Swine Flu Stocks - Just Wait Until Fall 29 comments
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I've been watching some of the Swine Flu Stocks I initially covered right when the first cases were identified with a mixture of a) disbelief in the volatility and gains on little fundamental substance contrasted with b) envy that I didn't pick the right one(s) and let 'em ride.
Novavax (NVAX): If we take Novavax as an example, I had highlighted here in this Novavax CEO interview article that while the stock had rallied coming off the breaking news, much of it seemed to be based on hype and I postulated that the large pharmas with the existing capacity and approved technologies would likely get the lion's share of the tenders for vaccines. Following my post on 4/30, shares dipped as much as 40% within weeks and unfortunately, I didn't play it right and make any money on the call. However, subsequently, shares are now up 34% vs. the S&P rally of 15% even inclusive of that dip. For a high Beta stock like this, perhaps not to be unexpected even in lieu of any Swine Flu news, but not too shabby either.
Some Other "Swine Flu Stocks" over the prior 3 month period:
Each of these has a particular niche or stake in a swine flu breakout worth investigating further. Some have more diverse pipelines and approved products that don't rely so heavily on swine flu hype, and SVA is a Chinese biotech which adds an additional emerging market/preferred local China supplier tilt to the equation.
My calls that still stand:
a) Most of these "swine flu stocks" will not be able to retain their gains once the dust has settled.
b) Some will continue to run due to a large tender award here and there (if there isn't enough capacity to go around from large pharma, some of these smaller players will inevitably get some tenders)
c) Anyone making predictions on just how virulent and contagious the swine flu will become this fall doesn't know what they're talking about - anything can happen.
d) The revenues derived by the large pharmas like GSK will likely not see a meaningful impact to their bottom line (above and beyond what is already baked in to committed orders) given the relative small impact to revenues - and vaccines in general are a low margin business compared to small molecule products sold in massive scale like typical blockbusters.
Swine Flu Investing Idea
Rather than throwing money after individual stocks which are subject to massive volatility, perhaps consider some speculative cash going toward several cheap way out of the money call options on multiple stocks. If just one or two of them hit, the gains of Thousands % on the couple options that hit will more than offset the inevitable declines/losses you'll see in expired options that didn't go anywhere. I wouldn't advise LEAPS or waiting until January expiry. I think it will be quite evident by the Nov. time period both how severe the pandemic becomes and also, how effective/available the existing supplies of vaccines are. If things go well, expect options to expire worthless and your speculative play lost 100%. If things don't go so well on any of the multiple fronts, at least some of these shares could continue to see triple digit rallies, sending options returns into the 4-digit realm easily given the leverage employed and low starting share/strike prices.
What are your favorite Swine Flu Stocks, Ideas and Forecasts?
Disclosure: No position in any of the aforementioned stocks.
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Eight weeks ago, I intiated a conversation with my broker, who happens to sit on the Board of Directors of Jefferson Hospital, a large hospital here in Philadelphia. He stated back then that the board was already spending monies on training, protocols, inventory and guidelines. Back then, the board expected a 10% chance of AH1N1 virus mutating into a more virulent form, and a 30% chance of 30,000,000 dying worldwide.
I've been keeping a close eye on this flu, and I'm not liking what I'm learning. Several respected colleges of medicines here in the USA have put out articles that make my armhairs stand on end.
More recently, I talked again with my broker, who said he was becoming increasinigly concerned, and he's quite an understated guy.
Now comes the media into this phenomena, almost too late. I have read the the Minister of Health of England expects, by the end of next month, 100,000 new cases PER DAY!
I like your stock tips. I have been (morbidly, but defensively) picking up shares of (SNY), which has already had a lift.
This is one scary animal out there. I really hope the bad things rolling around in the medical community come in untrue.
Any of them might go up 1000% but any of them can go to zero. The best you can do is manage risk. If you're simply a fundamental investor -- it'd be very hard to put your money into any name and frustrating to watch them pop.
It's a rewarding space with a lot of risk. All depends if you've got the psychology to deal with massive swings in both directions. And the speed to get in and out and not regret your decisions.
"The estimates I've seen range up to 350 MILLION dead worldwide."
There is no scientific basis whatsoever for such an estimate. At this point, it is simply not virulent. The mortality rates are very low. What is alarming is the fact that the cases continue through the summer and the deaths are not the normal young/elderly. This is abnormal and a concern and leads to - uncertainty - in what will happen in the fall. But what scientific justification is there for such an outrageous number?
