Short_interestjan31_Orelli_2_18_2014
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Short_interestjan31_Orelli_2_18_2014

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Myraid Genetics, Sarepta Therapeutics, Questcor Pharmaceuticals, Ziopharm Oncology, and MannKind top the list of the most shorted biotechs.

Myraid Genetics, Sarepta Therapeutics, Questcor Pharmaceuticals, Ziopharm Oncology, and MannKind top the list of the most shorted biotechs.

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Short_interestjan31_Orelli_2_18_2014 Short_interestjan31_Orelli_2_18_2014 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 Jan 31, 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
  • Myraid Genetics (Nasdaq: MYGN) • 51.2% of float sold short • Increase of 0.7% in outstanding short from Jan 15 to Jan 31 • 24 days to cover short interest • Bear thesis: Competition with Myraid’s BRCA1/BRCA2 test, BRACAnalysis, from other diagnostic test makers. Shares up 50% year to date.
  • Not a Bad Start to the Year
  • Sarepta Therapeutics (Nasdaq: SRPT) • 35.2% of float sold short • Increase of 5.2% in outstanding shares short from Jan 15 to Jan 31 • 4 days to cover short interest • Bear thesis: FDA won’t give Sarepta’s Duchenne muscular dystrophy drug eteplirsen an accelerated approval. Shares up 28% year to date.
  • Shorts Are Loosing Here Too
  • Questcor Pharmaceuticals (Nasdaq: QCOR) • 34.1% of float sold short • Decrease of 8% in outstanding shares short from Jan 15 to Jan 31 • 8 days to cover short interest • Bear thesis: Government is investigating Questcor’s promotional practices for its only drug Acthar. Shares up 27% year to date.
  • Sometimes One Drug Is All You Need
  • Ziopharm Oncology (Nasdaq: ZIOP) • 31.2% of float sold short • Decrease of 1.4% in outstanding shares short from Jan 15 to Jan 31 • 20 days to cover short interest • Bear thesis: Proof of concept clinical trial data on Ad-RTS-IL-12 in breast cancer, melanoma, and/or glioblastoma will fail.
  • Can’t Make Up Our Minds, Can We?
  • MannKind (Nasdaq: MNKD) • 30.2% of float sold short • Decrease of 11.5% in outstanding shares short from Jan 15 to Jan 31 • 9 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 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 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.