Forum Archive Index - May 2003

["Malcolm Cameron" <malharcameron@hotmail.com>]

Snoopy if you had bought and held chemeq from float you would have been very 
successfull but with there high minimum entry quantities in a lot of floats 
in the australian market at the time it would have been to many eggs in one 
basket regards Malcolm








>From: "tennyson@caverock.net.nz" <tennyson@caverock.net.nz>
>Reply-To: sharechat@sharechat.co.nz
>To: sharechat@sharechat.co.nz
>Subject: [sharechat] My Biotech Investment Strategy Revealed
>Date: Mon, 05 May 2003 17:55:47 +1200
>
>
>Hi All,
>
>I see that no-one has responded to my challenge on how to become a
>successful investor in Biotechnology.   So here is my take on the topic.
>
>For investment in biotechnology I give equal weighting to both the
>science behind the technology being developed, and the business plan
>behind commercializing that technology.   These being my two
>requirements, you can see that none of the science seed research
>projects grown into companies make it onto my radar screen.   IMO,
>there is no point in having the best science in the world if you do not
>have the sales channels in place to market the product you are
>producing.
>
>My initial foray into biotechnology saw me identify a company with good
>science and a good sales force ready to exploit the product.  I was
>patient and waited for the stock to lose any bubble in its share price (or
>so I thought, the share price halved), then I moved in and bought the
>stock.
>
>Not long after that the share price halved again......
>
>After this sobering lesson I decided that perhaps I wasn't the hot biotech
>stock picker I thought I was.    The company did move into profit (a rare
>thing for a biotech, so at least my judgement wasn't totally misplaced),
>but in no way did it achieve the kind of results that would have justified
>my purchase price.   Until, that is, around 1999 at the height of the
>NASDAQ boom where I had the good fortune to have my shares taken
>over.
>
>So all ended well and I did end up with a small profit on this investment.
>To this day,  I don't regard my original investment strategy as unsound.
>But I have given up on my quest to become a hot biotech stock picker.  I
>stand by my assertion in a previous post that investment in
>biotechnology is at best a zero sum game, which amounts to a
>guarantee that biotechnology investors as a group will lose in the long
>run.
>
>However, what if an investor in the commercial world publicly identifies a
>biotech research company that has commercial promise and acts?   And
>what if  I could get in on this deal at virtually no cost?     Well, a 
>couple
>of months ago I got in on just such a deal on these terms.    I am
>referring here to the Wrightson's buy into Genesis Research and
>Development.
>
>I still have the Genesis Research and Development Prospectus and it
>has duly achieved an honoured(?) position in my 'library of shame'.
>GEN was always going to be a long-shot and the big weakness I saw in
>the prospectus (which was why I didn't invest) was that I didn't see a
>satisfactory strategy in the offing to bring any products developed to
>market.  However, bringing product to market is exactly what WRI does.
>So when WRI bought into Genesis, at a very good price (less than the
>cash value of the bank deposits) I sat up and took notice.
>
>Genesis Research is still a cash burner, so buying into the company
>even at a good price means that it is not guaranteed that this will be a
>good investment.  However the price paid:
>
>0.1542 x 5.75m shares x $1.31 equates to $1.1615m
>
>Given that there are 134.2m WRI shares out there this equates to
>around 1c per share.  In other words it would not be catastrophic to WRI
>if this entire investment ended up flushed down the dunny.  On the
>upside a closer co-operation between WRI (who have their own crop
>research centre out at Lincoln) and GEN could lead to significant
>rewards, especially as WRI *does* have the sales channels to get a
>commercial reward from any successful product development.  It has
>since been announced that GEN is to split into two, one half
>concentrating on the 'health business' and the other the 'plant business'.
>What is the bet that WRI will be driving the latter half?
>
>>From the Wrightson perspective the risk reward equation looks good.
>
>Downside: 1c per share.
>
>Upside:  Whatever the market thinks is a suitable premium for a
>successfully developed high tech product.  IMO any upside is more
>likely to be reflected in a changed market perception that WRI is no
>longer a commodity company with cyclical assets.    Changing the
>perception of WRI is a long term objective of MD Dr Alan Freeth and
>could result in a major re-rating of the WRI share price.
>
>In summary I feel the risk/reward trade off for investing in WRI is more
>attractive than ever.   At $1.11  (and a yield of 15%) WRI is, IMO still
>*the* stand out investment on the NZSE.  I don't know when the market
>will finally realize how cheap WRI is, but I certainly wouldn't want to be
>underweight in WRI waiting for it to happen.   This is why I topped up at
>seemingly insane price of $1.01 on 31st March 2003!
>
>SNOOPY
>
>discl: hold WRI
>
>But do not hold GEN directly.   I'm quite happy to leave the decision of
>where my indirect holding in biotechnology company GEN goes, in the
>capable hands of Dr Freeth and the WRI board.
>
>--
>Message sent by Snoopy
>on Pegasus Mail version 4.02
>----------------------------------
>"Stay on the upside of the downside,
>Anticipate the anticipation!"
>
>
>
>
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