“Madam - I cant believe after all these months your still "undecided". By now I would have thought - a typical sophisticated seasoned investor...would /should have a very good idea - Good or Bad .”
Why can't you believe I am undecided? What is so incredulous about that?
Because my style of investing doesn't happen to follow your approach - or many other conventional approaches?
What is the "appropriate" timeframe that would be deemed acceptable to you?
Two months? One month? Two weeks? Five days? Two days? 24 hours?
Why can't one, if the fancy takes them or the circumstances warrant it, follow a company for many, many months - years even - before buying its stock?
On what basis do you get to play arbiter over the "right amount of time"?
Why is it beyond the realms of possibility that I - or anyone, for that matter - can continue without certainty for a protracted period of time?
If you have digested anything I've ever posted in the past, then you might have picked up that my personal philosophy for the creation of wealth through investing in listed companies has one overriding cornerstone, namely:
IT IS NOT SO MUCH THE JAGGING OF THE MULTI-BAGGERS THAT MATTERS, AS IT IS TO AVOID PERMANENT CAPITAL LOSSES.
You see, I believe the mistakes most investors make is that they only "see", or envisage, the potential upside return potential in a stock, without making the necessary risk adjustments to that return potential.
It is the natural human condition; we are wired to think that way.
While it at first took a lot of hard work and discipline, I have taught myself over time to think 10% about the Return, but 90% about the Risk.
And I make no apologies for that: it works for me on many levels.
In other words, before I establish a debut shareholding position in a company, I seek to reach a state of mind in which I feel the potential upside is far outweighed by the potential downside (and I'm not referring to temporary downside here - we all know stock prices can fluctuate for all sorts of extraneous reasons unrelated to intrinsic value - I'm referring to the potential for the permanent destruction of my capital).
Now I'll pause here for a minute to pre-empt any smart alec responses along the lines of "Oh, Adam, so you think you are so smart that you only buy stocks that only go up and never go down? Who are you trying to fool? That's impossible."
But that's not what I am saying, although it is the way it is often interpreted.
What I am saying is that my OBJECTIVE is to avoid incurring permanent capital losses. I don't always achieve it, but I try darn hard to do so. Much harder than most, and for that I make absolutely zero apology.
So yes, that means that my investment opportunity set is limited, and it also means I invest far less frequently that most. (Hard as it might be for some to believe, complete years have gone by in which I haven't bought a single share in any company.)
Clearly, I spend the overwhelming majority of my investing life simply waiting. Waiting and watching. I see it as stalking my prey, and having the patience to wait for the right time to pounce. (But do I sometimes wait too long and the market "discovers" the intrinsic value in a stock before I am in a position to act and I end up missing out? Absolutely. But that's an occupational hazard with which I am content to live.)
One of my biggest positions today is a company I followed very closely for close to 3 years(!) before the event finally occurred that made me believe that my downside was adequately protected in terms of the probability of avoiding permanent capital loss.
And then I started buying the company's stock aggressively.
With conviction.
So I understand why my approach - which, remember, focuses 90% on the potential pitfalls and the risks - might come across as negative to followers of certain stocks, or that I am nit-picking unnecessarily.
No one likes to have their beloved investments impugned by some crank who is constantly trying to pick holes in all the many and varied rosy arguments and the obviously-sensational upside.
I understand that, but again, I make no apologies for my philosophy.
So to MSB; yes, there is a great upside "story" here (which is why I follow the company and the developments surrounding it): there's the "multiple shots on goal", the "massive unmet needs", the Great Pioneering Professor running with the vision, the "Biotech Deal of the Year", the much-vaunted debut commercial revenues pending in Japan, the hundreds of millions of dollars in milestone payments, the "$4.3bn NPV" for just one application, the "world's 11th most valuable Phase 3 trial", the Teva "partnership", the scale potential via the Lonza manufacturing arrangements, the "Big Pharma needs to buy new growth avenues and these guys take M&A bites in tens of billions of dollars" angle, the "smart fund managers are buying in" storyline, the $80 target prices from some analyst quarters, etc. etc.
The list of upside positives is exhaustive and clear to see (which is why just 10% of my effort has gone here... the positives are ubiquitous, so this part is easy. I spend almost zero time and effort now thinking about the upside. That exercise is now completed.)
But the hard part - which requires 90% of the work for me, and which is the subject of almost all my ongoing work - is dimensioning the downside risk.
I could not do so when the share price was $8.00 and I still cannot do so today, almost three years later.
