(MRNA) Archives - Page 20 of 27 - Mad Hedge Fund Trader

The Market Outlook for the Week Ahead, or The Great Asset Shortage

Markets are wonderful arbiters of the laws of supply and demand.

When there is a shortage of a particular security, Wall Street has a magical ability to manufacture more by running the printing presses to meet supply, or in the modern incarnation, open the spreadsheets.

Except for this time.

The amount of new cash created by global quantitative easing and the prolific saving habits of locked up Americans are creating more demand than even this efficient highly process can accommodate.

Which means that prices can only go up.

How long and how far is anyone’s guess. My target for the Dow Average is 120,000 in ten years, but even I don’t expect that to take place in a straight line. So, we are all sitting on our hands waiting for the next pullback to buy into, which may….or may not ever happen.

A lot of Dotcom Bubble memories are rising up from the dead. Analysts in 1999 made outlandish forecasts of stocks rising 50% in a year, which then took place in four days. That happened to Tesla (TSLA) last month and Airbnb (ABNB) last week.

In the meantime, the smartest traders, call them the oldest traders, are taking profits on the best years of their careers.

Of course, the short-term direction of the market will be determined by the January 5 Georgia Senate election, where the polls are in a dead heat. The last time this happened, during the presidential election, the Democrats won by a microscopic 15,000 vote margin.

If history repeats itself, the Biden administration will get an extra $6 trillion to play with to restore the shattered US economy. Think $2 trillion for infrastructure spending in all 50 states, $2 trillion for the rescue of bankrupt states and municipalities, $1 trillion for alternative energy and EV subsidies, and another $1 trillion in odds and ends. Needless to say, much of this will end up in the stock market.

I am getting a lot of questions these days regarding what will end this once-in-a-generation runaway bull market. The pandemic created this bull market by accelerating technology, business evolution, and corporate profitability by ten years. I bet a year ago, you weren’t spending your day on Zoom meetings, as I was.

The great irony is that the Pfizer (PFE) and Moderna (MRNA) vaccines may not only kill Covid-19 but the bull market as well. That’s because money will then come out of stocks and go back to the real economy.

That makes pandemic darlings like Peloton (PTON), DocuSign (DOCU), and Etsy (ETSY) especially risky. But then 6% growing GDPs were never what stock market crashes were made of, so any declines will be modest.

As for my own positions, I have a rare 100% long portfolio, mostly Tesla, but also the (TLT), (CAT), (JPM), and (BABA), 80% of which expires with the option expiration on Friday, December 18.

After that, I’ll take it easy with 10% short (TLT) and 10% long (TSLA) and wait for the market, or Georgians to tell me what to do.

A flood of money is to hit the stock market, says hedge fund legend Ray Dalio. The US is facing a perfect storm in favor of all risk assets. There is no reason why price earnings multiples for American stocks can’t reach 50X, double the current 25X. Buy what the central banks are buying. The funny thing is that I agree with Ray on everything. Buy risk on dips.

Stocks will keep soaring into 2021, says JP Morgan strategist Marko Kolanovik. The more risk the better. The Fed will keep interest rates low for at least another year, and ultra-low rates will force big institutions out of bonds and into stocks. Volatility (VIX) will decline. It all sounds like a great long stock/short bond trade to me. Hmmmmm.

Tesla completed a $5 Billion share issue, after a move to $650, up $142 from my November Mad Hedge BUY recommendation. The stock seems hell-bent on testing the Goldman Sachs $780 price recommendation before the December 18 S&P 500 entry. Elon Musk’s creation is now worth a staggering $608 billion. It’s the best recommendation in the 13-year history of the Mad Hedge Fund Trader.

San Francisco rents dive 35%, as tech workers flee to the suburbs. A lot of remote work is now permanent. Studio apartments are now a mere $2,100, and a one-bedroom can be had for $2,716. For a two-bedroom if you have to ask, you don’t need to know. Shocking!

Sales of million-dollar homes are soaring, as ultra-low interest rates persist and people spend much more time at home. So, bigger for your pod is better. Mortgages over $766,000 are up 57% YOY.

