The 5 Most Hated Biotechs: Myriad, Sarepta, OncoMed, VIVUS, and MannKind
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The 5 Most Hated Biotechs: Myriad, Sarepta, OncoMed, VIVUS, and MannKind

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The five companies with the largest number of shares sold short as a percentage of float.

The five companies with the largest number of shares sold short as a percentage of float.

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The 5 Most Hated Biotechs: Myriad, Sarepta, OncoMed, VIVUS, and MannKind The 5 Most Hated Biotechs: Myriad, Sarepta, OncoMed, VIVUS, and MannKind Presentation Transcript

  • 5 Most Hated Biotechs
  • Defining “Hatred” • Biotechs listed on the NASDAQ with largest short as a percentage of float • As of latest data available on Feb 28, 2014 • Days to cover is defined as the short interest divided by the average daily volume – Longer days to cover can create short squeeze during a rally – Put another way, a longer “days to cover” indicates an increased conviction by short sellers
  • Myriad Genetics (Nasdaq: MYGN) • 51.9% of float sold short • Decrease of 0.6% in outstanding short from Feb 14 to Feb 28, but still higher than where it was at the end of January • 12 days to cover short interest (down from the end of Jan as volume has increased). • Bear thesis: Potential for diagnostic test competitors to take market share from Myraid’s BRCA1/BRCA2 test, BRACAnalysis. Shares up 68% year to date.
  • Not a Bad Start to the Year
  • Sarepta Therapeutics (Nasdaq: SRPT) • 40% of float sold short, up from 35.2% at the end of January • Increase of 1.9% in outstanding shares short from Feb 14 to Feb 28. • 8 days to cover short interest • Bear thesis: FDA won’t give Sarepta’s Duchenne muscular dystrophy drug eteplirsen an accelerated approval. Shares up 40% year to date.
  • Shorts Are Loosing Here Too
  • OncoMed Pharmaceuticals (Nasdaq: OMED) • 33.3% of float sold short • Increase of 1.1% in outstanding shares short from Feb 14 to Feb 28 • 12 days to cover short interest • Bear thesis: Early pipeline -- nothing in phase 3 development -- doesn’t justify the nearly $1 billion market cap.
  • A Long Ways to Go Source: OncoMed Pharmaceuticals
  • VIVUS (Nasdaq: VVUS) • 29.7% of float sold short • Increase of 4.3% in outstanding shares short from Feb 14 to Feb 28 • 6 days to cover short interest • Bear thesis: Company is struggling to sell its obesity drug Qsymia. VIVUS doesn’t have a large pharma marketing partner like its competitors.
  • Shorts Winning This Year
  • MannKind (Nasdaq: MNKD) • 29.4% of float sold short • Increase of 1.9% in outstanding shares short from Feb 14 to Feb 28, but lower than where it was at the end of January. • 7 days to cover short interest • Bear thesis: FDA won’t approve MannKind’s inhaled insulin Afrezza and/or the drug will be a commercial flop.
  • Talk About a Volatile Stock
  • Buy? Sell? Short? • A large short interest is a sign that other investors think shares will go down. • It’s not necessarily a sign that you should sell, but it’s important to investigate the bear thesis further. • In fact, investing against the crowd can be rewarding. A high short interest will exaggerate the move as shorts buy the stock to cover their positions.
  • The Motley Fool's chief investment officer doesn’t think you should short this company. In fact, it’s his No. 1 stock pick for 2014. You can find out which stock it is in our special free report. Just click the button below.