Bullish Mentality Drives Usual MO-vers: PCYC, MDVN, REGN, SGEN 

It is hard to add biotech stocks to your portfolio at these elevated levels but big players like Fidelity, Cap World, JPMorgan, T.Rowe Price and selected hedge funds- Orbimed, Baker Bros, etc can drive their holdings up more on any good news. Case in point is Medivation (MDVN)  up 4% to new highs on news that JNJ’s drug Zytiga sales (Q4 Sales $264M) for prostate cancer may have been slowed due to competition from Medivation’s drug Xtandi.

  • Many biotech stocks including some in the Rayno Life Science Portfolio (GILD,REGN) are driven by momentum.
  • Metrics do not matter for the high fliers because PEs and P/S are not useful during the hypergrowth phase (MDVN,REGN ).
  • A strong NASDAQ as well as related indices and ETFs (QQQ) create more biotech buying.
  • Funds with huge buying power like Fidelity can buy more of  their favorite stocks especially when retail investors get an appetite for the biotechnology sector.

A quick review of selected best performing large cap biopharmaceutical stocks shows big holdings (as of 9/30/12) by the major players:

Biogen Idec (BIIB) up  22.6% 1 yr.  22.8M sh held by Fidelity

Biomarin (BMRN) up 56.7% 1 yr.  13.7M held by Fidelity

Celgene (CELG) up 33.9% 1 yr.  12.8M shares held by Cap World

Onyx (ONXX) up 86% 1 yr. 8.4M shares held by Fidelity

Pharmacyclics (PCYC) up 314% 1 yr. 11M shares held by Baker Bros.

Regeneron (REGN) up 123% 10.8M shares held by Fidelity

The ETF FBT  hit new highs yesterday:

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