Jamie Diamond says he wouldn’t touch bonds with a ten-foot pole, and nor would I. A 91-basis point yield just doesn’t do it for the chairman of JP Morgan Chase (JPM), one of my recurring longs. Stocks are a much better choice, even if there is a bubble in progress. Keep selling every rally in fixed income, especially the (TLT).

Weekly Jobless Claims soar to 853,000, up a massive 153,000 from the previous week. To see this happen during the Christmas hiring season is heartbreaking. With 200,000 a day falling to Covid-19, I’m surprised it's not higher, which means it will be. This is what peaks look like. Washington has totally given up.

An $800 billion payday for the bay area. That is the amount of wealth created by just two companies, Tesla (TSLA) and Airbnb (ABNB), since March. And the great majority of shareholders live in the San Francisco Bay Area, including its venture capital and pension funds. No wonder home prices in the suburbs are up 20% YOY. The great irony is that (ABNB) received a massive government bailout only in March. I hope they repay the loans early.

Is Cuba the next big play? A Biden détente could lead to the emerging market investment opportunity of the decade with the $43 million Herzfeld Caribbean Basin Fund (CUBA). It just had its best month in 11 years (like many of us). With Fidel Castro long dead, what’s the point in continuing a 60-year-old cold war. A big market for American products and services beckons, not to mention the tourism and cruise opportunities. But can Biden afford to lose the Florida Cuban vote in the next election?

When we come out the other side of the pandemic, we will be perfectly poised to launch into my new American Golden Age, or the next Roaring Twenties. With interest rates still at zero, oil cheap, there will be no reason not to. The Dow Average will rise by 400% to 120,000 or more in the coming decade. The American coming out the other side of the pandemic will be far more efficient and profitable than the old. Dow 120,000 here we come!

My Global Trading Dispatch catapulted to another new all-time high. December is up 8.55%, taking my 2020 year-to-date up to a new high of 64.99%.

That brings my eleven-year total return to 420.90% or more than double the S&P 500 over the same period. My 11-year average annualized return now stands at a nosebleed new high of 38.26%. My trailing one-year return exploded to 66.30%, the highest in the 13-year history of the Mad Hedge Fund Trader.

The coming week will be a slow one on the data front. We also need to keep an eye on the number of US Coronavirus cases at 16 million and deaths 300,000, which you can find here.

When the market starts to focus on this, we may have a problem.

On Monday, December 14 at 12:00 PM EST, US Consumer Inflation Expectations for November are released.

On Tuesday, December 15 at 11:00 AM, the New York Empire State Manufacturing Index for December are published.

On Wednesday, December 16 at 8:00 AM, US Retail Sales for November are printed.

On Thursday, December 17 at 8:30 AM, the Weekly Jobless Claims are published. We also get November Housing Starts.

On Friday, December 18, at 2:00 PM, we learn the Baker-Hughes Rig Count.

As for me, I was stunned to learn that 84 million people are watching The Mandalorian, the latest Star Wars installment Disney (DIS) launched in its hugely successful streaming service a year ago.

It reminds me of when I first saw Star Wars in 1977. I was changing planes in Vancouver, Canada on the way to Tokyo and used a long layover to take a taxi to the nearest theater to catch a film I’d heard so much about.

I was amazed when I realized that the guy sitting in the next seat had memorized the entire script and was mouthing all the words. The only other time I have ever seen this happen was sitting on the benches at Shakespeare’s Globe Theater in London. At least then, they were reciting Romeo and Juliet.

Stay healthy.

John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader

December 8, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
December 8, 2020
Fiat Lux

FEATURED TRADE:

(IS THIS STOCK A DISCOUNT TO MODERNA?)
(NVAX), (MRNA), (PFE), (BNTX), (AZN), (JNJ), (MSFT)

Is This Stock A Discount to Moderna?

Biotech Letter

Eighteen months ago, an unknown vaccine developer called Novavax (NVAX) confronted an existential terror: getting delisted by the NASDAQ stock index.

This threat came on the heels of the company’s second failed vaccine study in less than three years, plunging Novavax shares to less than $1 for 30 straight days and triggering a warning from NASDAQ.

Desperate to keep the company going, Novavax sold two of its manufacturing plants in Maryland, cutting the payroll by over 100 employees.

