Update-1 2:30P EST 12/30 …Countertrend rally in small cap biotechs. Who is buying? Daytraders, ETFs or funds? Or just tax loss selling is over. Omicron news dominates healthcare complex.
- Bounce in ARKG and XBI.
- Green screen flashes in smaller caps:CYRX, CRSP, PACB,TDOC, VCYT etc.
- Even gene therapy is up:CLLS, CRSP, EDIT,NTLA.
- Biogen buyout rumor fading stocks down 7.8% to $238.
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Healthcare Stocks are Winners in 2021
- Outperformance was achieved with one ETF the XLV. United Health (UNH) was up 44%.
- Small cap biotechs were down 20% as tracked by the XBI.
- Consider positions in medtech and molecular tools in 2022.
We will provide 2021 Year End Performance to our recommended healthcare portfolio as of Friday December 31. Here’s an interim report as wells as our previous update from 12/10/21.
The S&P weighting for healthcare is 13.5% We allocate our healthcare portfolio by one major ETF the XLV which is up about 24% YTD at $141.20. The XLV has done very well in December off its lows of $130. So one can diversify a general stock portfolio to healthcare with one ETF the XLV. Our top overweighted pick within healthcare is United Health (UNH) up 44% YTD !
Healthcare Stock Winners: Large caps ABBV, REGN and VRTX.
To add further diversification to healthcare consider ETFs in biopharmaceuticals and medtech both of which underperformed the XLV. Large cap biopharmaceuticals did well especially our top picks : ABBV, REGN, RHHBY and VRTX but the iShares Biotechnology ETF (IBB) at $153 was flat YTD and volatile having peaked in February and August.
As we have written their year many times speculative small cap biotechs have not done well in 2021 since they peaked in February. The bellwether SPDR S&P Biotech ETF (XBI) at $112.74 was down about 20% YTD and even failed to rally in Q4. Many of these smaller cap biotechs lack revenue and some lack clinical stage products. Even clinical stage biotech companies have high risk for stock pickers without scientific knowledge. Moreover the biotech market was flooded with IPOs in 2021.
We also introduced specialized life science funds (PRHSX ) and medtech (FSMEX) ,iShares US Medical Devices (IHI) up 21% YTD to our portfolio and those sectors could do better in 2022.
