Update-4 JY 23 Midday trading: Reiterate-take Profits on COVID Vaccine stocks
- Big Sell-Off Today: BNTX, INO, MRNA, NVAX. Antiviral stocks REGN VIR holding up. Review and update after the close. XBI weak but holding in channel.
Update-3 July 21 Momentum is easing a bit with some buying into laggard sectors like energy and materials. GLD up 2.06%, XLK down 1%, XBI down 2.08%.Notable all time biotech highs today: DHR, IMMU, TMO.
- Vaccine Movers: BNTX up 3.85%, NVAX up 1.78%, INO up 6.62% (not shortable), MRNA down 2.2%. From what I have read the experts picks as best prospects are: BNTX, Oxford/AZN and MRNA but this is a week to week race. Now that preliminary results offer hope for a vaccine in 2021 politicians are asking about vaccine pricing.
- Gene therapy stocks were in a red screen mode.
- Mid-caps we follow were also hit hard across the screen but most were near 52 week highs: ALNY down 4.5%, INCY down 2.77%,LGND down 2.72%, Volume was below average.IBB was down 2.29% to $142 level off Mondays high at 4146 level.
- Large caps were weak but near 52 week highs.
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Update-2 July 20….Some vaccine news on Oxford/AstraZeneca fails to boost stock down 3.96%, more results by September.
As you can see from the chart below, COVID vaccine stocks have made a huge run-up since march and as we have said in earlier posts , “the easy money has been made”. trading these stocks. We have to wait until September to see more data from more from the top eight candidates before we can see 1-2 vaccines pulling away from the pack. Even if the vaccine are safe and produce neutralizing antibodies you still dont know how the immune response protects against coronaviruses in real life. Trading in these stocks will remain volatile and choppy.
- Narrow rally in mega-cap techs with NAZ up 2.58%.
- Coronavirus stocks weak or mixed but XBI up 1.41%; winners BNTX, GNMK, REGN, TDOC; losers AZN, QDEL, INO, MRNA, NVAX.
- 2/3 of my new biotech picks did well today; CRSP up 2,95%, XNCR up 5.16% ; large caps were mixed.
Biotech Portfolio Review: Stay the Course or Rotate Holdings?
- Innovation is a Key Driver of the Life Science Industry.
- The wild card is progress with COVID vaccines.
- See Coronavirus Stock Play Summary at Bottom of page
Your biotech portfolio is probably up at least 10% YTD because the IBB is up ~17% and the XBI up 18.35% while the S&P 500 (SPY) is flat YTD. The tough call is that if Technology (XLK) is also up 18% YTD similar to biotech performance do you raise cash or go more defensive with the life science positions you own.So here are three model portfolios to track within life science and healthcare but independent of your overall holdings. We kept 10% cash in all model portfolios because of the run-up and need for future buy ins. With a few exceptions we have not included many of our top picks because of their excellent one year performance: ABBV, BMY, GILD, GNMK, MRK, RHHBY, TDOC etc.
Here are a few general assumptions in developing these portfolios:
- Biotech bull market continues with one 10% correction. The COVID pandemic has upgraded medical stock sentiment with many people because of a perceived greater need for therapies and vaccines
- Underperforming sub-sectors will come back slightly as surgeries pickup. e.g. medtech and devices.
- Stock picking gets harder near market tops and more volatility caused by news, the 2020 election and geopolitical events.
Disclosure: we are overweight biopharma and life science.
Our biotech portfolio review will show which of the various ETFs and funds outperform .
Strategy One-Keep it Simple and Stay With the Leadership ETFs Trending
- Three ETFs: IBB, XLV, XBI equal weight-30,30,30% and 10% Cash or split cash and GLD.
Strategy Two- Overweight Healthcare but more Defensive Stance
- XLV and IBB 20% each, XHE Medtech 20%; BMY 10% JNJ 10% UNH 10%, Cash 10%.
Strategy Three– Diverse Life Science and Mutual Funds; More Trades.
- IBB and XHE 20% each; FBT 10%.
- Three Life Science Funds:FBIOX, FSMEX, PRHSX 10% each
- 10% trades in mid-cap or large caps: AZN, CRSP, XNCR initially.
- 10% Cash.
These biotech portfolios will be reviewed monthly through 2020. We will fix prices and weightings after today’s close..
Coronavirus Stock Plays as of July 18, 2020
| Company | Stock | 3/6 P | %Perf | 3/16 P | MCap | 4/30 | 7/18/P | %Perf | |
| week | $B 3/16 | YTD | |||||||
| Co-Diagnostics | CODX | 12.89 | -8.83 | 9.09 | 0.226 | 11.34 | 18.45 | 1961 | |
| Gilead Sci | GILD | 80.23 | 8.5 | 68.9 | 87.06 | 84 | 77.51 | 19.28 | |
| Genmark Dx | GNMK | 4.54 | 0.275 | 12.51 | 18.27 | 279.8 | |||
| Inovio | INO | 14.09 | 166.31 | 6.13 | 1.12 | 12.03 | 26.97 | 717.3 | |
| Moderna | MRNA | 29.61 | 8.6 | 26.49 | 9.77 | 46 | 94.85 | 384.9 | |
| Regeneron | REGN | 494.43 | 8.3 | 440.83 | 48.5 | 525.9 | 644.06 | 71.5 | |
| Teledoc | TDOC | 135.9 | 9.6 | 116,74 | 8.49 | 164.6 | 217.77 | 160.1 | |
| VIr BIO | VIR | 45.7 | 15.1 | 45.76 | 4.61 | 30.51 | 51.38 | 308.6 | |
| AstraZeneca | AZN | 37.79 | 52.28 | 61.1 | 22.54 | ||||
| BioNTec | BNTX | 40 | 47.48 | 85.25 | 151.6 | ||||
| ChemBio Dx | CEMI | 2.36 | 12.7 | 5 | 9.65 | ||||
| Hologic | HOLX | 32.25 | 50.1 | 61.88 | 18.52 | ||||
| NovaVax | NVAX | 6.91 | 18.13 | 140.49 | 3430 | ||||
| Quidel | QDEL | 74.2 | 139 | 267 | 256 | ||||
| FBT | 177 | 19 | |||||||
| IBB | 143.96 | 19.46 | |||||||
| XBI | 118.74 | 24.84 | |||||||
| XLV | 105.89 | 3.96 | |||||||
| QQQ | 259 | 22 | |||||||