Biotech Bull Market Rolls On In A Volatile Q2 2015: XBI Up 12.4%
Dealmaking and Fast Money Fuel Biotechs
Q2 2015 Review
Despite a major down trend at the end of April and the recent sell-off, the sector outperformed in Q2 of 2015. The S&P was down 1% and flat YTD.
- The XBI Biotech ETF continues to be the sector ETF leader up 12.41% compared to 5% for the IBB and 2.51% for the FBT.The XBI has more speculative small caps in its holdings.
- The XLV Healthcare SPDR ETF was flat up only 0.83% over 3 months.The QQQ was also flat after a late May sell-off.
- The Five Star Fidelity Select Biotechnology Portfolio (FBIOX) lagged most ETFs this quarter up only 3.5% probably due to overweighted large caps.
The quarter saw a vicious sell-off in April when the sector was briefly negative, recovered up until ASCO in early June followed by the blow-off top in late June that sold off with the crisis in Greece. The blockbuster Celgene/Juno $1B immunotherapy deal sparked the markets.
M&A and licensing was a big driver in 2015 with 29% of total in healthcare with $293B in transactions. With genomic and immunological technology exploding there appears to be unlimited opportunities for growth.
A portfolio of Rayno Large Cap stocks was surprisingly volatile ending up only 7.37% because of a 3% hit this week. Gilead Sciences (GILD) was a leader up 16.28%.Regeneron (REGN) was up 10.95%.
Rayno Mid Caps performed well after ASCO with Clovis Oncology (CLVS) up 17.25% in Q2, and Seattle Genetics (SGEN) up 34%. ALKS and VRTX held up as well.
Rayno Small Caps were extremely volatile with plenty of profitable trading opportunities: Celldex Therapeutics (CLDX), FibroCell Science (FCSC), Foundation Medicine (FMI) and Ignyta (RXDX). We recently added Array Biopharma (ARRY) now at $7.21. Albany Molecular Research (AMRI) remains a long-term hold in our portfolio.
Disclosure: None.
No surprise that XBI has been so popular of late, the ETF has performed amazingly well among other ETFs and even stocks, up 35% YTD!! With this kind of performance, people will continue to be tempted to stuff their hard earned money into the ETF. After all, why bother trying to hand pick the healthcare winners when there are far better qualified folks out there who have done all the hard work for us? Big question is, can XBI keep shining? The following issues are potentially casting a long shadow over XBI; are some of the ETFs stock holdings heavily overpriced and at tipping point? How stable is ObamaCare from a legal and popularity standpoint? Will painfully slow drug development and FDA approval times have an impact on drug companies held by XBI?