The Rise of Biotechs May Be Attracting The Shorts (PFE, MRK, BAX, BDSI, SPPI, GNBT, AVII, CEGE, BBH, GILD)
Biotechnology stocks have risen faster than any sector in the past 30 days, although the new short-interest data suggest traders are now increasing their directional bets against the group.
Large biotechs including Pfizer Inc. (NYSE: PFE) and Merck & Co. (NYSE: MRK) are in the top 10 of all large-cap stocks with the greatest increase in the number of shares shorted. And biotechs including Baxter (BAX) are among the stocks seeing a greater than 50 percent increase in short interest from mid-June until the end of that month, the most recent short interest data available.
Perhaps one reason biotechs are an increasing near-term target of the shorts is that the group’s price movement has been counter to the overall market. The price of all biotech stocks with a market cap of $1 billion or more is up 3.6 percent in the past 30 days, vs. a drop of 6.2 percent for the S&P 500. Biotech is the only group to advance more than 3 percent over that time period, other than health care services, up 3.2 percent.
Pfizer is not a stock most traders bet against, with only 3.5 percent of its float sold short. But the short interest of Pfizer rose 16.2 percent to more than 235 million shares by the end of June. Merck shares, with a heftier 6.9 percent sold short, saw its short interest rise 9.1 percent over the same time period.
Some smaller biotech names have seen a very large short interest increase, including BioDelivery Sciences International (Nasdaq: BDSI), up 93 percent. Spectrum Pharmaceuticals Inc. (Nasdaq: SPPI) short interest is up 54 percent. Biotech stocks with at least a 40 percent rise in short interest include Generex Biotechnology Corp. (Nasdaq: GNBT), AVI BioPharma Inc. (Nasdaq: AVII) and Cell Genesis Inc. (Nasdaq: CEGE).
One of the biotech ETFs that is watched most closely by traders is the Biotech HOLDRs (BBH). One of its top holdings is Gilead Sciences Inc. (Nasdaq: GILD), which makes up roughly a third of the index. Its stock saw a 17 percent increase in its short interest to more than 20 million shares.
The biotech Holdrs in early July rose to levels not seen since September 2008, although the index has fallen early this month after creating a bearish candlestick pattern. The fall occurred not not long after MACD, an oscillator watched by technical traders, turned negative — Mike Tarsala
Five Fast-Growing Biotechs To Watch Right Now (ALNY, FOLD, HALO, AOB, STEM)
Alnylam (Nasdaq: ALNY) leads a short list of some of the fastest-growing biotech stocks where analyst estimate revisions continue to rise.
BioHealth Investor began by analyzing 171 stocks in the biotech sector based on revenue growth over the trailing four quarters, identifying 30 stocks in the sector with better than 50 percent revenue growth over the past 12 months.
We then screened those 30 stocks to look for those very few names that have seen both strong growth in at least the past two years and positive analyst estimate revisions in recent months, in an effort to find stocks with strong trends that still have potentially improving operations going forward.
The work resulted in growth biotech stocks to watch: Alnylam Pharmaceuticals Inc. (Nasdaq: ALNY), Amicus Therapeutics Inc. (Nasdaq: FOLD), Halozyme Therapeutics Inc. (Nasdaq: HALO), American Oriental Bioengineering Inc. (NYSE: AOB), and Stemcells Inc. (Nasdaq: STEM).
1) Alnylam:
With a new class of potential biotech medicines, aggressive goals for development and partnerships, cash on the books and a large addressable market, Alnylam tops our short list of biotechs with strong growth and increasing analyst estimates.
Can Jim Cramer Reignite Medical & Healthcare Stocks? (DNA, SNN, BDX, BAX)
This week’s features from Jim Cramer on CNBC’s MAD MONEY are right up the alley of BioHealthInvestor.com. Whether or not they are right up investor-alley is another issue. Cramer is revisiting some names he thinks you can hide out in for safety.
On Monday, Cramer came out calling Genentech (NYSE: DNA) his pick in biotechs. He noted that it could head to $88 per share if his 1990’s scenario pans out.
On Tuesday, Cramer anointed Smith & Nephew (NYSE: SNN) as he called the stock his favorite in the health care sector. He believes much of the past issues are behind it and you can get in now.
On Wednesday night, Cramer came out with an interesting call in Becton Dickinson (NYSE: BDX). As it is the staples company for hospitals and medical offices, he thinks they are safe during hard times with it that far off of 52-week highs.
One call he changed was his reversal or exit on Baxter International Inc. (NYSE: BAX). He had been bullish on this one and with it up this high he said it’s time to ring the register.
Stay tuned, because he’s got Thursday night and Friday night picks in various parts of healthcare, medical, biotech, pharma, and more.
Jon Ogg
July 10, 2008