But I'll keep trying because one day I might be able to get a reasonable handle of how much of my capital is at risk of being permanently lost, and assuming it is negligible compared to the upside, then I will be in a position to "pounce".
Until then, I keep waiting and watching and monitoring developments, and searching for the pieces in the jigsaw puzzle to fall into place.
Regrettably, I cannot offer any apology if my innate patience causes you disbelief.
But following conventional norms in lemming-like fashion is not how I have come to succeed. Quite the exact opposite, in fact.
Hopefully you now understand why I am undecided after “all these months”
(PS. "...typical sophisticated seasoned investor..."?
I'll happily accept "sophisticated" and "seasoned", but "typical"? Heck, I decidedly hope not!)
“You mention Australian fund managers ? but I'm very surprised that your not aware of the "new" o/seas managers that bought up in June/July/some August 14 and in the same period M&G and Blackrock added to their positions. All available on google - very easy to find.”
That's as maybe, but clearly someone else has been selling, too. That's what you get with markets; some people are buying at various times (including short-sellers covering position, don't forget) and some people are buying.
Personally, I put zero store of value in what professional fund managers are doing on any given day/week/month. Like stockbroking analysts, I think the abilities of investment managers are way over-rated and their influences are way over-stated.
“I remember in the months the GFC hit, shorting was banned in the US - why ?”
Because corporate America needed to recapitalise during a one-in-a-hundred year exogenous shock to the financial system when capital liquidity dried up!
Why do you reckon? Because the US authorities had some sudden-found moral qualms with short-selling?! Give me a break.
“Yes - I also have friends in the investment banking space...they tell me with some stocks shorting does its job to keep the SP honest ...and there are other stocks where it can be VERY opportunistic. They tell me the way it is and as best mates over a long period of time - we trust and care about each other. You want to do more research about MSB....because you are "undedcided" - but it appears you haven't listened to the recent webcast (Aug 14) where there were many analysts asking many questions ..particularly around CHF . For e.g. Maxim's (J Kolbert) asked a question along the lines of "tell me about your strong relationship with TEVA". Dolce, Vinn, CouncilG...I am sure you guys (gals) have.”
Oh yeah, I did listen to it. Twice. But overwhelmingly it contains bits of information that are useful in helping to envisage the upside with the company, but that I already know all too well. I don't need further cheerleading about it. I understand the positives and the resulting upside very well.
Trouble is, there is nothing useful for the purposes of my specific research which is, remember, getting to grips with how much permanent downside there is, if any.
On the specific question of the relationship with Teva, that's not a very useful use of Q&A time following a MSB result webcast, I don't think. How much objectivity could the answer possibly contain?
The question of how Teva views its relationship with MSB is a question best asked of Teva itself. Were the relationship to be strained or dysfunctional, do you honestly expect MSB to wilfully volunteer that fact, even when prompted?
Given my philosophical focus on the potential negatives in my quest to dimension the potential downside, the last place I expect to get objective, impartial, frank and candid information - particularly of the less-than-rosy type I am ususally after - is on a company conference call where management gets to field Dorothy Dix questions from pandering analysts who invariably have conflicting commercial motives given investment banking arrangements.
(PS. I sense you have a disdain for shorters. Well, I suggest your ire is misdirected. You should aim your contempt at the investment banking and stockbroking fraternity with their sycophancy and toxic target prices which have poisoned many an unwitting investor.)
“Oh .and what a bonus for TEVA to have NIH partner with MSB on the Class IV very sick patients. A much smaller (120 patient) trial..I suggest all holders do more research on this trial.”
Yes bonus indeed. Yet another positive. But I know all about the upside already. NIH doesn't add any value to my understanding of the potential downside to the share price.
You have never mentioned the DISK trials ? Do you know about these ? (you may or may not want to know - but you are free to do more research).”
It might surprise you to learn that I know a great deal about this programme and it is probably the aspect of the business about which I am most excited. (just because I don't constantly wax lyrically positive about it doesn't mean you should assume I know nothing about the disc trials. In fact, you would be better served to not make too many assumptions about me, because they are bound to be flawed, based on precedent).
I happen to believe that divesting a part of this application is MSB's best opportunity to avoid a further dilutive equity raising which would otherwise be required over the next 12 months.
“Anyway - I'm very comfortable with MSB.”
Me too. I am comfortable with the upside potential. Just not the downside.
“I guess we all have are own investment philosophy and programs.”
Indeed, which begs the question why you impugn mine.
MSB Price at posting:
$4.06 Sentiment: None Disclosure: Not Held
(20min delay)