Infotech and Biotech

04/09/2004 12:00 am EST


Ken Kam

CEO, Marketocracy, Inc.

The top-performing Master 100 Fund (US:MOFQX) is developed by the buying and selling activity of the 100 top stock pickers from among the 50,000+ investors who manage virtual funds on its Marketocracy Web site. Here are some of their new infotech and biotech buys.

"Our two largest sectors, Information Technology and Healthcare, have constituted about 50% of the portfolio for several months. Within healthcare, biotechnology stocks make up our largest industry concentration. Biotechs tend to be more speculative in nature, since test trial data can quickly make or break a company. One guard against the volatility associated with more speculative stocks is diversification. We also look at the following factors when evaluating biotech stocks:

  • Are they in late stage clinical trials?
  • Do they have connections with a larger company (to help them bring a successful drug to market)?
  • Do they have a pipeline of attractive products in various stages of development (early and late testing as well as production)?
  • Are their developmental drugs priced into the stock?
  • What is the current FDA environment?
  • Do they have strong management and enough cash?

"Here are some highlights on stocks we are adding to the portfolio right now:

"CV Therapeutics (CVTX NASDAQ) a small-cap ($483M market cap) biopharmaceuticals company specializing in drugs to treat cardiac problems. We increased our position by 300% on recent price dips. CVTX is in the top 2% of the portfolio. CV Therapeutics meets many of the above listed criteria for Biotech investments, including having approved drugs as well as new drugs in the pipeline, and having a partnership with a larger company, Biogen.

"OraSure Technologies (OSUR NASDAQ) is a new portfolio holding this month. OSUR is a small-cap ($455M market cap) developer of collection devices for collecting oral specimens. They offer a range of devices specialized for different tests ranging from HIV to wart removal to alcohol testing.

"Viragen (VRA ASE) is a micro-cap ($69M market cap) stock involved in several areas of research in the biopharmaceutical arena. The company has recently made a myriad of key announcements including financing, partnerships, and filling key management positions. Although the stock is a penny stock (current price $0.21), the trading volume has been high in recent weeks in conjunction with these announcements. We increased our holdings by about 10%."

"Our other largest portfolio holding is in information technology. Our three largest info tech holdings include two communications equipment companies--Lucent Technologies (LU NYSE) and Netopia (NTPA NASDAQ)--and one Internet software and services company,  Equinix (EQIX NASDAQ). These three stocks  are also in the top 15 holdings of the Master 100 portfolio overall. Meanwhile, here are some highlights on new IT stocks we are adding to the portfolio right now:

"Aladdin Knowledge Systems (ALDN NASDAQ) is an Internet security software company with a market cap of $247M. The firm recently reached profitability, and recently raised guidance on the first quarter. ALDN is currently in the top 20% of the portfolio. Our top investors have recently more than doubled their holdings in the stock.

"Pinnacle Systems (PCLE NASDAQ) makes CD and DVD burning and editing equipment for both the consumer and business markets. This mid-cap ($640M market cap) computer equipment firm recently raised its profile by providing the equipment used at the Grammy Awards ceremony broadcast. Pinnacle is currently in the top 2% of the portfolio.

"IPass (IPAS NASDAQ) makes virtual private network (VPN) software. This mid-cap ($719M market cap) company has an attractive PEG ratio of 0.8x. The stock is currently in the top 20% of the portfolio."

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