There are a couple of investing adages that I reflected upon yesterday.
- Know what you own and why you own it.
- Do more of what is working and less of what is not.
Simplistic perhaps but definitely helps me when deciding whether to make trading decisions in my portfolio. I sold two stocks yesterday that just were not performing. RIG and ARCP. Both were purchased many months ago primarily for yield. However, I look at total returns and these just haven't cut it. Their price erosion has been much greater than the dividends received. ARCP has a terrible balance sheet now with their repeated debt-sourced acquisitions. Both were sold a losses.
However, days like today remind me why smaller biotechnology plays should be a small part of my portfolio. I view these as pure speculation on the big upside. Trying to take a basket approach with limited risk in each name relative to total portfolio. Today those that have been the biggest laggards are killing it.
- CLDX up 17%
- CLVS up 7%
- INSY up 3.5%
- NPSP up 1%
- SGEN up 5%
None have particularly interesting call premiums yet so I'll sit and hold. All of them are interesting M&A targets by larger pharma companies and their recent selloffs provide an improved risk/reward view. I got in too early on all but NPSP, but today is certainly helping erase that.
Disclosure: I am long CLDX, CLVS, INSY, NPSP, SGEN.