By January 2020, Novavax only had 166 employees in its roster and was priced at $4 per share.

By December of the same year, Novavax more than tripled its workforce and the stock has risen to $128 per share.

What a difference a year—and a global pandemic—could make.

To date, Novavax stock has already skyrocketed to over 3,000%—shattering even the wildest dreams of its early investors. And this isn’t the best news yet.

Like Moderna (MRNA), another small biotechnology that skyrocketed this year, Novavax is projected to enjoy more room for growth in the succeeding years.

Despite the similarities in their achievements, there has been a notably sizable gap between the valuations of these two biotechnology companies in the Operation Warp Speed list.

The valuation gap would probably make more sense now, especially since Moderna has the golden ticket when it comes to high efficacy results for the COVID-19 vaccine, while Novavax has yet to prove its candidate’s worth.

However, Novavax isn’t out of the race just yet. Novavax plans to end 2020 with a bang by launching pivotal COVID-19 vaccine trials for its candidate, NVX-CoV2373, in the US and Mexico.

While the old saying, “The early bird gets worm,” is frequently accurate and we’ve seen how first-movers generally attain the highest success, this may not be the case here.

In view of the COVID-19 vaccine race, there’s a realistic possibility that Novavax will come out as a bigger winner than Pfizer (PFE) or Moderna (MRNA) in the long run.

Admittedly, it’s encouraging for vaccine developers to know that RNA vaccines, such as Pfizer and BioNTech’s (BNTX) BNT162b2 and Moderna’s mRNA-1273, are effective.

It’s definitely even more encouraging to learn that the second type of vaccine, which is being developed by AstraZeneca (AZN) and Oxford, also offer successful trials.

However, the potential of Novavax’s vaccine candidate proves that there are many ways to skin the cat.

This protein-based vaccine, which also caught the attention of Microsoft (MSFT) co-founder Bill Gates, is expected to show the best results among all the developers.

Although its competitors are months ahead in their tests, NVX-CoV2373 actually outshone the rest of the developers on key metrics in the monkey and even human tests.

Moreover, Novavax’s technology offers versatility, which means it can be applied to other vaccines and treatments as well.

If NVX-CoV2373 gains approval, the company will easily continue this momentum in 2021 and in the next years.

The market opportunity presented by the demand for a COVID-19 vaccine is unbelievable.

Priced at $16 per dose, Operation Warp Speed shelled out $1.6 billion to buy 100 million doses of the Novavax vaccine.

Considering that this is a two-shot vaccine, this would only cover 50 million people.

Although the price may be higher or lower depending on various factors, $16 per dose is a good starting point for a back-of-the-envelope calculation.

What we know so far is that Novavax has already secured agreements to manufacture more than 2 billion doses.

Taking into consideration the price point of $16 for each dose, that easily gives the company a potential revenue of a whopping $32 billion in 2021.

The upside is surreal.

Plus, we still have no guarantee whether the need for a COVID-19 vaccine will be a one-time requirement or a yearly ritual like flu shots, which Novavax also has covered with the production of its new drug, Nanoflu.

As the market continues to swoon over the huge updates from Pfizer and Moderna, it no longer comes as a surprise when other candidates are glossed over.

Novavax isn’t about to start selling its COVID-19 vaccine tomorrow, but it’ll probably release critical data in the next months.

Assuming that it gets regulatory approval by the first half of 2021, it’ll begin to realize the upside almost instantaneously.

At $8 billion market capitalization, Novavax stock could easily triple to $24 billion by the time the vaccine is released.

I believe Novavax offers a potential long, and I find myself getting bullish on this stock.

Although it has a limited pipeline at the moment, I think positive data from its COVID-19 vaccine candidate will serve as a catalyst for this stock to trade much higher in the future.

While I can see that Novavax is widely considered as a dark horse in this race, I believe it’s going to be a dark horse that can lead us out of this darkness soon.

novavax

December 3, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
December 3, 2020
Fiat Lux

FEATURED TRADE:

(IT’S TIME TO JOIN THE COVID-19 VACCINE BANDWAGON)
(PFE), (BNTX), (MRNA), (NVAX), (AZN), (JNJ), (MRK)

It’s Time to Join the COVID-19 Vaccine Bandwagon

Biotech Letter

In the history of corporate ventures, Pfizer (PFE) is one of the select few that can claim that their contributions genuinely contribute to the betterment of mankind.

