This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Investing lessons from the biotech rout

By Robert Freedland

The Healthcare Model on Covestor had a challenging month in March and into early April, 2014. As of April 3, 2014, the model while down 6.3% for the prior 30 days. Over a 90-day period, the portfolio is up 11% and, on a trailing 365 day basis, it's up 44.3% as of April 3, 2014.

This portfolio had a good ride with some of the bigger biotech names like Alexion (ALXN), Celgene (CELG), Biogen Idec (BIIB), Illumina (ILMN), and Gilead (GILD). Recent biotech purchases like Vanda (VNDA), Salix (SLXP) also came under intense selling pressure during the month’s now infamous biotech rout.

This month tested my manager skills. With some of my top stocks declining, should I stay put or move aside? Like the Wisconsin Badger’s Frank Kaminsky who learned to pivot to help get his team to the quarter-finals of the NCAA March Madness basketball tournament, I also tried to employ the Wisconsin ‘pivot’ in investing.

My first instinct as my leading holdings started breaking down was to sell and move to cash to give this portfolio some space and not risk losing the great gains it already had.

With Health Insurance stocks moving higher on the apparent success of the Affordable Care Act enrollments, I initiated a new position in United Healthcare (UNH). I initially sold then re-purchased a position in generic manufacturer Actavis (ACT), another stock with a reasonable valuation and likely to benefit with cost-savings required of Healthcare systems.

I repurchased my Amgen (AMGN) as it is one of the most reasonably priced of the biotechs I had held with a P/E of 17.94 currently, although it also remains under pressure.

I pivoted this past month and purchased Baxter Travenol (BAX) soon to split into two separate units, I added medical supply company Covidien (COV) to the portfolio and Varian (VAR), the radiation oncology equipment manufacturer.

This adds to some of the other holdings like St. Jude (STJ), and Medtronic (MDT) already in the portfolio. In other words I moved to stocks that were priced more reasonably and occasionally even paid dividends. Moving a little bit towards ‘value’ and a little away from ‘momentum’ which has been under attack in the stock market recently.

I do not claim to pivot like Kaminsky and certainly wouldn’t want to be seen on the court, but investing and responding to the market may well be considered similar to getting out on the court and playing ball.

I am not always prepared for that final 3 pointer by any opponent, but the portfolio is a team effort that requires new names and other former red-hot stars that may need to sit the bench for the time being.

DISCLAIMER: The investments discussed are held in client accounts as of March 31, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.

Robert Freedland

Robert Freedland

Robert has over 40 years of investment experience and is a full-time optical surgeon. He uses his expertise in the

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,911.28 -65.03 -0.36%
S&P 500 2,079.91 -6.33 -0.30%
NASDAQ 4,930.2010 -17.24 -0.35%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs