Katie Hudson (SELL): I'm going to call out the biotech sector...

Katie Hudson (SELL): I'm going to call out the biotech sector initially and then I'm going to talk about a company specifically. We just think that the whole biotech sector in the small-cap part of the market is structurally overvalued and overhyped. Certainly, there are a lot of interesting products coming down the pipeline, but a lot of them have a billion or a one-and-a-half billion dollars of market cap and a lot of risk attached to them. Getting a product to market requires commercialisation, it requires distribution, it requires a change in the way a clinical practice operates. And so we think there's a lot of risk attached to these products and these companies that is not reflected in the company's share prices.

One I call out is Neuren. It has a really interesting new product that they've just got FDA approval for, but the hard part is about to start for them. They've got to change clinical practice. Certainly, we think there'll be a lot of patients who will try the product, whether that will be sustainable and meet expectations about some pretty significant market growth for a $1.7 billion market cap company we think looks challenging.

Pro Medicus (ASX: PME)

Chris Conway: Mike, what about you? What's an overhyped darling and why?

Mike Younger (SELL): For us, it's Pro Medicus. It's a fantastic business and has a lot of characteristics that investors look for - high earnings growth, high margins and low capital intensity. But valuation wise it's really extreme. This is a stock trading at a hundred-odd times PE and it's one of the only tech stocks which hasn't derated over the last 18 months. And to highlight the extremity of that valuation, if you continue to grow the earnings out at the pace that they're currently tracking versus growing out the market growth, it would take over 10 years for Pro Medicus to trade at a market multiple. And so for us, that's very extreme and provides very little margin of safety should something go wrong.

Just to help posters, here is her full analysis. I don’t know much about promedicus, but they also dissed that company; after which it rose from about 60 to 90c.