Biotech Values

[DewDiligence]

>TEVA--Dew, did you sell because you had reached a predetermined sell point or because you thought that TEVA has risen quickly and might not be able to maintain the pace in the short term?<

Those sound like two ways of saying the same thing: that the valuation is not so compelling after the 50% rise off the early-2005 lows. I don’t impose a hard and fast sell price for a stock, but rather reevaluate each holding on a continuous basis.

I still like TEVA a lot on a longer-term basis because:

1. Generic drugs are the best answer to rising healthcare costs, as you point out;

2. TEVA’s execution is second to none; and

3. TEVA and NVS are probably the only two companies with the resources to exploit generic biologics, when the day finally dawns for these products.

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By the way, I feel the same way about NVS as I do about TEVA: a great company that I sold for valuation reasons only.

If TEVA continues to rise above 40 before I get eventually back in, so be it. Every decision has a risk. Regards, Dew