The Weekly Wrap Up - A New Feature
Specializing in biotech stocks, Small Caps, managing optimized portfolios
Seeking Alpha Analyst Since 2009
Finding tomorrow's big winners in the lucrative biotech sector, The Biotech Forum focuses on proprietary, breaking research on promising biotech and biopharma stocks with significant potential for outsized alpha. It is the fourth most subscribed to investment service offered through the Marketplace on SeekingAlpha.com. Our service offers a model-20 stock portfolio as well as the most active Live Chat on the Marketplace. This is where scores of seasoned biotech investors trade news and investment ideas back and forth throughout the trading day.
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Specializing in profiling high beta sectors, Bret Jensen founded and also manages The Biotech Forum, The Insiders Forum, and the Busted IPO Forum model portfolios. Finding “gems” in the biotech and small-cap stock sectors, these highly volatile spaces proven hugely successful have empowered Bret Jensen's own investing portfolio.
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Learn more about Bret Jensen's Marketplace Offerings:
- Today, we start a new free feature for real-time Biotech Forum followers. It is called the Weekly Wrap Up.
- In it we detail the market week, highlight any insider buying of interest and recap some key happenings in the biotech sector on the week.
- Our inaugural weekly issue is provided below.
Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it." -Ronald Reagan
Equities started out on the wrong foot Monday as the S&P 500 fell for the fifth straight session. Some of the froth seems to have been coming out of the market in the more speculative niches. Bitcoin fell over 15% on the day to under $50,000 after cresting over a $1 trillion market cap for the first time the previous Friday. This was a major headwind for the NASDAQ which fell more than two and a half percent on the day.
The trillions of dollars being pumped into the economy by congress and the Federal Reserve have been a huge headwind behind the rallies of every asset class including equities for months. Copper is a nine-year high while front-month ICE Brent crude oil futures for delivery in April had risen over 19% in the month of February by market close on Monday. Lumber prices have tripled off their April pandemic low and have roughly doubled since the start of 2020. This is eroding profit margins at home builders. This has added $24,000 in costs to building the average house since the pandemic lumber price low in April of last year.
The yield on the Ten Year Treasury continues to creep and closed at just above 1.35% Monday. Investors seem to be starting to worry about the increasing odds of inflation as the new administration tries to ram another $1.9 trillion in loosely targeted Covid19 relief stimulus through Congress. Airlines were one of the strongest areas of the market on Monday on hopes Covid19 cases and deaths are dropping. A couple of Manufacturing readings (I, II) also came in significantly stronger than expected on Monday.
Tuesday, stocks plunged in early trading. However, testimony from Fed Chairman Powell reaffirmed his commitment to keeping easy-monetary policies unchanged for the foreseeable future. This helped a reversal in the early down momentum especially in the big tech stocks like Apple (AAPL). By the end of the day the NASDAQ posted a loss of just .3% while the S&P 500 broke a six day losing streak with a small gain.
Companies poised to benefit from an end to movement restrictions like cruise lines were some of the strongest performers in the market on Tuesday. Bitcoin recovered half of its double digit dip from Monday. The spread between the two-year Treasury yield and the interest rate on excess reserves, or IOER; set by the Federal Reserve fell to its narrowest since the depths of the coronavirus market selloff, a potential sign of financial-system stress.
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Wednesday, stock rose nicely in trading with the S&P 500 up approximately one percent on the day. The National Retail Federation forecasted that retail sales will grow between 6.5% to 8.2% in 2021 to more than $4.33 trillion as more individuals get vaccinated and the economy reopens. On for the housing front, January new home sales came in higher than expected while weekly mortgage applications fell as rates rose.
Markets fell hard on Thursday as yields spiked up past the 1.5% level on the 10 Year Treasury. The NASDAQ plunged just over three and a half percent on the day, the worst one day performance for the tech driven index in four months.
Equities stabilized and were mixed on Friday. The Ten Year Treasury Yield dropped 10 bps to just over 1.4% on the day. For the month of February, the 10-year yield rose 0.37 percentage points. This is the largest one-month increase in the yield since November 2016.
