, which is a protein that stimulates production of cancer-fighting “t-cells.” At its current burn rate the company estimates that it has enough cash on hand to see it all the way through the end of 2017, by which time the expected outcome of many of these trials should be known. Since making this announcement on February 24th ZIOP shares have increased from just under $8 to $9.50, a gain of nearly 20%.

There are many more bridges to cross before any of these companies can declare victory in the fight against cancer, but thus far all of them are proceeding as we hoped. Please bear in mind that although we believe our Special Situations stocks offer more long term upside potential that the average stock, they are also riskier and should be viewed as speculative investments.

Jim Pearce

 

Next Wave Portfolio Update—Workday

By Rob DeFrancesco

Sentiment had gotten overly negative early last month on Workday (WDAY), with the stock dipping to a 52-week low of $47.32. From the 52-week high of $92.62 reached last May, the shares were off nearly 50% on unfounded concerns about increased competition from legacy software vendors and a potential slowdown in cloud-software spending. Workday was hit especially hard because of its elevated valuation. The sharp pullback proved to be a buying opportunity.

Workday shares surged more than 18% on March 1 after the company’s fiscal fourth quarter results beat expectations on both the top and bottom lines. Revenue in the January quarter rose 43% to $323.4 million, above the consensus estimate of $319.6 million. Management said win rates were the highest in eight quarters (especially against main competitors Oracle and SAP) and that it saw no impact on demand from any negative macro developments. Billings guidance was raised for the fiscal first quarter (ending April).

Workday is doing a lot of things right in order to continue to grow its business over the long term. The company is signing up new customers at a healthy rate (100 were added in fiscal Q4, a record quarterly gain), getting customers live in a timely manner (more than 70% of the total customer base of 1,181 is in production on the platform) and investing heavily in R&D (representing 40% of fiscal 2016 revenue) to develop new products as a way to expand its total addressable market.

While Workday’s core human capital management (HCM) software still has plenty of upside (BofA in the latest quarter became the largest customer in production), the newer financial management offering is emerging as the dominant growth driver. About 30% of all new customers subscribe to both offerings.

With the full Workday enterprise sales force now selling both solution sets, this could be the year when the financials product really starts to ramp. Going into fiscal 2017 (ending January), the pipeline of financial management business was up 150% from the year-earlier level.

Workday in fiscal Q4 added a record 45 new financials customers. Of the 207 total financials customers, more than 100 are now live, double the year-ago level. J.B. Hunt, the transportation services company, went live in the latest quarter; it’s now the largest financials customer in production.

The competitive landscape on the financial management side looks quite appealing, according to Workday CEO Aneel Bhusri. On the fiscal Q4 earnings call, he said SAP (SAP) doesn’t have a real cloud strategy for financials, while Oracle (ORCL) is struggling with its Fusion financials module.

At the end of January, Workday’s unearned (deferred) revenue stood at $899.7 million, up 42% from the year-ago level (the current portion—to be realized over the next 12 months— totaled $769 million). In fiscal 2016, non-cancelable subscription backlog of $1.56 billion was up 62%, vs. a 52% gain in fiscal 2015. The combined total (unearned revenue and backlog) of $2.45 billion rose 54%. The company’s net new annual contract value (ACV) growth rate is expected to accelerate in fiscal 2017 as the financial management product gains traction.

Looking ahead, this fall Workday is expected to roll out new solutions covering planning and learning management. With the addition of Workday Student (focused on the higher education vertical), the three new offerings will expand the company’s addressable market by $5 billion. Workday has proven it can successfully sell additional modules into the customer base, as the recruiting module (part of the HCM unit) has 545 customers in less than two years.

For the fiscal first quarter, billings are now expected to come in at $360 million to $365 million, vs. initial guidance of $350 million. The company in FY’17 is capable of delivering 30% billings growth, 600 basis points above the consensus. With happy customers (the satisfaction rate is 98%) and increased Fortune 500 reference customer wins, Workday looks well-positioned for the year ahead.

