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Biopharma Portfolio 2018 YTD: Performance Summary

By Kurt Osterberg · On August 10, 2018

Rayno Biopharma Performance 2018: YTD 8/4

Large Caps Begin to Outperform

FBT Is the Best All Around Life Science Play

We have provided herein a summary of biopharma portfolio positions for our readers. The Rayno portfolio picks are designed for long-term performance and does not include short-term high volatility trades. The best way to make money in biotechnology is to hold the best companies over the long-term. We do not give sell signals except through more volatile “risk off” periods where ETFs can be used to re-balance portfolios. Our top ETF trading pick has been the XBI, although over the past quarter the FBT has proven to be less volatile and outperformed because of more diversified holdings in tools and healthcare services.

Our best pick was Foundation Medicine (FMI) up 118% YTD and almost 7x since inception. The Company is being acquired in a tender offer by Roche Holding AG (RHHBY for $2.4B. Foundation Medicine is a leader in precision medicine for oncology.

Our worse pick was Celgene (CELG) down 15% YTD; added 11/20/17 at $102.

bluebird bio (BLUE) is down over 17% YTD but is still a 3.4X return since added on 2/3/16.

Q2 of 2018 showed strong momentum in mid and small caps and we did not add any of the best performers such as LOXO, NBIX, and SRPT. Momentum has eased since mid-July.

July 2018 showed a rotation into large-cap healthcare with the XLV up 6.2% and many biopharma stocks including the large-cap IBB were up ~15% over 3 mos: AMGN, BIIB, MRK, REGN, VRTX.

Several analysts have commented on some of the reasons for the recent rotation into large-cap drug and biotech stocks among them: perception of value and defensive nature of drug stocks, diversification from overweighted portfolios in technology and FANG stocks, growth plus value with dividends. The rally could have been ignited by various macro headlines and a slowly building assumption that policy changes in the Administration for control of drug prices with Medicare and Medicaid is not likely. Moreover, some drug company executives have responded to Trump’s call to hold the line on drug price increases.