12/10/21Update-1 A good week with S&P At New Highs despite inflation at 40 year highs at 6.8%. Infotech leading way up. Small cap biotech still lagging near lows for the year. XBI at $110 could not hold mid-week gains. Same pattern for ARKG now at $60.74 near lows at $56. Large cap biopharma  and healthcare still strong holds: ABBV PFE  REGN RHHBY UNH VRTX. Healthcare XLV up for the week but IBB down.

12/6/21 Update-1…Market rallies on omicron variant optimism less severity. Russell 2000 up 2% with some our top small/mid caps moving up CYRX and VCYT. Healthcare lags but ABT, ABBV and UNH show gains. Vaccine stocks BNTX and MRNA plummet double digits. VRTX holds $205 level. Drug pricing legislation remains the major headwind to the biopharma industry.


Healthcare Performance in a Volatile Month

  • Small cap biotechs continue weak-ARKG and XBI get no traction.
  • Quality large caps remain good holds: ABBV, ABT, REGN RHBBY,UNH.
  • Sector shift to large cap cyclicals and value underway.

It’s been a rough month for small cap biotech stocks amidst a general correction in the market which brought general indices down about 10%. Despite breakthroughs in vaccines, antivirals, sequencing and molecular diagnostics investor interest in life science stocks has waned.  Analysts and specialist hedge funds hit with big losses in the sector blame potential passage of drug pricing legislation by Congress and overvaluation of an avalanche of young companies that are overvalued yet have no clinical stage products.And overlay these issues with the strong statements by Chairman Powell on the taper and inflation concerns and you have risk aversion. As we await more data on the omicron variant and how effective our current vaccines will protect we have a greater period of uncertainty.

Over the past week the market has moved toward value and industrial and away from the explosive growth and high PE of tech stocks which have traded on momentum. Among the weakest sectors were the Russell 2000 down 3.86%, the NASDAQ composite don 2.62%,, and Consumer Discretionary down 2.36%. So for the short-term we have big concerns about GDP growth from COVID yet intermediate expectations of inflation and rising rates.

Review our model portfolio performance below and notice that the XLV is still  up 18% YTD led primarily by United Health (UNH) up 31% YTD. We previously recommended a more basic portfolio with the XBI AND the XLV but as you can see the IBB has taken a hit and is now at a loss for 2021 down 2.25% again today at $145.

Our strongest recommendation has been to overweight large cap biopharma stocks like ABBV,REGN and RHHBY that have growth and strong pipelines. We recently recommended Vertex Pharmaceuticals (VRTX) at around $180. As another contrarian play have a look a laggard Bristol Myers Squibb (BMY) now at $57.39.

About mid-year we added medtech stocks to our portfolio with  the IHI or FSMEX.


2020 12/3 2020 2021 2021
Stock/ETF Ticker Price Wgt 11/27 Price YTD 2020 Price MTD High P
10/25 % 12/31 %Perf % Perf 12/3/21 % Perf 2021
iShares NAZ Bio IBB 136 25 143.22 151.5 -2 25.7 148.39 -9.95 176.81
iShares Russell 2k IWM 163 10 184.37 196.4 9.51 18.3 214.7 -10 234.42
Merck MRK 80 5 79.86 81.77 -5.33 -10 73.34 -17.3 88 or PFE
United Health UNH 330 15 337.94 350.7 31.31 27.19 449.32 -1.75 460
SPDR S&P Bio XBI 117 5 131.46 140.8 -22.2 48 109.53 -16.55 174
Healthcare SPDR XLV 108 25 109.44 113.4 18 14.71 130.37 -3.64 136.81
T.Rowe Hlth Sci
99.65 9 106.8 -9.2 117.14
iShares U.S MedT IHI 15 54.83 13.42 61.87 -6 67.15
Tracking Comp
ARK Genomic ARKG 93.26 -37.39 58.39 -25.41 115.15
Fido Biotech FBIOX 25.18 -22 19.63 -15 27.73
Fido MedTech
-9.04 81.62 -7.83 89.34
DOW DIA 13.23 346.24 -4.23 358
S&P 500 SPY 21.27 453.42 -2.43 459
NASDAQ-100 QQQ 22.12 383.13 -0.77 404

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