Institutional investors who scooped up Workday shares in the fourth quarter definitely were happy to see the recent rebound in the stock. Fidelity was the #1 buyer (adding 2.82 million shares) and is now the #1 holder, with 9.82 million shares. HHR Asset Management initiated a position of 1.19 million shares. Baillie Gifford purchased 808,173 shares, taking its stake up to 7.47 million shares (it’s the #4 holder), while Janus Capital more than doubled its position to 1.48 million shares. Other notable buyers: Blackrock, Two Sigma Investments and Jennison Associates.

Workday remains a ‘Buy’ in the Next Wave Portfolio.

 

Emerging Biotech Investment System (EBIS) Update

By J. Duarte MD

In this issue:

  • The Big Picture: It’s Not a Biotech Problem. It’s a Health Care Problem.
  • In Depth: The Case for Cerus Corp. More Deals. Earnings due on March 8.
  • Special Situation Trading Portfolio: New!! Medidata Solutions (MDSO) A Very Special Tight Money Situation plus Opko Inc. (OPK) – Stealth Bull Market
  • Long Term Holding EBIS Portfolio Update: Steady as She Goes
  • News and Analysis: Is the Money Drying Up in Health Care?
  • Shopping List

The Big Picture: It’s a Health Care Problem

Biotech and health care investors are likely to be disappointed in the recent returns of their portfolio given  recent declines in this area of the market.  Thus, we thought that a comprehensive review of what’s happening and why it’s happening was in order.  This week’s issue is all about the changing financial climate of the U.S. health care system and its implications for investors and their portfolios.

This is the overriding dynamic from where all investment analysis and decision making in this sector of the market should start.  Obamacare is well entrenched now and the rate of change in the way money is distributed throughout the system, based on the law and its rules, are about to accelerate.  Simply stated, there will be less money available in the system, a fact that will create difficulties for many years for patients, doctors, and investors.  This combination of influences will change the system radically as big money investors begin to recognize the situation and act accordingly. 

Think of it this way: With 10,000 baby boomers retiring on a daily basis for the next ten years and Obamacare expanding the number of insured through Medicaid, there just isn’t enough money in the system to pay for health care at the rate that Americans have become accustomed to.  And although that sounds negative, there is a bright side for investors.   Companies that provide the services and products required to manage this new set of circumstances will likely outperform the traditional health care and biotech plays.

First we look at the technical aspects of the health care and biotech sectors, and then in our Special Situations Trading Section we have a new stock, Medidata Solutions (MDSO) which is well positioned to profit from this new set of circumstances. Finally, in our News and Analysis section we delve into the details of why you can expect big changes in the way money flows through the health care system and what it could mean for your investments and maybe your next visit to the doctor’s office.

SPX chart 2016 03 04

It’s not just a biotech problem; it’s a comprehensive health care sector problem for investors these days.  The S&P 500 (SPX) has mounted a nice comeback over the last three weeks, rising 10.4% from its early February bottom.   But the health care sector is lagging badly with the S & P Health Care Index (SPHC) only delivering a 6.4% rebound over the period.  The Nasdaq Biotech Index (NBI) has done slightly better, with a 9.2% bounce. 

NBI biotech index 2016 03 04

But a closer look at the charts tells a much different and more significant story.  The S & P 500 has recovered nearly half of the 13% that it lost in its most recent intermediate term decline while the NBI has recovered slightly less than one third of its 30% loss while the S & P Health Care Index has recovered less than half of its 14% loss.  The point is that health care and biotech stocks lost more ground during the recent decline than the S & P 500 and that both areas, especially biotech are not keeping up with the S & P in the rebound.  That means that investor money is going elsewhere more often.  There is a reason for this dynamic.

