A Real Bright Spot in Biotech

Even smart rich guys lose money when they bet on the wrong biotech.

Valeant Pharmaceuticals is cratering again this week as investors continue to question the company’s drug pricing and business practices. The firm has even caught the ire of Washington— hardly a bullish development. Shares have dropped a whopping 70% since August.

Plenty of big money investors have been dumping Valeant shares for weeks. But for hedge fund legend Bill Ackman, betting on Valeant has lost his fund billions in just a matter of weeks…

“In recent weeks, the 49-year-old Mr. Ackman has been under siege,” The Wall Street Journal reports. “Valeant’s stock, which once accounted for one-fifth of his fund’s holdings, is down 65% since its August high, and Pershing Square has lost about $4 billion in value during that period. Its four funds, now totaling $16 billion in assets, are down 16% this year, after a record 40% return in 2014. It is the largest decline ever for his firm.”

Even for a billionaire, these losses are quickly piling up…

Anatomy of a Biotech Crash

As you’re aware, there are plenty of biotech train wrecks out there right now. And I haven’t exactly been kind to this group of ailing stocks ever since they began showing signs of pneumonia back in July. When trading profits are on the line, you gotta get out the way when sellers take control.

But that doesn’t mean there aren’t plenty of interesting companies in the biotech sector that are going to do a lot of good for the world one day.

Not all of these companies are junk like Valeant. In fact, lots of them are making piles of money these days. There are plenty of bullish narratives and fundamental reasons investors can list if they find the right investment…

But you have to be choosy. You can’t just fling your money at a random biotech stock and hope that it doesn’t land you in the poor house. There are just too many hand grenade biotechs out there that could blow up in your face if you’re not careful…

And one of the most bullish narratives in all of biotech is new drug candidates for diseases that have zero good drugs currently on the market.

And according to our own resident tech expert Ray Blanco, that’s exactly what could be brewing with one tiny company set to release new data tomorrow at a major industry conference. This company could give new hope to 5 million Americans who currently have no hope at all and satisfy a $67 billion a year treatment need.

That’s blockbuster potential…

To see what this company could be on the verge of accomplishing, click here.

Sincerely,

Greg Guenthner
for The Daily Reckoning

PS: During the sharpest session on the biotech correction, Ray sent me this note:

I wouldn’t write off biotech just yet. It has been through four 20% declines since the market bottomed in 2009. Each one proved to be a buying opportunity. 

Why is Ray so bullish? Read his story and see for yourself…

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