Portfolio Review: Continued Market Outperformance In Q1 2018

Following the teaching of Philip Fisher – who is Warren Buffett’s mentor – we maintain the core of the Integrated BioSci Investing (“IBI”) as a long-term oriented growth-investing community. Notwithstanding, we are cognizant of the needs to service our partners, who are interesting in the capturing of short-to-medium terms profits. Therefore, we are nearing the completion of the new Index portfolio to enable traders to leverage our edge in data and binary events trading.

Figure 1: Notable IBI Performers. (Source: Morningstar).

Overall Performance

In Q3 2017, our returns were 8%, an equivalent to the average performance for the Dow Jones Industrial Average (INDEX:DJI). With more companies added and longer time for theses to play out, our performance was boosted to 20% for Q4. In Q1 this year, the earnings further amassed to roughly 30% (as shown in table 1). Notably, our results were calculated based on the data produced since almost a year prior (at the inception our marketplace inception back on June 6 in the previous year). The “big picture” outlook best reflects our long-term oriented approach. For the same period of comparison, the SPDR S&P Biotech (NYSE:XBI), DOW, and iShares of NASDAQ Biotechnology Index (NASDAQ:IBB) procured 27%, 16%, and 9%, respectively.

Table 1: Comparative market performance (Source: Dr. Tran BioSci)

Gargantuan Winners

Subsequent to the Kite Pharma (NASDAQ:KITE) acquisition by Gilead Sciences (NASDAQ:GILD), Celgene Corporation (NASDAQ:CELG) bought out Juno Therapeutics (NASDAQ:JUNO) for a hefty premium. Both Kite and Juno procured 83% and 48%, respectively. Of note, the key winners from the previous quarter continue to appreciate aggressively such as Nektar Therapeutics (NASDAQ:NKTR) that delivered 437% profits for us. Moreover, the robust winners, Spectrum Pharmaceuticals (NASDAQ:SPPI), Crispr Therapeutics (NASDAQ:CRSP), Atara Biotherapeutics (NASDAQ:ATRA), Amicus Therapeutics (NASDAQ:FOLD), Madrigal Pharmaceuticals (NASDAQ:MDGL), Sparks Therapeutics (NASDAQ:ONCE), and Enanta Pharmaceuticals correspondingly earned 147%, 164%, 190%, 48%, 44%, 47%, and 52%.

Notable Losers

As with any portfolio (and especially for those focusing bioscience), it is the norm to witness a good number of underperformers. The key is to ensure that there are more winners than losers. Peter Lynch stated that if you are good in this field, you’ll be able to pick six out of ten winning stocks. That said, our losers, Versartis (NASDAQ:VSAR), Edge Therapeutics (NASDAQ:EDGE), Melinta Therapeutics (NASDAQ:MLNT), Intercept (NASDAQ:MLNT), Acadia Pharmaceuticals (NASDAQ:ACAD), Mallinckrodt (NYSE:MNK), and Protalix Biotherapeutics (NASDAQ:PLX) posted the respective 91%, 88%, 57%, 44%, 33%, 40%, and 43% declined. Even though these firms experienced significant depreciation, our portfolio still outperformed: this is due to the fact that we are long-term oriented investors. In betting on a company, you can at most lose 100% while potentially gaining multiple folds profit (on a company like Nektar) to make your efforts worthwhile.

Despite the losses posted, we still hold those companies for at least a year to enable them to make a comeback. Asides from Edge and Versartis, aforementioned firms have a robust chance of making a turnaround. And, they’re only suffering from temporary paper losses due to negative market sentiments. Nevertheless, the situation can change rapidly due to the underlying fundamentals as their various catalysts materialized. Omeros Corporation (NASDAQ:OMER) is a prime example. When the concerns regarding Omidria was recently abated, the stock rallied over 41%. For the equities mentioned, we recommend that you to either hold tight or to purchase more.

It’s imperative to be cognizant that the chances of Edge and Versartis to make a successful comeback are extremely low. We neither recommend investors to hold those stocks nor to purchase more. We keep them in the portfolio to remind our mistakes to better our due diligence.

Closed Positions

Given our long-term oriented nature, we rarely exit a position unless the company is outright acquired. As said, we moved both Juno and Kite to the closed positions (as presented in table 3) because they were acquired. Fonar Corporation (NASDAQ:FONR) is the exception to our rule. After many years of recommending it to friends (and now clients), we recently closed the position for nearly 6X profits. We exited Fonar, as the company has been experiencing substantial profits for many years but is most likely to face industry headwinds – the increasing competition and the reimbursement reduction of its diagnostic imaging business. The experience with Fonar reinforced the need to go ultra long for reaping the most profits out of your investment.

Table 3: IBI Closed position (Source: Dr. Tran BioSci)

Leveraging Partners’ Intelligence

IBI is your community just as much as ours. Hence, your feedbacks have been instrumental in the platform’s growth. Following your recommendations, we implemented salient changes to the portfolio as presented. The relative performance, as well as price target, are the products of your ingenious minds. And, we greatly appreciate your wisdom. Moreover, we take heed from partners and further innovated the Specialty Reports, for capturing the essence of the new bioscience investing. All firms featured in a Specialty Report are presented at one convenient place for you.

Final Remarks

In all, we expect IBI to perform well in the long-term despite the volatile market in the recent months. Whether you’re a long-term oriented investor or a trader, our aim is to assist you in your own research due diligence – for you to enjoy an edge in data analysis. Last but not least, we encourage you to provide us with more feedback, as we wish to streamline our operations to best serve you for years to come.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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