SPHC chart 2016 03 04

Looking at the bounce, from a chartist standpoint, we note the following. The S & P 500 is near a test of its 200 day moving average while NBI and SPHC are still trying to bounce above their 50-day lines. This tells us that the latter two indexes are still in intermediate term (weeks to months) down trends while the S & P 500 is further along in its recovery as it is testing the long term trend (months to years) of the 200 day moving average.  What this means is that if the S & P 500 bounces back above that line and moves further above it, it will be considered to be back in an uptrend.  Neither biotech nor health care stocks are close to that point.

The bottom line is that the next couple of weeks could be very significant because investors will be making significant decisions as to where they will be putting their money.  And investors tend to move toward the areas that have momentum, which at this point are other sectors beyond health care and biotech.  The other important point is whether the S & P 500 will be able to climb above its 200-day moving average and stay there long enough to bring more money into the market and extend the rally.

Still, our analysis shows that investors could still make money in biotech and health care related stocks by adhering to strict fundamental and technical criteria and by being willing to look for ideas beyond the traditional model.  We get that, which is why our EBIS system remains very reliable and our technical analysis Special Situations model has been very successful.  What we’re saying is that there is no reason to despair as there are still significant opportunities in health care and biotech outside the traditional areas. By the same token, investors should be aware of the fact that it may not be as easy to pick huge winners as it was in 2014 and 2015.

Our recommendations continue to err on the side of caution.

  1. Pay close attention to the overall market and how health and biotech stocks are faring in comparison.
  2. Monitor the price of all current positions in your biotech portfolio individually.   Look at each stock separately and keep up with Sell Stops and any trading rule that we include in our recommendation.
  3. Pay attention to news items, especially as related to products, mergers, takeovers and geopolitical events. There are many excellent stories in biotech at the moment, but they are more often than not company specific as the sector is overall weak. That means stock selection is the key to success.   
  4. Focus on risk management and on the fundamentals of any open position. Our July 27th, 2015 update has an excellent tutorial on how you may go about doing using this ETF to hedge your portfolio. For further reading on portfolio protection techniques and risk management also consider a copy of Dr. Duarte’s “Trading Options for Dummies.”
  5. Don’t get over confident and stick with what’s working. Risk is still high in this market but a long term strategy reduces risk because of the time horizon of the expected payoff.

In Depth: EBIS (Emerging Biotech Investment System) Pick: Cerus Corp. (CERS)

Restated Buy Recommendation: Cerus Corp (CERS).  Earnings Report due March 8, 2016

Cerus Corp. (CERS) – Buy Range $5-$7. This stock was initially recommended 11/16/15. Bought 11/16/15 at $5 – 3/4/16 closing price $5.72.

We like Cerus Corp. as a long term portfolio holding. The company has the potential to become a key player in the area of blood supply testing. The company has been steadily increasing its book of business based on increasing sales of its Intercept blood component sterilizing system.  On March 4, the company announced a new purchase deal with the Puerto Rico blood banking system.  The company’s earnings are due on March 8, 2016.  Although we don’t expect any current increase in earnings or revenues, we expect that there will be more detail on the expectations for the future of revenues and earnings based on the current ongoing situation with the Zika virus. 

Earnings estimates are for $9.72 million in revenues and a loss of $0.16 (16 cents per share) in net income. Hopefully there will also be some guidance on how the FDA approval process for Intercept’s use in red blood cells is going as well.

A recent document from the FDA recommends one of two methods for decreasing the chance of Zika virus spread by the blood supply. One is by pathogen reduction techniques, such as Zika’s Intercept system. The other is by obtaining blood products from geographic areas where the virus is not known to be locally transmitted.

We first recommended Cerus in November 2015 as a niche play in blood testing. And as the market’s volatility tells us to be cautious, we thought it would be worth having a second look at this small company and provide a detailed update on why we still like it.

