Friday, April 13, 2007

I’m Moving ‘All In’ on VRTX

Well…kind of. Specifically, I am putting all $1.4 million that I have in my CNBC Million Dollar Portfolio Challenge portfolio into Vertex Pharmaceuticals.

My thinking is that while I am still somewhat pleased to be listed in the top 1% of contestants, each day the top 10 contestants widen the gap between my steadily growing portfolio, which is gaining about 3% or so a week, and their vast fortunes. As of this writing, I now find myself more than $1 million away from making it in to the top ten list.

The catalyst is coming tomorrow, when Vertex will present some new clinical data on telaprevir (VX-950,) a promising Hepatitis C drug, at a conference in Barcelona. Depending upon what is presented, the fallout with likely have a dramatic effect on the stock price of VRTX, whose calls currently have an implied volatility of about 78.

Adam Feuerstein of TheStreet.com did an excellent job of sizing up the situation for Vertex and telaprevir in February. Earlier today, 24/7 Wall St. summarized the options play on Vertex and talked about it as a potential “next Dendreon.”

As I see it, I probably need to make at least another $1.5 million, probably more, in the month remaining just to have an outside shot of finishing in the top ten. Ironically, this is not necessarily a desperation play on my part. If ten or more other people make bigger bets on VRTX than I do and the stock soars, then I’m that much farther out of the money. So…in this strange world of stock market competitions where high risk trumps good portfolio management skills, VRTX is both an offensive and defensive play on my part.

Looking ahead, if there is good news on Saturday (and Monday), I’ll increase the level of transparency on my thoughts and actions in this contest a little. If not, then I’ll put this subject on the back burner and move on to other subjects.

4 comments:

TradingGoddess said...

Oh! Just terrific! The day my hands are tied and I can't make a single trade...you decide to do this and I just now find out.

So much for me riding on your coattails. I will be in your dust. :(

In all seriousness, congrats! :)

And this has nothing to do with the contest...

but take a look at this. I think that guy stole your pogo stick!

Bill Luby said...

TG,

Not to worry, I took a hit on VRTX on Friday and it is down another 6% pre-market today.

Notable Calls provides a summary of analyst perspectives on VRTX post-Barcelona.

TradingGoddess said...

What did you mean "not to worry"?

My congrats to you were offered with sincerity.

I do believe I will never joke around again, as it seems that no one takes me seriously when I am being serious.

:(

TradingGoddess said...

oh...

p.s.

I see you got your pogo stick back. I don't see it posted on his site anymore.

hehe

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