The 2CentView portfolio was up 12% fo the year, which matched the S&P500 but well above the FTSE100 (flat).
The portfolio ended the year 75% US and 25% UK 0% Europe – mainly because the US was the only market showing real jobs growth and a rising stock market – the model also showed many more opportunities in the US than outside the US. The exposure to USD/GBP exchange rate is also something to keep an eye on – sterling strength representing a buying opportunity for US Stocks – but can go the other way!
Where it did badly:
2 Core positions were savaged – Blinkx (down 90%) and $TCG (thomas cook) which cost the portfolio nearly 6% – need to do a better job managing zero cost core positions – where you can take your eye of the ball.
Europe and US House & Autos continued to underperfrom and took losses in Deutsche Bank, HSBC and $USG and $GM – all go cut on the 25% Stops (they continued to go lower – except $GM which has come back – thanks EBOLA!)
Also took some losses in $FUEL, $GIMO, $ICPT on the rotation out of expensive growth stocks into more low growth stocks – growth positions are the riskiest and hardest to manage as moves can be savage.
Where it did well:
$AAL- American Airlines, $SAVE did very well up nearly 100%
$FB up 37%
$CELG and $ISIS – up nearly 80%
$YHOO – up 40% – easiest trade of the year!
$AAPL – up 50%
$MS – Morgan Stanley up 30%
Rite Aid and Radian also performed well (core positions from 2013)
2014 was in general lot tougher than 2013 as the market experienced volatility throughout the year – Russia/Ukraine, EBOLA, Oil price collapse – all tested the nerves – but also represented buying opportunities.
The 2CentView strategy of taking some profits, setting stops helps build low cost positions and mitigates losses from positions not working – this really helps in managing volatile markets – and helps you sleep at night – we all have day jobs!
Overall the portfolio is up 73% since beginning of 2013 when the model and strategy was first built.
Main lesson learnt from 2014 – be more selective and if a core position drops more than 30% – start to exit – even if it is because of a malicous blog!
So 50% of the portfolio was up average of 51% =25.5% on the winners
30% portfolio down 25% = -7.5% on the losers
Extraordinary breakthroughs in the UK life sciences sector” and is investing 10% of his portfolio in UK companies like Oxford Nanopore and Circassia Pharma, according to the Times.
The Times also mentions US Biotechs – Celgene, Gilead, Amgen, and Biogen Idec.
There are breakthroughs happening in the US – and every week small biotechs announce innovative new treatments are getting FDA phase one approval.
2CentView has been tweeting about $CELG and $GILD all year – so hopefully you are involved in at least one big biotech – FVs below:
Which are all up between 30 and 50% this year and still reasonably valued.
As for the smaller Biotechs – there are 100’s! and picking the right one is a lottery…
Best to buy the IBB ISHares if you want exposure to the whole sector, or buy into Neil Woodford’s portfolio.
Warning: The Sector is however very risky – invest for the long term so keep positions in the IBB and small Biotechs small and look to add on weakness – and keep wide stops.
Large cap Biotechs holding up as smaller caps continue to sell off.
Both $GILD (Gilead Science) and $CELG (Celgene) reported this week with analyst upping EPS forecasts on Gilead.
$GILD FV now 90, is a hold at $73 and a buy if you are not long at $70 (stop $60) take profit target $90.
$CELG FV still 170 post results.
$ICPT – intercept – taking a beating from the $320 level when 2CentView first tweeted. The potential for this company is huge [they have synthesised Human Bile], but there are no earnings for the first 3 years.
If you got in at 320, keep the position (which should be small!) unless it dips below $200.
If you are not long, look to buy a small position here at $260, stop $180. Do Some good research first!
Price target $400. This is a volatile stock – be prepared to take the loss.
BioTech companies which are difficult to know what exactly they are worth and want exposure to the Biotech sector, then buy $CELG (Celgene).
The recent pull back from 169, means $CELG has 2015 p/e lower than Pfzier and Merck!
It also makes investments in smaller Biotech companies like OncoMed, Epizyme and several others – helping them make the big breakthroughs, so automatically gives you exposure to smaller biotech without having to buy them!
$CELG 5Y implied growth is 15% vs Merc 16% and Pfzier 13% – so this looks very attractive on valuation grounds and much less risky than $REGN, $ISIS, $ICPT etc..
2CentView is that there are breakthroughs happening in the BioTech sector – this has brought a flurry of new bio tech companies trying to catch the wave of investor optimism – this means the prices paid are way too high and too uncertain and too risky.
Celgene is a much a safer bet.
Still like $ICPT though – at around 300 could be worth a small speculative punt.
Being long $ICPT is a bit like winning the lottery (with much better odds!) – there are so many BioTech stocks!.
If you want to get involved, here some good ones to look at. Prices are not cheap, but the stocks are at premium for a reason – this sector is making medical breakthroughs and the traditional pharma companies will start buying them up or merging.
$GILD – a 2CentView pick at 60 now $75 – FV Now $95. Focus: Hepatitis.
$CELG – FV=140 but this on a 24% implied Growth at 174, so not expensive in growth terms.
$BIIB – implied growth = 28%.
$REGN – the most expensive on a implied growth of 44%.
Companies with no positive EPS but have potential new break through drugs
$ICPT – intercept Pharma – the news their drug – which has the same structure as human bile acid, will go straight from trial to commercial use rocketed the stock!. BAML estimate of $400 is regarded as Conservative
$ISIS – RNA Research – new field of Research using Ribo Nucleic Acids
$CLVS – Clovis – BAML next potential $ICPT – anti cancer agents
Buy 2/3rds of your position in $GILD, $CELG or $UTHR : take profit 50% up, 25% down.
Buy 1/3 in one of $ICPT, $ISIS, $CLVS – Risk Reward: 3 to 1: take profit 70%, loss 35% down