Not that I've actually posted or anything. Hopefully someone asides from me got something interesting out of this blog.
check out seeimadeit.blogspot.com for some completely unrelated fun. I made it is a sewing blog founded by Norma - she makes her own clothes and she is excellent at it and quite hot.
Saturday, May 22, 2010
Friday, March 27, 2009
We have a winner!
I am very pleased to announce that we have a winner for our "most ludicrous title for a sell-side research report" contest. No, this contest was never announced, publicized, or otherwise "run," but as the DeStocker is running the contest, the DeStocker gets to decide the rules of the game, right?
The prize (a lifetime supply of this valuable medical innovation) is awarded to our friend Charlie Duncan of JMP Securities. I tried to find a picture on the internet of Charlie but there are lots of Charles Duncans. In fact, I liked another one better, so I have used his image instead.
Anyway, we give kudos to some other Charlie Duncan for his note on ALTH,
"Early and Right on Another Emerging Leader in Hematology/Oncology."
Let's parse the key phrases in the title:
"Early and right"
Looking at the back of the report, there's a little chart showing the ratings history and target prices for ALTH in the hands of Dr. Duncan. Looks like he initiated with a buy rating in late 2007 at around $7 per share and a price target of $12. Last time I checked, this was a $7.50 stock. Also, I hasten to point out that just a few months before his initiation, the stock went from $4 to $7. Early and right?
"on Another Emerging leader...."
So here it seems that he is referring to some kind of pattern of victory in calling hematology/oncology stocks, based on his buy rating on Celgene. The body of the note compares the two companies in a kind of hematology/oncology bikini contest.
I could be a jerk and list out a few of the other stocks that Duncan has gotten dead wrong in the past, but I will refrain because I am feeling kind today. Maybe he's some kind of savant with Heme/Onc and that's why he felt it necessary to remind us all of his prowess here.
Hey, Charlie is a nice guy, but a little victory in the world of Heme/Onc is apparently a source of hubris. I hereby predict that ALTH is going to croak in some unimaginably weird fashion.
Thursday, March 19, 2009
Will your portfolio get you fired?
I woke up this morning with a heavy heart. I looked out the window, saw the rainy drizzle, and thought back to the rainy drizzle this time last year at the Cowen conference. Things were so simple back then; only one investment bank had failed, people still had jobs, everyone thought UTHR could do no wrong and BMRN was going to take over the world with Kuvan.
I thought about those two companies and realized that there are certain stocks that are safe to own from a career perspective and others where ownership will bring automatic firing. Some of this depends on whether or not you are a hedge fund analyst or a vanilloid investor, and whether or not you have already antagonized your portfolio manager via a brilliant unearthing of SQNM at $25, for example.
So for your reading pleasure, I present a hierarchy of stock ideas and the relative career risk level for the analyst who is proposing it:
Safe no matter what:
Gilead - nobody ever got into trouble for owning this. Even if you lost money you had a good reason for it.
Maybe you lost money here but you don't look like an idiot because everyone else did too
United Therapeutics - hey, I talked to a guy who called every doctor in the trial and it works!
Celgene - at some point the sheer earnings power of this company will be apparent. Say when?
Really jeopardizing employment
BioMarin - amazing how one drug can provide negative value to a company
Forest Labs - can justify valuation with a DCF; that and $2.00 will get you a cup of coffee
Pretty much a goner
Arena - if everyone else hates this, and it works, doesn't the stock go down?
Progenics - much like the drug in end-of-life hospice patients, this stock idea provokes instant shitting for portfolio managers throughout the United States. Usually onto their analysts.
I thought about those two companies and realized that there are certain stocks that are safe to own from a career perspective and others where ownership will bring automatic firing. Some of this depends on whether or not you are a hedge fund analyst or a vanilloid investor, and whether or not you have already antagonized your portfolio manager via a brilliant unearthing of SQNM at $25, for example.
So for your reading pleasure, I present a hierarchy of stock ideas and the relative career risk level for the analyst who is proposing it:
Safe no matter what:
Gilead - nobody ever got into trouble for owning this. Even if you lost money you had a good reason for it.
Maybe you lost money here but you don't look like an idiot because everyone else did too
United Therapeutics - hey, I talked to a guy who called every doctor in the trial and it works!
Celgene - at some point the sheer earnings power of this company will be apparent. Say when?
Really jeopardizing employment
BioMarin - amazing how one drug can provide negative value to a company
Forest Labs - can justify valuation with a DCF; that and $2.00 will get you a cup of coffee
Pretty much a goner
Arena - if everyone else hates this, and it works, doesn't the stock go down?
Progenics - much like the drug in end-of-life hospice patients, this stock idea provokes instant shitting for portfolio managers throughout the United States. Usually onto their analysts.