This giant biopharmaceutical company has rapidly developed a promising vaccine candidate for the deadly COVID-19—an achievement that could potentially put an end to the global pandemic that has transformed 2020 into an apocalyptic year.

To date, Pfizer and its partner BioNTech (BNTX) have submitted the vaccine, BNT162b2, to the FDA for review—a move that could take us all a step closer to returning to our normal everyday lives, where we can be with our friends and loved ones without fretting over deadly infections.

If BNT162b2 gains approval, Pfizer and BioNTech can start the distribution by Christmas.

As expected, the COVID-19 vaccine will provide a quick and substantial boost to the company’s revenue this year.

Outside its COVID-19 program, Pfizer has a number of blockbuster treatments that have been generating steady growth despite the health and financial crises this year.

At the top of the list are breast cancer drug Ibrance and stroke and blood clot medication Eliquis. Other stars of Pfizer’s strong lineup include rheumatoid arthritis medication Xeljanz, heart failure treatment Vyndaqel, and prostate cancer drug Xtandi.

In terms of its pipeline, Pfizer has at least six programs queued for regulatory approval and an additional 21 candidates undergoing late-stage trials.

While Pfizer and BioNTech are leading the charge in the COVID-19 vaccine race, this is not necessarily a winner-take-all-market.

Days after Pfizer announced the results of its trials, fellow vaccine developer Moderna (MRNA) also released promising data. Another biotechnology company, Novavax (NVAX), has been sending out impressive results as well.

Even AstraZeneca (AZN), which has been working with Oxford, offered good news despite the delays in its own trials.

Meanwhile, Johnson & Johnson (JNJ) and Merck (MRK) have been making progress in their own COVID-19 programs as well.

However, there’s a crucial role played by Pfizer’s success.

It introduced to us the possibility of jumpstarting a vaccine program and shortening the development period that typically takes at least 10 to 15 years to complete.

More impressively, Pfizer has managed to come up with a vaccine with 95% efficacy – an amazing feat considering that 90% to 95% of vaccine trials tend to fail from the very beginning.

Most importantly, Pfizer’s recent results showed that we can now explore new options in vaccine development.

Taking BNT162b2 into consideration, this program opened doors for treatments created based directly on the molecular and even genetic structure of viruses.

Needless to say, Pfizer is a compelling stock to buy at a time when it is the norm to complain about having nothing to purchase at a reasonable price.

Additionally, Pfizer shares offer a dividend yield of 4.2% – a major advantage in a financial market that appears to be starved for any sort of security.

For those patient enough, the current conditions look to be ripe to use options to make the most of the short-term volatility to position yourselves for long-term gains.

By selling puts and buying calls, you can get the options market to pay them to purchase stock at cheaper prices and even participate in any rallies.

With Pfizer stock priced at around $36.18 these days, you can sell the January $36 put and buy the January $38 call for a credit of roughly 60 cents.

If Pfizer stock rallies, then you profit.

If the stock falls, then you can just buy it at the put strike price, although at a minimal discount because of the credit, or simply cover the put and move on.

If Pfizer stock hits $43 at the January expiration though, the call would be worth $5.

This risk-reversal plan is based on the prediction that good things are expected to happen to Pfizer—and to the world—soon.

Obviously, the key risk is that the stock rolls over and falls before the January expiration.

Given the new COVID-19 vaccine, however, that seems highly unlikely.

November 24, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
November 24, 2020
Fiat Lux

FEATURED TRADE:

(WATCH OUT FOR BIONTECH’S HOCKEY STICK GROWTH)
(BNTX), (PFE), (AZN), (MRNA), (JNJ), (REGN), (DNA)

Watch Out for BioNTech's Hockey Stick Growth

Biotech Letter

BioNTech (BNTX) is the perfect example of an old saying, “Timing is everything.”