Cerus is a niche play on blood testing and the neutralization of infectious agents including hepatitis, HIV, the agent that causes syphilis and other infectious agents and may be a play on the Zika virus based on case reports and recent data from the company. Cerus has a proprietary technology, the Intercept system, which is used to test blood components, plasma and platelets, for parasites and viruses and to inactivate them. Cerus has been expanding its market share steadily in the last 6-12 months, having signed key agreements for the use of Intercept with key regional blood supply agencies in the south of the United States and elsewhere. It already has a presence in Europe, Africa, and South America, which may be its most important asset at the moment.   Cerus, in our opinion, may be a focal company as the Zika virus dynamic plays out, due to its the potentially pivotal role in the prevention of blood supply contamination with resurging infectious agents. The company, on February 9, announced a multi-year deal with the American Red Cross for the use of the Intercept system for testing of plasma and platelets. The American Red Cross is the largest supplier of blood products in the United States.

It’s important to recognize that Cerus’s potential market is huge. It does not have FDA approval for Intercept to test red blood cells, yet. But it is in the process of attaining that approval. And if it does receive it, we would expect the shares to explode to the up side, regardless of market conditions as the global market for blood transfusions is huge, with over 100 million potential transfusions per year possible. Consider that there is now a huge influx of immigrants from the undeveloped world entering Europe but also increasingly the United States.   This one dynamic, when coupled with normal travel patterns of Americans to global destinations where mosquito borne diseases are not rare, raises the potential for a resurgence of infectious diseases rarely seen in the U.S., and thus their entering the blood supply. Just recently the incidence of dengue fever, a mosquito transmitted virus that can lead to heart disease has increased in the U.S. where cases have been reported in Texas as well as Hawaii. The state of Hawaii has declared a state of emergency for mosquito borne diseases including dengue fever and the newly recognized and more emergent Zika virus even though their incidence is seen as declining.

We previously reported that analysts Dan Cohen and Scott Matusow make an interesting case for the Intercept system, noting an August presentation by the company regarding the Zika virus and the potential use of Intercept as a way to reduce the spread of the virus via the blood supply. The authors also noted that CERS has received approval in Brazil for such a use with Intercept. Both authors report ownership in shares of CERS.

CERS currently has FDA approval for testing plasma and platelets, but not red blood cells. Studies are under way for red blood cell application of the Intercept system. The bottom line is that it is plausible to consider that CERS shares could spike at any time within the next twelve months if its Intercept system proves to be useful in the treatment of Zika virus by early detection and eradication of the virus via testing and treating of the blood supply as well as the implications of further gains in the shares if the company receives approval for application of the Intercept system for red blood cells.

Dr. Duarte owns shares in CERS.

CERS gets a +7 EBIS rating, HOLD. It is, however, a very attractive and moderate risk company with excellent long term potential as its focus on blood supply testing seems to be extremely timely given the current geopolitical situation and the resurgence of infectious diseases.

Here are the EBIS details:

The EBIS Score for Cerus Corp (CERS) is + 7 (HOLD) based on September, 2015 data.  

  • Cash on hand: (+1) CERS had $58 million in cash on hand in September 2015 compared to $22 million in December 2014.
  • Cash on Hand growth (year over year): (+1) The year over year cash growth was 32%.
  • Revenues (present or not): (+1) Cerus reported $8 million in revenues in its September quarter compared to $9.5 million a year earlier.
  • Revenue growth (10% or greater): (+0) Revenues fell by 16% year over year in the September 2015 quarter.
  • Trailing Total Liabilities/Current Assets (<1=+1 , >1=0): (+1) CERS has a 0.30% ratio, which means that it can cover all its expenses with its cash and current assets in a worst case scenario and continue to operate the company.
  • Earnings (Present or Not Present): (+0) CERS had a $16 million loss in its most recent quarter
  • Net Income Growth (Year over Year): (+0) CERS cut its losses by 22% year over year in September.
  • Products on the market: (+1) CERS has products on the market and is making strides in expanding its market share.
  • Pipeline Strength: (+1) CERS has one key product in late development stages in its pipeline.
  • Late Stage Clinical Trials and Product Launches: (+1) CERS has several important products in critical stages