Tuesday, March 17, 2009
Sublime Analyst Headlines
Today is St. Patrick's Day and therefore I do not feel my typical sense of loss at waking up drunk. In, fact, my only concern at this moment is that I will spill my favorite morning brew (Guinness, coffee, and a dash of allspice) on the keyboard, shorting out the Rockintosh and preventing me from continuing my journey into the blogosphere.
I think back to this time last year; I was attending the Cowen Healthcare conference and was trying to hide my disgust at having to celebrate St. Patrick's day in Boston. There was some news item about some stupid investment bank that was having trouble. To my mind, it was no wonder they were losing money given they had the word "Bear" in their name. The news broke on Sunday night and while traveling out I tried to dial in to the conference call but all the lines were busy. There was another hedge fund manager on the plane who had successfully dialed in but he wouldn't share his phone line with me. Somehow in retrospect I do not find this surprising.
This morning I spent some time reading research notes, remarking on how some analysts just seem to fade away without a "cessation of coverage" note. It then falls on the buy-side analyst to figure out if they are still employed and if so, what their next up/downgrade is going to be.
The titles of research pieces fall into several key categories. I will use today's headlines for illustration:
The accidentally brilliant:
"ARNA: BLOOM Data...Soon--Lowering Earnings Estimate"
The innovative punctuation in this title is important because it reveals the analyst's true thoughts without subjecting the company to a tedious and divisive downgrade. On the surface, this looks like a simple note, saying "BLOOM data is coming soon; by the way, we are lowering our earnings estimate." (This in itself is a little silly since ARNA isn't going to earn anything in the next few years except the admiration of the obese if BLOOM works). But paying attention to the correct use of the ellipse, you get something entirely different: "BLOOM data approaches; soon we will be lowering our earnings estimate." Presumably because he thinks BLOOM is going to fail?
The brazenly zero-value-add:
"Genentech Inc. (DNA): Definitive merger agreement with Roche"
Only a Very Important Bulge Bracket Analyst (VIBBA) would be able to get away with a title like this, which could have been lifted from a headline on CNBC.com or, God forbid, Seeking Alpha. I suppose this kind of note can serve some kind of utility in letting a Very Important Portfolio Manager (VIPM) know that a certain little company was taken over by a bunch of cantonese, but I would imagine that the VIPM would have to be cowering under a rock, hoarding gold, twitching, and muttering to himself about AIG in order to have missed this wee news item.
The inadvertently revealing:
"Reports 4Q; Ph.III Data for Picoplatin in SCLC Coming Soon"
The analyst here made a point not to specify whether or not he thought the data would be positive, but is forced to write a note anyway because the company reported their quarter. From this title alone you can tell that this is not a bulge bracket analyst because those analysts can ignore quarterly results from little pipsqueak companies. The bland title also suggests that the analyst is unwilling to take a stand on whether or not the trial was successful; therefore he likely recently got burned on a binary event and is a little gun-shy.
The utterly obnoxious:
"Genentech:Time to Put it in the 'Win Column'; Downgrading to Neutral"
This is a variant on those titles like "as we predicted, XYZ fails" or "ABC works, as we predicted." In fairness, this analyst typically acknowledges when he is right and when he is wrong. But generally, please spare us a tallying of your brilliance. We know that you rule already.
The totally awesome:
"Wood morning - March 13, 2009"
I have to thank Wood & Co for this.
I think back to this time last year; I was attending the Cowen Healthcare conference and was trying to hide my disgust at having to celebrate St. Patrick's day in Boston. There was some news item about some stupid investment bank that was having trouble. To my mind, it was no wonder they were losing money given they had the word "Bear" in their name. The news broke on Sunday night and while traveling out I tried to dial in to the conference call but all the lines were busy. There was another hedge fund manager on the plane who had successfully dialed in but he wouldn't share his phone line with me. Somehow in retrospect I do not find this surprising.
This morning I spent some time reading research notes, remarking on how some analysts just seem to fade away without a "cessation of coverage" note. It then falls on the buy-side analyst to figure out if they are still employed and if so, what their next up/downgrade is going to be.
The titles of research pieces fall into several key categories. I will use today's headlines for illustration:
The accidentally brilliant:
"ARNA: BLOOM Data...Soon--Lowering Earnings Estimate"
The innovative punctuation in this title is important because it reveals the analyst's true thoughts without subjecting the company to a tedious and divisive downgrade. On the surface, this looks like a simple note, saying "BLOOM data is coming soon; by the way, we are lowering our earnings estimate." (This in itself is a little silly since ARNA isn't going to earn anything in the next few years except the admiration of the obese if BLOOM works). But paying attention to the correct use of the ellipse, you get something entirely different: "BLOOM data approaches; soon we will be lowering our earnings estimate." Presumably because he thinks BLOOM is going to fail?