Coming from its humble IPO in 2019, this biotechnology company now sports a $25 billion market capitalization—a number that could still go up once its COVID-19 vaccine candidate with Pfizer (PFE) receives US and EU nods.

What we know so far is that their COVID-19 vaccine candidate could secure an emergency approval as early as December and start delivery before Christmas.

Although it’s still not available in the market, the effect of its COVID-19 vaccine candidate, called BNT162, has made itself known in BioNTech’s earnings report.

The company reported roughly $80 million in revenue in the third quarter of 2020 alone—an impressive 135% jump from its previous performance in the same period last year.

To date, BioNTech and Pfizer are estimated to supply roughly 1.3 billion doses by the end of 2021.

Additional orders could still come in though, which is why the two companies have been busy scaling their manufacturing capacities.

If all goes according to plan, then the expected returns from their COVID-19 vaccine sales could come sooner than initially thought.

Recent reports reveal that Moderna’s (MRNA) COVID-19 vaccine candidate also showed over 90% efficacy. Even AstraZeneca’s (AZN) candidate with Oxford University disclosed promising results.

However, BioNTech and Pfizer’s candidate has a couple of competitive advantages.

The first would be its 95% efficacy, which gives the two companies the commanding position and effectively relegates the rest as second grade options.

Their candidate showed no safety concerns—a major issue for AstraZeneca and Johnson & Johnson’s (JNJ) candidates.

Third, the partners have been able to reassure their capability to manufacture at scale—an issue that would pose problems for other developers like Moderna.

In fact, BioNTech acquired a vaccine manufacturing plan in Germany just last September to meet the demand for 250 million doses by mid-2021 and another 80 million doses monthly thereafter.

In terms of manufacturing capacities, the two potential competitors of BioNTech and Pfizer here are AstraZeneca and JNJ. Both have already paused their trials and are now falling behind in terms of the rigid schedule.

As for the other COVID-19 vaccine leader, Moderna has yet to prove that it can manufacture at scale.

BioNTech and Pfizer even shut down the red herring about the cooling and storage of their COVID-19 vaccine candidate. The two companies released their plans for distribution and detailed a strategy that’s not only feasible but also cheap.

Since the vaccine requires extremely low temperatures to maintain its efficacy, Pfizer and BioNTech will ship them from centralized warehouses via a thermal shipper.

This will ensure that the temperature is maintained for 10 days without the need to re-ice and up to 15 days with re-icing. A GPS will be used to monitor and track the integrity of the vaccine in real-time.

The impact of its sales from the COVID-19 vaccine would dwarf practically everything else in BioNTech’s financial statements.

However, this does not mean the biotechnology company will revert to its 2019 status once the peak of its COVID-19 vaccinations is over.

Instead, BioNTech will be in possession of an extremely valuable IP of an effective and working mRNA vaccine platform.

This will allow the company to apply the technology to other infectious diseases.

If it continues with its partnership with Pfizer, it can even develop vaccines for farm animals and domestic pets and market those under the bigger company’s animal healthcare spinoff, Zoetis (ZTS).

Here’s a bit of background on BioNTech.

Founded in 2008, BioNTech was created to develop hyper-personalized medicine and treatments.

At the center of its mission, the company’s basic idea is that the tumor found in each cancer patient is one of a kind.

To help find a cure or treatment, the company analyzes the tumor for its genetic signature.

Once they identify this unique element, they would develop gene-based therapies to limit the spread or even put an end to that particular occurrence of cancer.

If you think this is a lofty goal for a small biotechnology company, then you’d be surprised to find out that BioNTech proved their theories in 2017.

At the time, all 13 patients who underwent the analysis and received injections for genetically personalized therapies for their advanced-stage cancers.

Essentially, the cancer patients developed immunity from their own cancer.

Apart from COVID-19 and cancer treatments, BioNTech is also working on treatments for tuberculosis, HIV, and several rare diseases.

Outside its partnership with Pfizer, it has been partnering with Regeneron (REGN) and Genentech (DNA).

Biotechnology stocks have the tendency to move when the companies release updates about their treatments under development.

For momentum investors, it’s crucial to be prepared for whatever happens in the aftermath.

Looking at the developments and other updates, BioNTech’s COVID-19 vaccine work could send this stock to the moon.

