Update-2 Healthcare and Biotech Recap September
Our strategic focus has been large cap biopharmaceuticals and healthcare (mainly UNH). Smaller caps have been a disappointment except for traders.The IWM is down 10% in one month! Some of our speculative picks are still in the green since JY 1 CCXI, CRSP, EVH, XBI . Our leading biopharma picks are: BMY, LLY, REGN, VRTX, Portfolio laggards are ABBV and GILD.
Over one month ending 9/30 here is performance:
- IBB down 3.75, XBI down 5.23%.
- UNH down 2.75%, XLV down 2.93%
- QQQ down 10,7%, XLE down 10.5%.
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Update-1 9/28 1:30 EDT…Biotechs rally on Eisai/Biogen News that their Alzheimer drug slows progression of disease. This breaking news shows how much the market wants major clinical developments news on treatment of Alzheimer disease. And why biotech stocks can always rally on the potential of new drugs and innovative technology.
- Biogen (BIIB) is up 37% to $272 recovering to near 9/21 highs. Lecanemab shows reduction of clinical decline in Phase 3 Study of 1795 participants.
- LLY is up over 7% on potential of a similar AD clinical stage product plus a blockbuster obesity drug.
- News sparked rally in many large cap biopharmas: GILD, RHHBY, VRTX with IBB up 3.55%.
- Speculative small caps soared: ABOS up 93%, GERN up 5.9%, PACB up 8.7%, ROIV up 5.7%.
- ARKG up 4.8%, XBI up 4.2%.
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Healthcare Stocks Continue to Outperform Market
- UNH up 2.28%, XLV down only 12.89% YTD.
- Large Cap Biopharmaceutical leaders: VRTX, MRK, LLY, REGN all up over 10% YTD.
- SMID Cap Biotech breach technical lows with XBI down over 31% YTD.
Large cap healthcare and biotech stocks have been resilient amidst the market turmoil caused by rising rates and global geopolitical crisis. If your portfolio was overweight large cap energy and healthcare equities you may have been insulated from big losses.Small caps of any flavor are being crushed with all the major ETFs hit hard: IWM down over 24%, IJR down 22%, IWD down17% YTD. The ARKG is down over 50%! Without small cap strength generally biotechs and the XBI cannot rally.
Biotech ETFs are underperforming when momentum in the sector is waning. You need to pick outstanding stocks or stay with large caps.The IBB is down over 24% and the up- trend was broken at the $120 level.
Moreover with 2 year treasury yields over 4% you don’t need to take short term risk for decent gains.
Consider adding life science tools and diagnostics stocks to your portfolio. One of our top picks is the T.Rowe Price Health Sciences Fund (PRHSX). Among the top holdings are: UNH, DHR, TMO, ISRG and LLY adding a diversified mix of large cap tools and device stocks. These are growth stocks with less volatility in revenue,
Keep in mind that healthcare is a defensive sector so with an upside reversal rally healthcare could be left behind. Sector shifts are volatile as we saw last week with energy stocks.This is a treacherous volatile market with daily MACRO events. More clarity should be coming with Q3 earnings.
Long all large cap biopharmas, UNH, PRHSX, XBI.
| Model | |||||||||||
| PORTFOLIO | |||||||||||
| 2020 | 2020 | 2020 | 2021 | 2022 | |||||||
| Stock/ETF | Ticker | Price | Wgt | Price | Price | 1 year | Price | YTD | 30days | ||
| 10/25 | % | 12/31 | % Perf | 12/31/21 | % Perf | 9/23/22 | %Perf |
%Perf
|
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| iShares NAZ Bio | IBB* | 136 | 15 | 151.5 | 25.7 | 152.62 | -31.14 | 115.32 | -24.44 | -8.02 | |
| iShares Russell 2k | IWM | 163 | 5 | 196.4 | 18.3 | 222.45 | -20.36 | 167.31 | -24.79 | -12.38 | |
| Merck* | MRK | 80 | 10 | 81.77 | -10 | 76.64 | 11.81 | 86.78 | 13.23 | -3.79 | |
| United Health | UNH | 330 | 25 | 350.7 | 27.19 | 502 | 21.86 | 513.61 | 2.28 | -4.14 | |
| SPDR S&P Bio | XBI | 117 | 10 | 140.8 | 48 | 111.96 | -38.67 | 76.65 | -31.54 | -12.65 | |
| Healthcare SPDR | XLV | 108 | 25 | 113.4 | 14.71 | 140.89 | -8.57 | 122.73 | -12.89 | -5.12 | |
| T.Rowe Hlth Sci | PRHSX | n/a | 5 | 99.65 | n/a | 104 | -25.4 | 83.84 | -19.45 | -7.79 | |
| iShares U.S MedT | IHI | 50 | 5 | 54.83 | 65.85 | -24.67 | 48.07 | -27 | -7.81 | ||
| Tracking Comp | COMP | ||||||||||
| ARK Genomic | ARKG | 93.26 | 61.24 | -60.55 | 32.14 | -47.5 | -10 | ||||
| FIDO Biotech | FBIOX | 25.18 | 19.35 | -33.57 | 15.03 | -22.33 | -8.35 | ||||
| FiIDO MEDtech | FSMEX | 76.15 | 83.18 | -33.96 | 56.6 | -31.95 | -7.33 | ||||
| DOW | DIA | 310 | 363.32 | -13.58 | 295.9 | -18.57 | -10.1 | ||||
| S&P 500 | SPY | 379 | 475 | -13.45 | 367.95 | -22.53 | -10.77 | ||||
| NASDAQ-100 | QQQ | 315 | 397.85 | -22.41 | 275.51 | -30.75 | -12.29 | ||||
| Top Biopharmas | |||||||||||
| Abbvie | ABBV | 21.66 | 143 | 5.66 | 2.91 | ||||||
| Bristol Myers Sq | BMY | 3.77 | 70.71 | 13.41 | -2.83 | ||||||
| Eli Lilly | LLY | 16 | 311.46 | 12.76 | -1.16 | ||||||
| Merck | MRK | 11.8 | 86.78 | 13.23 | -3.79 | ||||||
| Regeneron | REGN | -14 | 697.33 | 10.42 | 15.73 | ||||||
| Vertex | VRTX | 41 | 283.42 | 29 | -0.98 | ||||||