The NASDAQ managed to post a gain while the S&P 500 and Dow Jones Industrial declined on the day. For the week the Dow was off just under two percent while the S&P 500 pulled back nearly two and a half percent. The tech heavy NASDAQ was the big loser on the week with nearly a five percent sell-off.
The consumer remains flush thanks to extraordinary legislative largess. Late this week federal data showed that U.S. consumer spending increased 2.4% in January after household incomes jumped 10%, thanks primarily to government checks from the last Covid19 stimulus package passed late in 2020. Another $1.9 trillion package is winding its way through congress even as the unemployment rate is now lower than the start of 2013, four and a half years after the peak of the last financial crisis.
Insider Buying Focus:
Outside of new IPOs, SPACS and a few names insiders seem to have bought consistently for years, there has been very few notable insider buys in the market recently. Here are couple I think worth mentioning this week that might be worthy of further research.
The CFO of Avis Budget Group (CAR) bought just over $1 million in new shares on February 19th with the transaction filed on the 23rd. A beneficial owner has been scarfing up shares pretty regularly over the past few quarters, but this is the first purchase by another officer of the company since March of last year during the height of the Covid19 meltdown in the market. We posted an assessment of Avis near the close of 2020.
The CEO of Incyte (INCY) also purchased just over $1 million shares in his biotech company on February 23rd. The stock has seen consistent, frequent and fairly large insider selling in recent years. This is the first insider buy by a non-beneficial owner in the shares since November of 2018. The stock has declined approximately 20% over the past month, and the company saw a key analyst downgrade on its shares on February 10th following fourth quarter earnings results.
Biotech Week In Review:
As usually happens when the market goes into 'risk off' mode during the week, the high beta biotech sector sold off this week, falling nearly seven percent.
In notable news on the sector this week, The FDA Vaccines and Related Biological Products Advisory Committee met late this around the request emergency use authorization or EUA of a COVID-19 vaccine from Johnson & Johnson (JNJ). All 22 members of the committee recommended to approve the vaccine. Look for this to be the third Covid19 vaccine approved by the FDA via EUA sometime next week even at it was shown to be only 66% effective in preventing moderate to severe COVID-19.
Merck (MRK) announced the purchase of Pandion Therapeutics, Inc. (PAND) for $60 per share in cash or just over $1.8 billion in one notable M&A activity across the sector this week.
BrainStorm Cell Therapeutics (BCLI) took a hit this week after the FDA advised the company that data from its Phase 3 trial of NurOwn in patients with Amyotrophic lateral sclerosis did not meet the threshold of substantial evidence to support a Biologics License Application or BLA. The stock fell just over 40% on the news this week. Given the company disclosed in November that a key trial to support this BLA did not achieve its primary endpoint, I am bit surprised investors were caught so flat footed.
Otonomy, Inc. (OTCPK:OTIC) took a similar hit in trading this week after its Phase 3 clinical trial of Otividex in patients with Ménière's disease did not achieve its primary endpoint.
And that was the week that was. I hope you enjoyed this weekly recap.
It is a popular delusion that the government wastes vast amounts of money through inefficiency and sloth. Enormous effort and elaborate planning are required to waste this much money." - P. J. O'Rourke
This week's special offer to real-time Biotech Forum followers is as follows. A two week, no obligation free trial into the Insiders Forum and 20% your first year of membership should you decide to join our community after your 14 free trial. The Insiders Forum model portfolio has returned over 140% since its launch in the summer of 2016, nearly 6,000 basis points over the return of the Russell 2000 over that time span. Membership includes access to the portfolio, weekly deep dives, investment archives, Live Chat and our weekly covered call idea of the week. To activate this offer, just click HERE. But don't wait too long, this discount/free trial will expire upon market close on Monday.
Thank You & Happy Hunting,
Founder, The Biotech Forum, The Busted IPO Forum & The Insiders Forum
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