The EBIS system consists of ten fundamental criteria that are updated every quarter after the earnings results for each company are published. Each criterion gets a value of +1 or zero. A total of 8 or more points earn a Buy rating. A total of 5-7 points earn a Hold rating. Less than 5 points delivers a Sell or Avoid rating. EBIS was introduced in the June 15, 2015 issue of the Biotech Report. The stocks in this portfolio are companies with long term profits. Our goal for this portfolio is to include stocks which we expect will be held for periods of at least twelve months, but likely longer.

Long Term Holding Portfolio Update

Meridian Biosciences (VIVO) Buy $18-21 – 3/4/16 closing price $20.69.Stock initially recommended on 6/29/15.

We still like Meridian Biosciences and suggest adding to shares on weakness. The company still has a 4.37% dividend yield and despite its decreased earnings, its results are comparable to its peer group. The longer term fundamentals are still positive given the increased likelihood of rising infectious diseases based on immigration and demographic patterns that are emerging in the U.S.

VIVO develops, manufactures, and markets diagnostic testing kits focused on gastrointestinal infections, virus detection, and parasitic illnesses. It also produces reagents and key testing and DNA amplification and enzyme related materials used in research. It has recently released a new product, the Para Pak single vial transport system for parasite testing which simplifies the transport of samples to the lab by using one vial instead of the more complicated multiple package systems that are currently on the market.

Meridian delivered $47.07 million in revenues and $8.47 million, or 20 cents per share in net income for its December 2015 quarter. This was a 10.58% decrease in earnings on flat revenues. And while this sounds disappointing, it’s actually a pretty good set of results.   The company’s gross margins increased as did the amount of cash on its balance sheet, which are both excellent signs of management that is looking toward the future. Vivo also kept its quarterly dividend at 20 cents per share.   Meridian delivered a mixed earnings report on November 5, 2015, beating on revenues at $47.5 million and missing on its net income by one cent at 20 cents per share. Estimates averaged $46.64 million in revenues and 0.21 cents per share for earnings.   This was a reversal of the previous quarter. The stock paid a 20 cent dividend on 11/12/15 and yields 4.4%. Dr. Duarte owns shares in VIVO.

Novo Nordisk A/S (NVO) – Buy Range $50-55. Recommended 12/21/15. Bought at $55 on 12/21/15. 2/19/16 closing price $56.75. Sell Stop at $46.

Short Term Trading Recommendations

These are stocks that have the potential for trending profits over shorter periods of time, sometimes days, but mostly weeks to perhaps months. The fundamentals are secondary in this portfolio, which is geared for momentum type stocks.

Trading stocks are only recommended as trades based on technical analysis and momentum.   These are not stocks meant for long term holding periods.

  • Special Situation Trading stocks are not EBIS type stocks. This means that they are more volatile and that any moves by these stocks, up or down, can be very fast and treacherous.
  • Follow the trading guidelines and recommendations issued with each stock in detail.
  • Trading guidelines are not applicable to our longer term holdings in the EBIS portfolio.

New Recommendation Alert – Medidata Solutions Inc. (MDSO) – Buy $36-$39.  Sell Stop $32.

Medidata crunches big data for health care companies at the research level. It not only has apps that help organize and study the research starting from the project stage to the clinical trial stage but it also has an app that allows patient input into the data.  The company also has a financial tracking system that lets its clients keep track of who is getting paid and how much as well as keeping trends and other financial variables in focus.  They are expected to report earnings in late April.  Revenues and earnings have been steadily rising.  In the current environment where money for health care expenses is expected to decrease, MDSO is well positioned.

Rollins Inc. (ROL) – Buy at $27-29. Bought 2/22/16 at $27.38. 3/4/16 closing price $28.67. Sell Stop at $22. Initially recommended on 2/22/16.