After all, its partnership with Pfizer resulted in what could be the most effective and efficient candidate to battle the pandemic.

This means that the demand for the vaccine would exponentially exceed the supply in the near future, with the majority of what can be manufactured getting pre-sold or call option reserved.

To date, BioNTech stock is trading at roughly $104 per share. However, I estimate that it could reach a target price of $600 by the first quarter of 2021.

biotech

November 19, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
November 19, 2020
Fiat Lux

FEATURED TRADE:

(A STOCK FOR ALL AGES)
(JNJ), (PFE), (BNTX), (MRNA), (BRK-A) (BRK-B)

A Stock for All Ages

Biotech Letter

November has been an action-packed month so far.

The US election has concluded, and on top of the political drama, Pfizer (PFE), BioNTech (BNTX), and Moderna (MRNA) have released COVID-19 vaccine trial data that look extremely promising.

Since Pfizer and BioNTech (BNTX) announced that their vaccine BNT162b2 offers roughly 95% efficacy, the development resulted in a market-wide rally, particularly in value stocks, with investors starting to anticipate the economy to show signs of meaningful recovery and bounce back to pre-pandemic levels.

Hence, it makes sense to position your portfolio in a manner that reflects these macro developments.

However, the coming months could still push the markets to be even more volatile.

That’s why my advice is to hold investments that have been historically proven to be dependable even in the most uncertain times.

One of the most reliable stocks in today’s tumultuous financial climate is Johnson & Johnson (JNJ).

Aside from Pfizer and Moderna, JNJ has also joined the ranks of COVID-19 vaccine developers brandishing their success.

In the latest update, the company announced that JNJ-78436735 could be ready for FDA approval by February 2021.

Although JNJ is months behind Pfizer and Moderna, JNJ-78436735 holds a huge advantage: it’s a one-jab vaccine.

In comparison, both Moderna and Pfizer require booster shots for their COVID-19 vaccine candidates. The second shots for these are expected to be given roughly a month after the first shot.

Despite not being the first in the market, JNJ still stands to reap the benefits from the recent developments, as the promising COVID-19 vaccine report could boost the company’s sales for its medical devices and consumer health products—a projection that is already coming into shape as JNJ stock gained over 7% since Pfizer’s announcement.

For the third quarter of 2020, JNJ raked in $21.1 billion in global sales, recording a 1.7% increase from the same period in 2019.

While this growth rate is not as exciting as previous reports, it signified a substantial improvement from the year-over-year sales decline in the second quarter, which was at 10.8%.

Sales for its pharmaceutical chapters rose by 4.7%, while its consumer health sector climbed by 3.1%.

More impressively, JNJ raised its 2020 sales guidance by $1 billion.

The company’s revenue guidance is now up to be somewhere in the range of $81.2 billion to $82 billion from its initial forecast of $79.9 billion to $81.4 billion.

Thanks to the diversity in its product portfolio, broad geographic reach, and of course, brand power, JNJ has been able to thrive despite the pandemic.

After all, JNJ has been in business since 1886, which indicates the company’s resilience and capacity to survive crises.

Historically, this company has been known as a safe stock primarily due to its growing dividends.

In fact, Warren Buffett’s Berkshire Hathaway (BRK-A) (BRK-B) has held on to JNJ stock for the past 14 years.

For context, JNJ reported $74.3 billion in sales back in 2014. By 2019, this Dividend Aristocrat’s top line has jumped to reach $82.1 billion. Even more impressively, JNJ has recorded a profit margin of at least 18%.

As a longstanding member of the S&P Dividend Kings, which lists companies that managed to boost their dividends for at least 50 consecutive years, JNJ offers an impressive dividend yield of 2.8%—significantly higher than the S&P 500’s average at 1.8%—translating to roughly $4.04 per share.

JNJ is a good long-term stock to hold.

Although it is admittedly not cheap, its valuation is still reasonable, especially if you think about the dearth of high-quality and safe assets available in today’s extremely volatile market.

So whether you’re a budding investor or a veteran of the market, I advise that you buy JNJ stock on the next dip at its share price to be one of the dividend investors enjoying this company’s revenue.