The brazenly zero-value-add:
"Genentech Inc. (DNA): Definitive merger agreement with Roche"
Only a Very Important Bulge Bracket Analyst (VIBBA) would be able to get away with a title like this, which could have been lifted from a headline on CNBC.com or, God forbid, Seeking Alpha. I suppose this kind of note can serve some kind of utility in letting a Very Important Portfolio Manager (VIPM) know that a certain little company was taken over by a bunch of cantonese, but I would imagine that the VIPM would have to be cowering under a rock, hoarding gold, twitching, and muttering to himself about AIG in order to have missed this wee news item.
The inadvertently revealing:
"Reports 4Q; Ph.III Data for Picoplatin in SCLC Coming Soon"
The analyst here made a point not to specify whether or not he thought the data would be positive, but is forced to write a note anyway because the company reported their quarter. From this title alone you can tell that this is not a bulge bracket analyst because those analysts can ignore quarterly results from little pipsqueak companies. The bland title also suggests that the analyst is unwilling to take a stand on whether or not the trial was successful; therefore he likely recently got burned on a binary event and is a little gun-shy.
The utterly obnoxious:
"Genentech:Time to Put it in the 'Win Column'; Downgrading to Neutral"
This is a variant on those titles like "as we predicted, XYZ fails" or "ABC works, as we predicted." In fairness, this analyst typically acknowledges when he is right and when he is wrong. But generally, please spare us a tallying of your brilliance. We know that you rule already.
The totally awesome:
"Wood morning - March 13, 2009"
I have to thank Wood & Co for this.
Monday, March 16, 2009
Losing An Old Friend
The DeStocker got up this morning, gave Mrs. DeStocker a goodbye buss as she headed off to her soul-crushing-but-economically-prudent-job, and sat down to his traditional homemade breakfast of coffee and an omelette aux fines herbes. While engaging in his daily curse-a-thon towards FreshDirect's lack of chervil, he decided to start a blog.
Yes, I will be blogging. While wearing pyjamas, of course, because that's the only truly authentic way to blog - much like how the Amazon.com guys started the company in a garage even though they could afford an office, because all good companies get started in a garage, right? Actually, the best bloggers blog naked but I think the cable guy is coming today and I don't want to give him ideas. I saw something similar to that in a movie once and it didn't end well.
As my deepest thoughts devolve to what I might want to make myself for lunch, I realize that I should probably return to the original subject of this blog: healthcare stocks. Yes, I was once a professional stock-chooser on behalf of a hedge fund or two. And like many of the professional stock-choosers, my tenure in that role has come to a sad end. Not really that sad, actually, as I can pretty definitively say that obsessing about whether or not Celgene is going to miss or beat the quarter is no way to spend a life. But since I am now looking for a new job and I realize that I should probably maintain some semblance of conversational ability with the healthcare stocks (so I can tell my colleagues in the stockroom what I used to do for a living), I will happily share my thoughts with you, the interweb-reading public, unless it becomes boring or I find something better to do or learn how to knit or something.
Today I am a sad witness to the departure of one of the all-time great biotechnology stories; a company that will be remembered as a hotbed of innovation and an incubator of talent, with great products and a rich corporate culture. It's almost like saying goodbye to an old friend. I am referring, of course, to CV Therapeutics.
I think this photograph, taken at NASDAQ opening bell ceremony in February 2008, says it all. Look at the beaming faces of all the corporate participants, except for Lou Lange - he gazes at his hands with downcast eyes, noting the lines and calluses in their rough-hewn form, knowing that the end is coming and that the eventual fruits of his labor will be bittersweet, like a partially-poached quince.
I thought for ease of reference I'd create a nice little table that summarizes the differences between CV and some other company that recently got taken out by a bunch of cantonese
| Some other company | CV Therapeutics | |
| Strategic genius | Art Levinson | Lou Lange |
| Blockbuster product that shocks everyone with its efficacy, safety, and tolerability | Avastin | Ranexa |
| Slightly disappointing product that does not live up to commercial expectations | Raptiva | er, Ranexa |
| Deft strategic move | Cabilly reexamination | Aceon |
| Kind of uncool | Suing City of Hope | Pretending MERLIN was positive |
| Reason for takeout | A highly evolved version of insider trading | The Kasparovesque strategic moves of the Silver Fox |
| Place your bets on | C-08 | Over/under on first generic filing |
Finally, the best part about this transaction has been watching the reaction of sell-side analysts who cover Gilead, and who previously wouldn't deign to sneeze on CV Therapeutics if their QT interval depended on it. All of a sudden, this is a great opportunity to talk about darusentan! Of course, darusentan has to work now, otherwise Gilead has wasted a billion dollars. Or, more accurately, has wasted an additional $1.5 billion after buying darusentan in the first place for $2.5 billion (I am not ascribing any value to ambrisentan because, as far as I can tell, its only purpose was to distract hedge fund analysts into complicated cross-border shorts of Actelion, thus distracting them from engaging in profitable pursuits like buying CVTX long).
Really, folks, this relationship needs to come to an end.
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