"London Companies training to operate with half current staff, the Church of England stopping Communal activities, France and the UK have already ordered vaccines for Half their respective populations"
These same activities occurred for SARS, Bird Flu, etc. and neither of those resulted in mass casualties. This is common disaster prep. Any company that doesn't have a risk mitigation plan like this post-9/11 just hasn't done their homework. The US was about to vaccinate the entire population for smallpox based on no credible threat.
By ordering vaccines for the swine flu, is that really any different than governments having available vaccines for the common seasonal flu each year? This is common.
"I have read the the Minister of Health of England expects, by the end of next month, 100,000 new cases PER DAY!"
I read this too. He made no predictions on mortality. 40% of the population ends up with a mild case of the flu over a span of 2 years, sure, there will be missed workdays and perhaps an elevated death rate from seasonal flu, but it doesn't necessarily translate into massive profits for the full swine flu index.
"Check with your Physician, you will be surprised at how much is known by the Medical Community here but was suppressed by the Media."
The words "media" and "suppressed" are oxymorons. The media cannot and will not keep a secret. They have no incentive to do so and they routinely put US national security at risk in order to break a story (remember telling the terrorists we were wiretapping them and recording their cell phone conversations?). If anything, hyping a phenomena results in eyeballs glued to the TV - Fear - ratings.
Do you use a physician who's making this claim? I don't think that is credible. With the internet and incentive to incite fear, I don't believe there is an international conspriracy amongst news outlets to act counter to their own self-interest.
Let me just close by saying the following:
I make no claims or predictions as to how virulent or contagious this strain will be in the coming years. I don't know. And given the wild range of estimates from people in no position to do so, the only certainty is that most of them will be wrong (I just hope they're wrong in a favorable direction for humanity). I just don't think we'll know until it mutates further and more time elapses. If someone is making an outrageous prediction that deviates from what the WHO, NIH, FDA, and what other relatively informed/scientifically sound institutions are making, I'd question their credibility and stake in the outcome.
Folks NEED to keep their immune systems in prime condition to fight this :Reco ; vitamin c-1000 mg 2x daily ,Lysine 1000mg 2x daily ,Take Zinc + magnesium 2x daily .AVOID crowds + DON'T shake hands .Wash hands frequently with anti-bacterial soaps .Have zinc lozenges ready to go at first hint of illness .Have your MD alerted to phone -in your RX for Tamiflu or Relenza . MUST take within 48 hours of 1st symtoms . Avoid chocolate , nuts + all beans , as these are foods that viruses feed on . As far as the vaccines , these are being fast-tracked without sufficieint testing .The US government has already ' protected " the drug makers from any possible litigation .I have also recently read " that gillian barre syndrome " is also a possible outcome of the new vaccines as it was in the past . I personally will get a supply of masks from medical supply house to use if I need to go out in public places . writer is RN , MBA
Take all supplements on a Q 12 hour , every 12 hours , to maintain a constant blood level of . Garlic supplements are also a natural antibacterial . have also read that " having a supply of essential anti-viral oils like cinnamon oil + eucalyptus oil " + know how to use them . Both can be purchased from reputable vitamin stores ie vitamin shoppe .
tinyurl.com/mtz8jl
tinyurl.com/mogd46
You're posting links to this mednews site with insipid stale information. A diagnostic test kit is breaking news? Do you have an affiliation with the site or something? You post links to it constantly in this thread and others.
Your comments:
"You are that "someone". Reread the title of your article."
The whole point is we won't know til fall and anyone making predictions is: wrong. It's a mathematical certainty that the vast majority of the predictions are wildly off since the predictions are wildly divergent. There's simply no way to tell how this thing's going to mutate in the coming months. It may go away. It may go away and come back in waves like the Spanish flu. Or it may wipe out millions. We just don't know. That's my point.
"Me, I'm Reporting what the Media has not published here in the USA."
Again, what are you getting at? Do you actually believe there's a massive reporter conspiracy? It's in their best interest to hype hype hype, which is what they do best. It's just that there's nothing really "new" out there to report on that's so shocking.
"Obama's injected more money."
Since when does Obama spending money correlate with actual urgent situations? Bailouts anyone? Throwing good money after bad at Chrysler/GM because a bankruptcy would bring down the country? Oh wait, they did declare and the market's up 45% from the lows!
If things are soooo bad, then why did we have the following ticker today in an UP RALLY for major indices?
BCRX down 8.5%
NVAX down 5%
SVA down 10%
These are the same stocks I mentioned in the article.
