Trading Biotechs From His Bedroom Nate Pile Beats The Street
December 29, 2014 issue of Forbes.
Nate Pile, 45
Healdsburg, CA
Day Job: Newsletter Editor, Stay-At-Home Dad
Strategy: Technology and Biotech Investing
Ten-Year Average Return: 17.6%
Top Pick: MannKind
As a math major at UC Berkeley in the 1980s Nate Pile’s awakening to the stock market came quite literally every morning at 6:30 a.m., when his college roommate, an active trader, got a call from his broker at the market open in New York City. The bull market of the 1980s hooked Pile, who landed a part-time job stuffing envelopes at one of the top-performing investment newsletters of the day, Jim McCamant’s Medical Technology Stock Letter.
Pile launched his own investment newsletter, Nate’s Notes, in 1995 from his bedroom, but for eight years he needed to teach junior high school math during the day to pay bills. Today Pile’s newsletter, focused on biotech and technology, is still headquartered in his home, in part because he is caregiver for his two daughters, but it is also one of the top-performing of its type, according to Hulbert Financial Digest. Ten-bagger recommendations of biotech giant Celgene and Apple have given a big boost to Pile’s returns.
Strategy: Pile pays attention to traditional fundamentals and technicals, but because some of his picks are biotechs he doesn’t fixate on traditional metrics. To understand the “story” of a stock, he drills down into the minute details found in the financial statements of the companies he is following. His portfolio tends to be concentrated, holding only 20 stocks. According to Pile, the key factors in his decision to invest are whether the company has a game-changing product that has the potential for huge growth and whether he would be happy to own the company even if the stock market didn’t exist.
Best Idea: Pile likes biopharmaceutical MannKind of Valencia, Calif., trading $3 below the level at which he first recommended it. In June the company finally received FDA approval for an inhaled diabetes treatment called Afrezza, but the stock is still down 60% from its 2004 IPO. Pile says many investors lost hope after Pfizer pulled a similar drug from pharmacies because of weak sales. Yet he points to two crucial differences: Pfizer’s product was the size of a liter bottle and MannKind’s the size of a lifeguard’s whistle. More important, Afrezza works faster, thus giving patients more control.
