Mad Hedge Biotech and Healthcare Letter
March 19, 2024
Fiat Lux
Featured Trade:
(NOT JUST A ONE-TRICK PONY, BUT A BIOTECH THOROUGHBRED)
(LLY), (NVO), (PFE), (AMGN)
I've been around the block a few times when it comes to investing, and let me tell you, I know a thing or two about spotting a winner. And right now, there's one name in the biotechnology and healthcare world that's caught my eye like a shiny new penny: Eli Lilly (LLY).
First off, let's talk about Lilly's recent partnership with Amazon Pharmacy (AMZN). This pair is bringing the future to us, offering direct home delivery of Lilly's medications, including the much-talked-about weight-loss drug Zepbound.
You heard that right. Thanks to this partnership, you can now get your hands on Lilly's weight-loss wonder drug, Zepbound, without ever leaving your couch.
Approved last year for obesity treatment, Zepbound is shaping up to be a blockbuster. And let's not forget about LillyDirect, the platform making all this possible, blending healthcare provision with top-notch delivery service.
Since launching in 2020, Amazon Pharmacy has been on a mission to simplify how we get our prescriptions, and teaming up with Eli Lilly only turbocharges this mission.
Now, let's talk about Lilly’s financials. This biotech’s market cap has ballooned to an eye-watering $700 billion, thanks to a 130% surge over the past year.
The buzz around Zepbound, showing potential for a 27% reduction in body weight, has investors sitting up and taking notice.
But I hear you ask, "Have I missed the boat on Eli Lilly?" My take? Not at all.
In fact, I think this stock could easily double in value and even surpass the trillion-dollar mark within the next five years. It's a bold prediction, but I've been around long enough to know a sure thing when I see it.
With obesity rates tripling since 1975 and more than half of the global population predicted to become obese or overweight by 2035, the demand for effective treatments like these is going to skyrocket.
Actually, the market for weight loss treatments is projected to reach $100 billion by 2030. And Lilly? They're ready to ride that wave all the way to the bank.
To date, Lilly only has one strong competitor in this space: Novo Nordisk (NVO). While other pharma giants, like Pfizer (PFE) and Amgen (AMGN), are trying their best to gain traction, these two are leaps and bounds ahead.
Now, I know what you might be thinking. "Isn't it expensive to develop these cutting-edge treatments?" You bet your bottom dollar it is.
Lilly isn't afraid to put its money where its mouth is. They're investing heavily in manufacturing capacity to keep up with the inevitable surge in demand. It's a bold move, but that's what separates the winners from the also-rans in the biotech race.
That’s not where it ends though. Lilly has another ace up its sleeve: donanemab, their early Alzheimer's treatment. This could also be a potential competitor of Biogen (BIIB) and Tokyo’s Eisai’s (ESALY) lecanemab, currently marketed as Leqembi.
Sure, the FDA might have put a temporary hold on Lilly’s candidate’s approval, but I've seen this rodeo before. It's just a minor bump in the road for this potentially game-changing drug.
If donanemab gets the green light, it could add billions more to Lilly's already impressive revenue streams. For perspective, the market for Alzheimer’s treatments is predicted to reach $6 billion to $8 billion by 2025 and record $15.5 billion by 2031.
Of course, no investment is without risk. But when I look at Eli Lilly, I see a company that's firing on all cylinders.
They're making strategic partnerships, investing boldly in their future, and have a track record of success that's the envy of the industry.
With a pipeline full of promising treatments, I believe Lilly is poised to gallop its way to even greater heights in the years to come.
So if you're looking for a biotech thoroughbred with a pedigree of success and a bright future ahead, I'd say Lilly is a horse worth betting on.
Global Market Comments
March 19, 2024
Fiat Lux
Featured Trade:
(THE MAD HEDGE MARCH 12-14 TRADERS & INVESTORS SUMMIT VIDEOS ARE UP!)
(THE BEST COLLEGE GRADUATION GIFT EVER),
(TESTIMONIAL)
The Mad Hedge Summit Videos are Up, from the March 12-14 confab. Listen to 18 speakers opine on the best strategies, tactics, and instruments to use in these volatile markets. It is a true smorgasbord of investment strategies. Find the best one to suit your own goals.
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There isn’t a man out there who doesn’t occasionally wish they could be 22 years old again but knows what they know now.
While it is unlikely that a time machine will be invented anytime soon for you to fulfill this wish, it is not impossible for a son, daughter, niece, nephew, or grandchild who recently graduated from college to achieve this.
A number of subscribers ever grateful for the trading and investment skills I have taught them over the past 16 years have asked me how they can pass this knowledge on to the next generation.
The answer is very simple. Set up a trading account in your child’s name and fund it with $10,000. Then buy them a one-year subscription to the Diary of a Mad Hedge Fund Trader.
Tell them that they get to keep any trading profits they generate. They can repay the original capital when they have the money to do so sometime in the future.