It's a roll of the dice - hence, speculative money. I wouldn't call this "investing" in fundamentals.
If this virus is mutating as fast as reported , the vaccines will not only be ineffective but risky . In Revelations , in speaking of the end times , " plaques " are definitely discussed . NONE of us is going to get out of THIS world alive !
I also did not state that "nothing" will happen until the fall. I stated that we will not KNOW for a few months just how bad this is.
On your returns - 40% gain in 2 weeks, 10% loss in one day...what readers here are going to be impacted by is what happens moving forward, which was the intent of the article - that they should not blindly assume continued triple digit gains in the face of the uncertainty this strain presents. However, if they want to place a speculative bet on a horrendous flu outcome and rally in shares, I listed out a low cash outlay/high return option (no pun intended).
will be double, if not triple.
I agree with the logical argument of Freya. She and others see an opportunity for a larger upside potential relative to the downside. To me, that defines investment savvy.
Here is the basis for that impression.
The key questions I see concern whether there is money on the table associated with this pandemic, and if so, are the companies discussed above likely to benefit?
Yes, it’s speculative and therefore by definition, risky. However, I see no less than THREE market forces interacting here. One is the fact that the WHO declared a pandemic. Two concerns the necessity for public health organizations to order sufficient product relative to 'projected' needs. I think the safer bet is that public health organizations will more likely err on the safe side and order large quantities of product, particularly given that it takes time to manufacturer and distribute the product. If public organizations order too little product, its their heads on the platter. The third force and probably the most speculative concerns the innovative drug development platforms for two of these companies NVAX and VICL.
In my business experience, large companies often buy innovations developed outside the company as opposed to developing them in-house. The recent acquisition of MEDX by BMY is a good example of this in action. No one would have bought MEDX based on their business fundamentals. They were, after-all a start-up. The people that did buy it bought on the basis of a combination of their knowledge and research efforts. In that particular situation investors of MEDX won. In addition a lot of those investors subsequently bought BMY figuring that BMY purchased MEDX for a good reason.
To me there are two sides to risk. Downside risk involves making an investment that goes south. Up-side risk concerns NOT making an investment in the presence of reasonable upside potential and consequently missing subsequent up-side gains. ALL investments have a risk. A fact that a lot of people learned when companies with impeccable business fundamentals went down the tube in the recent past. Even if you have your funds in dollars, their real valuation is subject to things not under your control like inflation. Sure the Government statistics say there is little to no inflation. Now look at the price of milk, and bread and other staples.
I don't make investments totally on the basis of what other people say, but I do listen to their arguments. Everyone needs to do their own homework. I started out investing in businesses I knew. If someone knows a lot about pharmaceuticals, like Fran Grady, than you listen very carefully to what that person has to say. If you don't know a lot about pharmaceuticals, and you are thinking of 'putting some skin' in the game, than you should start reading everything you can get your hands on. The smart play is to do what you can do to understand all of the risk components, downside AND loss of potential upside.
SO .... I agree with the logical argument of Freya. She and others see an opportunity for a larger upside potential relative to the downside. To me, that defines investment savvy.
totally agree with you on this one, GSK will clean up in the UK & also have an agreement with the Canadian Govt to supply Relenza. Have read that doses are being sold for $6 a pop & cost $1 to manufacture (ex-development costs), so they are set to do well. This article from The Guardian backs up this premiss : www.guardian.co.uk/bus...
Am looking at building a position throughout August (short term profits from swings) , as I can see the share price rising in September, when the kids go back to school.
On Jul 30 06:47 AM TradingHelpDesk wrote:
> From my side on the pond, here in the UK, I see (seekingalpha.com/symbo...)
> GlaxoSmithKline as a major beneficiary. Their latest update is littered
> with references to new Swine flu remedies and the investment the
> firm has made in preparation for such an event. Flu spikes in the
> November to January period and as there is no probability that Swine
> flu will fade away between now and then the situation bodes ill for
> the health of the population and well for the shares of GSK and the
> other stocks you mention. I reviewed GSK post update and the article
> is on SA for those seeking more info.
Why are you having discussions on what will work and not work, this is the next Y2K and the hype will drive these stocks up by November. Use Google to track the story and key word levels- that science in trading.
As soon as the heat gets turned on in the northern schools in the USA count 14 days and look out. A small up tick in cases will be blown into mass hysteria- the only thing the media knows how to do.
Watch the run, add your trailing stops, and take the cash by Feb and go to the Bahamas.
Most people get the flu or any cold either from direct contact- touching and kissing- or from breathing. We can