A Look into the World of ADHD Drug Companies

I’ve been content sitting on the sidelines with the positions in my portfolio, so I’m not pressed to spend cash for the sake of spending cash. Seemingly each day that passes the market rises higher and higher, and the bargain bits and pieces are being steadily sucked up in the vacuum that is ‘animal spirits’, among other things. Once again, this isn’t an excuse, only an observation of the underlying market conditions. There is still value to be found if one presses hard enough. Oddly enough, I can’t seem to get away from biotech whenever I start digging for bargains. I am not sure if it is how biotech companies value the assets on their books or what not, but this is where I’m finding the most value. Unfortunately there is so much left to be determined on Capitol Hill that many of these smaller companies are left in limbo when it comes to decision making. Not having a consistent tax code in place, nor even knowing what the next healthcare system will look like plague the companies and those who seek to invest. One such company is Alcobra Pharma, or ADHD (clever ticker, right?). ADHD is a classic NCAV discount play trading at a 30% discount to its NCAV. Usually I would like that discount to be at least 50%, but I think ADHD is developing something that couldĀ be a strong catalyst in its market. Before we get into the catalyst, it’s important to take a look at the fundamentals of this company.

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Deep Restructuring Play in Biotech

It’s been a while since I’ve written about a particular company, and frankly its not because I don’t have the time … I just haven’t really found any worth writing about. Whether its a new IPO, or Amazon’s buyout of Whole Foods, one event or another seems to kick the market past 6th gear and into overdrive. However, like I mentioned in my investors newsletter, and like I alluded to in previous pieces, what I think about the general market means absolutely nothing. It shouldn’t mean anything to you, the reader, and it shouldn’t mean anything to those that choose to put their money with me. My job is to find value. Period. It’s important that I stress this because when most people think of finding value, they assume that most of the value to be sought is during bear markets. We haven’t had a bear market in eight years now (since I started investing). To be on the sidelines during a bull run like this for the sake of “not being able to find value” is an atrocious and poisonous mistake to capital and intellect. Sure it might not have been a bear market where deals are found just by running a simple screener, closing your eyes, and landing on a net-net within seconds, but to make excuses is to attempt to cover up a lack of dedication and research.

I’ve mentioned numerous times how I overvalued I think the market is, but looking at my current portfolio; out of my 10 positions, 4 of them are long US equities. That’s 40% of my portfolio long US Equities. One of them is a pure momentum play, but the others are what I consider deep value, net – net picks. Even in this bull market you can still find deals, you just have to look extremely hard. Peter Lynch said it best, “Whoever turns over the most rocks will generally win.” Let’s turn over another rock.

Continue reading “Deep Restructuring Play in Biotech”