Happy Thanksgiving to My Readers
After two weeks of largely downward action for equites, the market popped back in a big way in the week just closed. The S&P 500 gained over three percent this week, its best weekly performance since December of 2014. Other major indices followed suit. Helping sentiment were minutes from the Federal Reserve on Wednesday stating policy makers when will raise rates in a gradual way when they do decide to pull the trigger. The main biotech indices had a very solid week even if they gave back some of their gains on Thursday.
Portfolio Update:
We saw a lot of positive action in the Biotech Gems portfolio on the week. Our large cap growth “core” positions are now up better than three percent on average despite the recent bear market in the biotech sector. Our small-cap positions also continued to narrow their losses this week.
We saw major gains during the week from the likes of Horizon Pharma (NASDAQ: HZNP), Synthetic Biologics (NASDAQ: SYN), Pacific Biosciences of California (NASDAQ: PACB), Xencor (NASDAQ: XNCR) and in our new addition Relypsa (NASDAQ: RLYP).
Horizon was buoyed this week by a positive mention in Barron’s as well as by announcing it was dropping its bid for Depomed (NASDAQ: DEPO) which hopefully will allow investors to focus on its strong underlying business fundamentals. Synthetic Biologics had a big double-digit percentage move on Friday, but I could find no news that accounted for this rally.
Pacific Biosciences of California was our big mover this week, rallying more than 25% on the week and continues to be one of the star performers for the portfolio. Investors continue to be bullish on the stock ever since the company announced in late September that it would be launching its next generation nucleic acid sequencing platform, which is called “The Sequel System.”
There was no news to explain Xencor’s 10% plus move this week other than improvement in sentiment in general, but the stock did breach its 50-day moving average which is positive from a technical perspective. Finally, Relypsa acquitted itself well in its first week in the portfolio gaining some seven percent on the week. The company was the subject of a couple of positive articles on SeekingAlpha this week as well as one on Yahoo! Finance.
It should be a slow week of trading leading up to the Thanksgiving holiday this week. The biotech sector has had a two step forward/one step back rally going since it hit a bear market bottom late in September. The main biotech indices are approximately 10% above their lows but still significantly below their highs reached in mid-July. Hopefully sentiment will continue to improve on the sector and we get sort of a “Santa Claus” rally for this space to close out what has been a challenging year for investors.