The Iconoclast Investor

We saw a huge relief rally on Thursday and Friday of last week, followed by a proportional counter-move yesterday. That the bottom has been seen in many stocks is a very high probability.
 
So what do I like?
 
I like medical stocks, especially those involved in biotech and genetic technology. There are some impressive charts today, and the long-term fundamentals are bright thanks to growing demand from aging baby-boomers. Who’s going to pay for all this care is yet to be determined, though recent events provide a clue.  Also, I have some “radical” ideas about the potential of health care to enhance productivity that I’ll share in a future issue.
 
But today I want to tell you about Sequenom (SQNM), a little company that earned a spot in Cabot Top Ten Report several times in recent months as it bucked the broad market’s downtrend.
 
Here’s a composite of what editor Michael Cintolo has written.
 
“Sequenom is a small California-based manufacturer of genetic analysis products for use in biomedical, agricultural and molecular medicine research. The company has never had a profitable quarter, but every quarter it sells more of its MassARRAY platform, a flexible and scalable platform that allows researchers to examine DNA sequences and variations with extreme accuracy.  The company itself has done groundbreaking work analyzing fetal gene and chromosome abnormalities such as RhD, and Trisomy. Trisomy 21, in fact, is Down Syndrome, and it’s the prospect that Sequenom could tap into this huge market that’s caused the stock’s strength since the results were released on June 4. The company’s non-invasive test (performed much earlier than amniocentesis) has a 99% detection rate, with zero false positives. The company’s first test group numbered 201 patients, and the company’s test correctly identified all 10 cases of Down Syndrome, while recording zero false positives. It’s now starting the process of testing 10,000 patients, and management is optimistic the results will show greater than 99% accuracy, with less than 1% false positives or false negatives. If all goes well, Sequenom is looking to commercialize the product in the middle of next year, and it by some estimates, the company could see revenues (for this one test!) of $165 million in 2010 and $2 billion in 2012.”
 
The stock has been acting extremely well in the last three months, hovering in the low 20s as the market fell apart.  It’s a very promising pattern.  Short-term, however, the biggest factor is tomorrow’s analyst and investor briefing, in which the company might release information that moves the stock.