“No matter who wins the election, we still have a lot of wood to chop. There is no way we continue to run huge deficits without a severe market consequence,” said my old friend and former client, Leon Cooperman, CEO of mega hedge fund Omega Advisors.
When John identifies a strategic exit point, he will send you an alert with specific trade information on what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
Mad Hedge Biotech and Healthcare Letter
July 11, 2024
Fiat Lux
Featured Trade:
(FORGET THE CASINO, INVEST IN THE HOUSE)
(TMO), (BIO), (DHR), (A)
I've always had a soft spot for healthcare innovation. But let me tell you, picking winners in this sector is trickier than trying to nail jello to a wall. You've got regulatory hurdles, fierce competition, and funding risks that'd make a Vegas bookie sweat.
That's why I'm a big fan of buying the arms dealers in this war on disease. I'm talking about the suppliers. These companies are calmly sitting pretty, ready to cash in on the general need for innovation without getting their hands too dirty.
Enter Thermo Fisher Scientific (TMO), the Waltham, MA-based behemoth that's supplying everyone from big pharma to your local hospital. They're slinging lab equipment faster than a short-order cook at a greasy spoon, and business is booming.
Just look at the numbers. Over the past decade, TMO's delivered a 400% total return. That's not just beating the S&P 500 – it's leaving it in the dust by 170 points.
And recently, Thermo Fisher just got the green light from those sticklers at the UK antitrust office to close a $3.1 billion deal for Olink, a Swedish outfit that's cooking up some serious magic in protein analysis.
We're talking about technology that can analyze hundreds of proteins faster than you can say "proteomics."
Speaking of proteomics, for those of you who slept through biology class, it's the study of proteins in biological systems. These little buggers are the muscle behind everything your body does.
While DNA is the blueprint, proteins are the construction crew that brings that blueprint to life. Figuring out how these microscopic workers operate is the golden ticket to a treasure trove of new drugs and therapies.
It's a growing field, with the global market expected to explode from $32.8 billion in 2023 to a whopping $161.9 billion by 2035. That translates to a compound annual growth rate of 14.2%.
As expected, Thermo Fisher isn't the only player in this game. You've got heavyweights like Bio-Rad Laboratories (BIO), Danaher Corporation (DHR), and Agilent Technologies (A) all jockeying for the top position.
But thanks to this recent Olink acquisition, Thermo Fisher's looking to pull ahead like a thoroughbred at the Kentucky Derby.
For better context, let's break down what this means for TMO's bottom line. Their mass spectrometry business, already a cash cow, could see a 5% bump in market share.
We're talking about an extra $475 million in revenue by 2028, with profit margins that'd make a hedge fund manager blush.
And that's just the tip of the iceberg. Their protein assays and kits business could see a 10% boost in market share, translating to another $450 million in revenue.
Despite these, Thermo Fisher isn't resting on its laurels. They're also partnering up with the likes of Bayer (BAYRY) to develop next-generation sequencing tools.
Next, let's talk dividends. I know, I know, a 0.3% yield isn't going to have you popping champagne. That's barely enough for a value meal at McDonald's. But don't let that fool you.
This company's been growing its dividend faster than a beanstalk on Miracle-Gro, with a five-year CAGR of 15.5%. It's not TMO's fault their stock price keeps outrunning their dividend.
Looking ahead, Thermo Fisher is projected to reach a 12% EPS growth in 2025 and 11% in 2026. It's like watching a rocket take off in slow motion.
Before you jump aboard though, I'll be honest with you.
At a P/E ratio of 26.6x, TMO isn't exactly on the bargain rack. It's priced like a fine wine, not a box of Franzia. But hey, quality costs money, and this is a company that's been delivering returns of 16.7% per year since 2004.
So, what's the takeaway here? Well, it’s clear that Thermo Fisher Scientific is a powerhouse in the healthcare and biotech sectors.
But, it's not going to give you the cheap thrills of a biotech startup that might cure cancer or go belly-up next week.
Instead, it's the steady Eddie that's going to keep chugging along, supplying the tools that make those moonshots possible.
If you're looking for income, well, this ain't your horse. But if you want growth with a side of stability, Thermo Fisher might just be the ticket. It's got more potential than a kid with a 4.0 GPA and a mean fastball.
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
Mad Hedge Technology Letter
July 10, 2024
Fiat Lux
Featured Trade:
(GERMANY BRINGS DOWN BITCOIN)
(BTC), ($COMPQ)
The German government unloading hundreds of Bitcoin (BTC) shows how a random event can reverse positive sentiment.
Technology stocks ($COMPQ) aren’t immune to this type of price action and as we inch closer to the election in November, get prepared for the likelihood of wonkiness to increase.
Luckily enough, the onslaught of regulatory attacks from all sorts of governments has more or less been priced into tech stocks.
A billion fine here or there for many of these tech titans is just a drop in the ocean.
Even political events now do little to sway tech stocks, because many events are just ephemeral in nature and don’t change the trajectory of tech.
Bitcoin isn’t necessarily directly important to tech stocks but operates in parallel.
It is true that there is a lot of crossover between talent pools in the labor forces. Everyone working in Google and Apple knows people working in Bitcoin and vice versa.
More often than not big tech has acted as a feeder source to fill position at Bitcoin and crypto companies.
For weeks now, Germany’s government has been selling hundreds of millions of dollars worth of Bitcoin — and it’s been a key factor behind the cryptocurrency’s intense sell-off.
Last month, the German government began selling Bitcoin from a wallet operated by the country’s Federal Criminal Police Office.
They also sold 900 bitcoins in June.
Last week, the government sold an additional 3,000 bitcoins worth roughly $172 million. Then on Monday, German police sold a further 2,739 bitcoins or $155 million worth of the cryptocurrency.
Bitcoin prices have also been under stress from the payout of billions of dollars worth of digital currency from the collapsed bitcoin exchange Mt. Gox — which went bankrupt in 2014 — to creditors.
A trustee for the Mt. Gox bankruptcy estate has started making repayments in bitcoin and bitcoin cash to some of the creditors through a number of designated crypto exchanges.
Bitcoin’s price is still up a good 89% in the last 12 months.
In January 2024, police in the eastern German state of Saxony announced the seizure of close to 50,000 bitcoins, worth around $2.2 billion at the time.
Today, Germany’s BKA holds roughly 32,488 bitcoins. At current prices, the government’s holdings are worth roughly $1.9 billion.
Although it might feel like a one-off, I do believe governments around the world will be in a position to confiscate more crypto in the future.
This could end up government owning more and more of the finite Bitcoin supply in circulation and could lead to regulation taking a backseat.
The golden goose won’t be killed if the government has skin in the game.
Even though this could become an unusual way for governments to onboard themselves into the crypto ecosystem, killing crypto would have a contagion whiplash that can’t be fully quantified as of now.
Uncertainty always tanks the market.
In fact, I believe the drop in Bitcoin from $73,000 to $53,000 is a positive event for investors because they can load up again at cheaper prices.
I believe we are in a goldilocks phase in technology where Bitcoin and tech stocks grind higher.
Temporary events that drop tech stocks or bitcoin by 20% are few and far between.
Many tech investors would love a better entry point, and it will truly take a real black swan to knock tech stocks or Bitcoin off their high and mighty perch.
As it stands, expect higher prices in both asset classes.
“If you don't understand the details of your business you are going to fail.” – Said Amazon Co-Founder Jeff Bezos