Rollins Inc. (ROL) is well positioned for the increasing awareness of how infectious diseases are transmitted.  The stock has been steadily climbing since our recommendation on 2/22/16.  This is a very special situation with a relationship to biotechnology in the current environment. Rollins owns Orkin, the exterminating company, and could be a big beneficiary of the current health concerns regarding Zika virus. It also owns other businesses, including TruTech and Critter Control which focus on wild life control. The company also focuses on bed bug and other pest extermination. This is a highly speculative trading situation which may have a short term lifespan but may also be increasingly powerful given the current potential for the rise in incidence of parasitic and animal vector related diseases. Thus, in the current market it’s an interesting story stock to consider.

Rollins is not a cheap stock trading at 39 times past earnings. Its most recent quarter delivered modest growth in both earnings and revenues, in the 5-6% range, which although not too exciting, is likely sustainable given the nature of the business. The company continues with a steady expansion plan including the addition of several international franchises, focusing on areas with large pest populations. It continues to invest in technology, recently updating support and analysis systems and including communication and software tools to its employees in order to maximize their interaction with customers.

Active Trading Recommendations:

  • Alert – ProShares Ultrashort Biotech ETF (BIS) Bought 2/28/16 at $48-$50. 3/4/16 closing price $43.90.  Sell stop changed to $42.
    • Note: We opened and closed a position in BIS earlier this year for a net gain of 53%, so this is a new trading recommendation.
  • Alert –Opko Health Inc. (OPK) Buy Range $8-$11. Bought 2/1/16 at $8. 3/4/16 closing price $9.70. Sell Stop raised to $8.  This stock is in a stealth bull market.
    • Note: We think the market is wrong on this one as management has expanded the company through acquisitions which have already delivered profits and operating capital and that buying it now could prove to be an excellent longer term play. We are also looking to add this company to our EBIS list in the not too distant future.

Opko delivered a well received earnings report in late February that showed that the company is consolidating its recent acquisitions. It has made several advances on its current business lines and products in development as well as ongoing successes and milestone payments from collaborations from other companies.

  • Alert –Emergent BioSolutions (EBS) Buy Range $36-39. Bought 1/25/16 at $36. 3/4/16 Stopped out at $34 on 2/8/16.  Total return (-) 5.5%.

News Update and Analysis: Is the Money Drying Up in Health Care?

We hate to bring up Donald Trump on these pages, not because we like or dislike him, but because so many people are so for or against him and he is a polarizing figure.  But whether you like him or not, he has changed the context of the political equation by saying the things he has said and continues to say. 

With regard to health care he has said two things that he would do if he became president.  One is that he will allow insurance companies to compete across state lines. The other is that he will let the government bid for drugs.  In both cases, it means that prices for two significant health care products would likely drop.  This would put both of those products on par with the cuts in pay that doctors have been receiving for several years.

The latest example of the shift in the way money flows through the health care system comes from the Obama administration’s recent communication which says that it’s ahead of schedule on implementing its “pay for performance” initiative for paying Medicare doctor bills.  Pay for performance is a government formula that is based on measures that the government thinks are important in patient care, such as whether diabetes and blood pressure measurements are within what the government thinks they should be.  There are some specialties, however, that are difficult to quantify when it comes to pay for performance. It’s not certain what “ahead of schedule” means.  But it sounds as if doctors are going to get another pay cut.    

What’s our point? The government has figured out ways to cut the amount of money it spends on Medicare by cutting what it pays doctors and hospitals. Through the Medicare advantage plans, such as those administered by United Healthcare (UNH) and its AARP brand, the government has also cut prices for what it pays for certain medications, again at least indirectly and on paper.  And it’s just beginning.  If Mr. Trump gets elected, he has said that he will have the government become a bidder for medications; a move that he hopes will cut prices and increase competition.  And while there is nothing inherently wrong with competition and creating value, it is important to consider that the end point of health care is to keep as many people alive as possible by helping to manage their conditions. 

