Damage held to the AM-IBB Holds at $180

Two Volatile Stocks

Green stocks in our coverage universe: ACHN, BIIB, CBST. Volume on all biotech stocks was above average, so review technicals as this could be a correction in the sector. We have not changed any of our biopharma picks but raise some cash as the big money has been made YTD. Some strange volatility is occurring so we suspect funds are raising cash and re-positioning their portfolios. Look at two stocks AEGR,and INFI today as examples:

Infinity (INFN), a MO stock with a YTD high of $50.51 and a low for the year around $33, but is down 22.65% to a new low YTD at $24.32. This was clearly an exit by major hedge funds who expected big things at ASCO Phase 1 Data from their IPI-145, P13 delta and gamma oral inhibitor for hematologic deficiencies. Analysts must not have liked the Abstracts from ASCO. We picked INFI a short paired with ALKS as a long.

Aegerion (AEGR) surged 31% after a Merrill Lynch Bank of America analyst said there was a $1B opportunity for their FDA approved orphan drug Juxtapid for treatment of the rare disorder homozygous familial hypercholesterolemia.There was a 12% short position on the stock even though it was hard to borrow. Many of the funds holding large positions of Infinity were also long Aegerion strangely enough.

Sell-Off in Momentum Stocks Suggests Portfolio Rebalancing By Major Funds

Review Your Portfolio Now-Update after market close

We have not done a detailed analysis but the tape today suggests major funds are raising cash after an all time high (IBB) of $186 was reached on Tuesday. Even our index of 40 mid-cap biotech stocks was red except for a handful-DVAX, JAZZ,VICL. Biogen (BIIB) was also stable off only 0.4%. My guess would be that major hedge funds who drove MO stocks to irrational highs are taking a bundle off given that their profits are enormous. 

Tools and diagnostics stocks are stable with many green tickers.

Just look at some of the movers where we have provided coverage in 2013:

Alexion (ALXN) off 4%, Gilead (GILD) off 2.43%, Infinity (INFI)-short- off 19%, Pharmacyclics (PCYC) off 2.3%, Regeneron (REGN) off 3.89%, and Seattle Genetics (SGEN) off 3.89%.

ASCO is coming up at the end of the month and industry insiders know that news will be a driver of stocks. It could be that investors are taking winners early given that the sector is up over 30% YTD.




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