so many small biotech stocks are so cheap now... | CRMD Message Board Posts


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Msg  46773 of 47888  at  6/3/2022 10:01:23 AM  by

fmrick


 In response to msg 46757 by  dnwang
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Re: so many small biotech stocks are so cheap now...

LABU at $5.2 is quite attractive.
 But LABU is not a company.  It does not develop drugs.  It is a leveraged ETF that attempts to get 3X the movement of the S&P Biotechnology Select Industry Index.  It's sister fund is LABD, which does the opposite. 
 
These leveraged ETFs seek a return that is 300% or -300% of the return of their benchmark index for a single day. The funds should not be expected to provide three times or negative three times the return of the benchmark’s cumulative return for periods greater than a day.
The reason it has cratered is because the overall index has. The real problems is people buying it as a long term investment.  It is not.  It is designed as a single day investment.  Sure, you can buy it and keep it.  But that is not what it is designed for.  
 
There are lots of good investments out there in the biotech sector.  However, are they really?  CRMD is a great example.  If you had never invested here, and found the stock TODAY, would it be a good investment?  I think so. 
 
The other side of the story is the long-term term investors.  Compare the two groups, people who have owned it for years and someone who bought today.  Each with 10K shares.  ABC Pharma comes along and offers $7/share in an all cash buyout.  Some are jumping for joy and the others are crying themselves to sleep.
 
It happened today for Turning Point Therapeutics (TPTX).  People who have followed the company for years saw the shares soar to ~$133/share in Feb 2021.  The stock got caught up in the biotech down draft and bottomed ~$25 in April. It closed yesterday at a little over $26.  Today it was bought out $76/share.  A great deal if you bought since April.  Not so much if you bought it 2 years ago.  
 
I'm holding 15 small bios right now.  I scared to death.  Each and everyone of them has gone down as the market declined.  Some are down a lot.  I own stocks I believe in.  I've held some for years, suffering through the ups and downs along the way.  Why am I scared?  Because they will fail?  No.  I'm scared that some BP will come along and scoop them up for pennies on the dollar compared to what I think they are really worth.  This is why I average down and trade these stocks.  I do my best to get my investment out when they start to run. I try not to get too greedy.  I live by the moto- Bulls make money, bears make money, pigs get slaughtered.  
 
But if you want to buy, there are lots of good deals out there.  You might get lucky and buy in time for the ride back up!  And they will go up. 
 


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Msg # Subject Author Recs Date Posted
46774 Re: so many small biotech stocks are so cheap now... noluckrequired 1 6/3/2022 12:02:09 PM




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