Those who read our “Big Picture” segment above can see that the price charts for health care and biotech stock indexes are dismal compared to the rebound in the S & P 500.  If you put the charts together with what is clearly steady erosion in what the government and subsequently insurance companies are willing to pay for medications and health care services, you can see that investors are starting to get concerned.   In an election season, when the loudest voice is yelling about cutting health care costs and when softer voices aren’t speaking disputing it, it suggests that the train for lower spending on health care has not only left the station but is well on its way along its trip to its destination.   

From an investment point, the results are clear. The bar has been raised significantly for analysts, companies, and individual investors. In the future, we think that a story and a strong balance sheet is only the beginning.  What will matter most, is who will be willing to pay for health care products and services, and how much.  Finally, it will be interesting to see what quality of products and services will be available for discounted prices and how many companies will be able to survive what lies ahead.

Shopping List

  • Regeneron (REGN)
  • Bio-Rad Labs (BIO)
  • Amgen (AMGN)

2016 EBIS Portfolio Results:

  • Emergent BioSolutions (EBS) – (Bought 5/11/15 MPP* 30.63) 1/7/16 Stopped out at $36. Return 17.63%.
  • Cambrex Corp. (CBM)  Position Closed: Sell Stop Triggered at $50 on 12/18/15. Bought 10/20/15 at $44. Return 13.6%.
  • Masimo Corporation (MASI) –Buy issued July 20, 2015. MPP: $40.65). Sell Stop triggered at $38 1/6/16. Return (-) 6.5%
  • Sirota Dental Systems (SIRO) – Buy Range $104-$108. Bought 1/26/16 at $104. 2/5/16 closing price 106.57. Sell Stop hit at $98 on 2/12/18. Return (-) 5.76%.
  • Vertex Pharmaceuticals (VRTX) – Trading Buy Range $96-100. Bought 2/4/16 at $96. 2/5/16 closing price $86.61. Sell stop hit at on 2/5/16 at $86. Return (-) 10.41%.
  • ]Emergent BioSolutions (EBS) – Buy Range $36-39. Bought 1/25/16 at $36. 3/4/16 Stopped out at $34 on 2/8/16.  Total return (-) 5.5%.
  •  

 2015 EBIS Portfolio Results:

  • DYAX Corp (DYAX) – Position Closed: Company taken over. Originally bought 10/7/15 at 22. 11/6/15 closing price was 34.52. Trade return: 56.9%.
  • Celldex Therapeutics (CLDX) – Trading Recommendation Position Closed: Stopped out at 16. Recommended 10/26/15. Buy range entered 10/26/15 at 13.22. Total Return 21%.  
  • Alnylam Pharmaceuticals (ALNY) – Trading Buy triggered at 85 on 10/9/15. Trading Recommendation Position Closed: Stopped out at 100 on 11/16/15. Total Return 15%.
  • Edwards Life Sciences (EW) – (Initially recommended 10/19/15- Bought 10-27-15 at $76.50 post 2 for 1 split). Trading Position Closed: Sell Stop Triggered at $78. Return 1.96%.

Stock Talk — Post a comment Comment Guidelines

Our Stock Talk section is reserved for productive dialogue pertaining to the content and portfolio recommendations of this service. We reserve the right to remove any comments we feel do not benefit other readers. If you have a general investment comment not related to this article, please post to our Stock Talk page. If you have a personal question about your subscription or need technical help, please contact our customer service team. And if you have any success stories to share with our analysts, they’re always happy to hear them. Note that we may use your kind words in our promotional materials. Thank you.

You must be logged in to post to Stock Talk OR create an account.

Create a new Investing Daily account

  • - OR -

* Investing Daily will use any information you provide in a manner consistent with our Privacy Policy. Your email address is used for account verification and will remain private.