As I continued my quest to research most of the Biotechnology companies, starting with those in the IBB, I got to Alnylam (ALNY) over a week ago. Then earnings season got underway, and it took me some time to finish up the research and write my opinion, which you can find at:
Is Alnylam In 2020 Worth $9 Billion Now?
I concluded I should buy some ALNY, though there is considerable risk due to the high market capitalization for a development-stage company, as high or higher as some companies with products already approved by the FDA and generating income.
Biotechnology stocks sold off on Monday, and when I looked at Alnylam this morning, after Seeking Alpha published my article it was further down, well below where it was when I started my research (at which time the market cap was $10 billion).
I decided to buy, but did not actually hit the button. After all, I have limited cash, and what goes to ALNY can't go to something else. In particular Seattle Genetics (SGEN) is reporting Q1 results on Thursday. I own a little bit of SGEN, and would like more. And then there others ...
So I'm going to try to not hit the Buy button until earnings season is over and I can make a rational decision about where to put cash to use, or to hold it.
I don't believe that biotechnology stocks are over priced in general, but it has gotten harder these last few years to find undervalued ones. I do occasionally sell parts of my positions when I think a particular stock has gotten frothy, and also when a stock has done so well that it has become too big of a part of my portfolio. That is where the cash comes from.
Biotechnology is perfect for buy and hold. In the longer run most of this class of company will turn pipelines into commercial therapies, and money. In the short run they can fluctuate drastically. When the Fed or Goldman or whoever screams sell, I usually wait until I like the prices, and then I buy. But not today.