If they lose all the money, they get nothing more and the both of you have learned a valuable life lesson.
This happens to be how many Wall Street veterans teach their own kids how to trade. It is also how many major hedge fund managers started out. Nothing beats learning by doing.
Having watched followers do this for a decade, the stories that come back are nothing less than amazing. Some kids literally take to trading like a fish to water. They come up with trading ideas that are SO good that even I, a 55-year veteran, haven’t thought about them.
I have also seen the opposite extreme. Some nascent traders put all their money into a single ill-conceived trade and blow all the money in a matter of weeks (so you bought oil and the beginning of the Gulf War, not during the build-up?). They get discouraged and never trade again.
There is a good rule of thumb to follow here. The longer the student traders read the Diary of a Mad Hedge Fund Trader before committing to their first real money trade, the greater the likelihood of making a profit. Those who wait a year and paper trade with “play money” until then can be reliably expected to match or exceed my own 50%-60% annual returns.
If successful, the lessons learned are legion. They learn responsibility and how to accept the consequences of their own actions. There is NO arguing with a closing mark to market P&L in your trading account.
They also come to understand risk management, information flows, risk/reward, and the value of time spent on deep research. If they get drawn into reading books about trading or options so much the better. This is incredibly valuable information to have not only in investment but in any future business activity they may engage in.
Buy a man a fish and you feed him for a day. Teach him to fish and you feed him for life. This is a way to teach your young relatives how to fish so you can get yourself out of the fish-buying business.
The sooner you get kids out of the nest, the better.
Sometimes It Helps to Have Some Big Guns Behind You
Your background is very impressive and intriguing. You definitely have a lot of valuable and unique experience.
I read your most recent post on activist investing and couldn't agree more. I have always been a fan of activist strategies because even under an assumption of efficient markets, activism can still generate alpha in theory.
I have also heard about how process-oriented investments, such as activism or distressed investing where you have a greater influence over the final outcome, are valuable from a standpoint of downside protection.
Many thanks,
Andrew
“Few individuals have had more influence than Elon Musk on life on earth, and potentially off earth too,” said Time Magazine editor, Ed Felsenthal when it named Musk “Man of the Year.”
Mad Hedge Technology Letter
March 18, 2024
Fiat Lux
Featured Trade:
(APPLE LOOKS FOR A WAY BACK)
(AAPL), (GOOGL)
Apple (AAPL) is in active negotiations to support iPhones with Google's (GOOGL) generative artificial intelligence engine and this is big news out of California.
The possible deal signals the sad truth that Apple's AI technology remains inferior to Google's suite of generative AI tools.
The move by Apple is a sign that management is in crisis mode in Cupertino, California.
Management has finally figured out that there is a real threat of getting left behind and steps are being taken to ameliorate this.
To be honest, I have not heard much about Apple’s AI exploits and I boil it down to Apple not having much of anything to show for.
Apple halted its long-rumored “Project Titan” work on developing an electric car.
The company reportedly announced the news internally and said many people in the 2,000-person team behind the car will shift to generative AI efforts instead.
Clearly, there is a strategic shift going on at Apple and management came to a conclusion the only way forward is to collaborate with other tech behemoths.
They are redeploying a 2,000-person team to go into some AI venture and onboarding Google’s AI software will be the next project for this team to work on.
It’s quite disappointing that Apple hasn’t been able to achieve any in-house headway into one of the biggest sub-sectors in technology today.
Apple needs to double down and hire another 2,000-person team of AI specialists to get to the root of the problem.
After the iPhone, many want to know what is next for Apple and CEO Time Cook has had time but an incomplete road map.
The two companies are in active negotiations to let Apple license Gemini, Google's set of generative AI models, to power some new features coming to the iPhone software this year.
Apple also recently held talks with OpenAI revealing their desperation to hang on to any olive branch extended to their future business.
There is even a possibility that an agreement between the two mega-tech giants will not materialize, and/or Apple will seek multiple partners to build a chatbot.
A deal would give Gemini a key edge with billions of potential users.
However, the report said, "the two parties haven't decided the terms or branding of an AI agreement or finalized how it would be implemented."
Google must feel vindicated after their AI tools went awry.
Even with a lot of rust around the edges, Google’s set of AI tools are still highly valued and sought after.
This is a major victory for Google and boosts the profile of their AI team and in-house expertise.
The AI wars will leave many other tech companies behind and Apple is ensuring itself it gets a seat at the table as the smartphone business gradually declines.
Apple has been lean any meaningful AI announcement and although this doesn’t put them back into the driving seat, it really is a breath of fresh air to see Tim Cook finally wake up and realize the company he shepherds is lost.
The iPhone is not the future and this is a painful way of telling shareholders that they have been asleep at the wheel.
In the short term, Google and Apple would be worth a trade.
“The most important investment you can make is in yourself.” – Said American Investor Warren Buffett
