The Biotech Bubble: Is It Or Isn't It ? Reply to scott
From conference call Hercules Technology Growth Capital's CEO Discusses Q4 2013 Results - Earnings Call Transcript
Feb. 27, 2014
Question from Jon Bock - Wells Fargo
...where are you starting to see on a venture stage the most valuation bubble or shall we say the least compelling valuations in your view?
Response from Manuel Henriquez - Co-Founder, Chairman and CEO Hercules Tech.Growth Capital NYSE:HTGC
It's really the equity guys chasing these valuations. Now that said, you're seeing still a fairly robust increase in valuation in technology companies and early-stage social media companies and SaaS-type companies. We are purposely – we are the most under invested in technology that we've been in the history of Hercules.(10 years) However, I believe that that tide will change in the second half of 2014 as all these companies finally get acquired, you'll start seeing a whole new birth of new technology companies being started that have new business models and a much more attractive valuation to be in. At which point, we will wade back in with some new product offerings that we will have to offer new plans of services to earlier stage companies that we don't have today, to really start grabbing some of that market share and some of that void in our portfolio today. So, technology is something where we purposely are under investing today. It is the easiest transaction to originate to. It doesn't require a lot of sophistication when you're first doing early stage deals compared to the expertise needed in energy technology or life sciences investing, for example.
Edit 03/14/2014
SAN FRANCISCO (MarketWatch) — Castlight Health Inc. shares soared almost 150% Friday on a strong reaction to the public debut of the cloud-based health care software company.
Castlight CSLT ended the day up by $23.80 at $39.80 after the company went public by selling 11.1 million shares of stock at $16 each. Castlight had originally priced its IPO in a range of between $9 and $11 a share.
The company’s software is used by businesses to improve their spending on health care and reduce waste in what Chief Executive Giovanni Colella called “the only industry in America that’s been failed by capitalism.”
By Brian Gormley ‘Next Big Thing’ Castlight Health Scores Giant Win for VCs
Latest Headlines is home to all the latest, up to the minute news headlines from The Wall Street Journal in a streaming continuous headline experience. 03/14/2014 Evening
Castlight Health Inc.‘s initial public offering is a giant win for Venrock and other venture capitalists who pumped $181 million into the San Francisco health enterprise-software company.
Venrock owned 20.6% of Castlight before the offering and 18% after, according to a regulatory filing. Based on Castlight’s market capitalization of $3.45 billion, Venrock’s stake now figures to be worth about $620 million.
Castlight’s shares debuted at $37.50, 134% above the expected offering price of $16, and closed at $39.85 Friday.
Castlight’s other venture backers included Oak Investment Partners, which holds 13.8% of the company’s stock following the IPO; Maverick Capital, which has 8.9%; Fidelity Investments, holding 8.6%; and Wellcome Trust, owning 7.6%, according to the filing. All major investors held onto their shares in the offering.
The IPO represents an eye-popping public debut for the company, but its large market opportunity and the track record of its investors and management made it a company to watch well before its IPO.
Among its board members are Facebook CFO David Ebersman, Venrock partner Robert Kocher, who served in the Obama Administration as special assistant to the President for health care and economic policy, and Venrock Partner Bryan Roberts, a prominent health-care investor who co-founded Castlight in 2008.
The other co-founders were RelayHealth founder and Castlight CEO Giovanni Colella, and Todd Park, who is now U.S. chief technology officer.
The Wall Street Journal named Castlight the “Next Big Thing” in a 2011 feature that ranked the most promising up-and-coming venture-backed companies.
Castlight helps self-insured employers control costs by making health-care cost and quality data accessible. The model appeals to many investors given the struggle companies have had with rising health expenses. The company secured its valuation despite drawing only $13 million in revenue last year.
Venrock previously backed Athenahealth Inc., a provider of cloud-based services to physician practices that formed in 1997. Athenahealth went public in 2007 and is now valued at $6.5 billion.
Castlight’s offering follows a successful IPO from medical-software concern Veeva Systems Inc., which went public in October and is now valued at $3.9 billion. Another, employee-benefits software vendor Benefitfocus Inc., went public in September. Its market capitalization is $1.3 billion.
These trends have caused venture capital investment in health-care information technology to soar to heights not seen since 2000, prompting some to warn of a bubble forming. Venture firms sunk $947 million into medical software and information services last year, the most since 2000, when they invested $2.3 billion, according to Dow Jones VentureSource.
Health IT last commanded this much interest around 2000, when “e-health” startups like Drkoop.com Inc. went public despite untested business strategies. Drkoop.com, which provided health information online, folded in 2001 after finding it couldn’t survive on a business model that included selling advertising and enabling e-commerce transactions.
Amid the new investment surge, some venture capitalists see another crash in the making, with a crop of startups launching with products but no real business models. But many longtime health-IT investors say there’s also an emerging class of companies poised to pull health care into the digital age and lower costs for hospitals, employers and consumers.
“There are high valuations out there today, but there’s so much more room to run in the digital transformation,” Stephen Kraus, a partner with Bessemer Venture Partners, said.
Rising medical expenses are pushing employers and their employees to examine costs, a trend that led Venrock, Castlight’s earliest investor, to back the company at its founding in 2008. Castlight says it has signed up more 100 customers as of the end of last year.
The Biotech Bubble: Is It Or Isn't It ? Perhaps like tech there may be a small bubble but the future is with both.
Personally, I think the future of tech is with companies that are innovating in terms of improvements of day-to-day life. Here's a somewhat odd note. I'd rather own the increasingly tech-y Nike (people wearing Fuel Bands and using shoes that report to your phone) versus something like Facebook. But, that's just me.
http://www.businessweek.com/articles/2013-10-15/sorry-nike-youre-a-tech-company-nowNike's not the best example, but I guess the question becomes what are tech companies that are innovating in terms of/things related to quality of life improvements. That's interesting to me, not social media companies.
In terms of healthcare, people aren't going to change the way they eat en masse (sorry, Chipotle isn't healthy), population continues to get older/demographics, etc etc.
It goes along with - as I mentioned in another thread - an increasing focus for the foreseeable future on things that are "needs" instead of "wants". As I mentioned in the other thread, even something like Canadian National Railway is an example - I don't like that the Canadian government is forcing the rails to move more grain, but between oil, a bumper crop of Canadian grain that needs to be moved and apparently a glut of timber that is sitting in warehouses, it feels like there's not enough railroad for all of the things that need to be moved - and they aren't building any more railroads.
I don't want anything where I have to ask whether it will be popular in a few years.
The Closing Bell: U.S. Stocks Have Worst Day In 5 Weeks
Mutual Funds That Take The Slow-Trade Route To Excelling
Bill Gross: Fed To Reassure Market On Zero-Rate Policy:
Why Fannie, Freddie Declines Leave Big Investors Unfazed: Bill & Bruce: "What Me Worry" I'm sorry but one need only look at the last name of one of the bill's authors to see where this was headed. I still wonder if BB bought more.
lol.
Frannie wind-down could spare preferreds; faces hurdles in any case
Mar 13 2014, 11:20 ET
“It’s hard to find any reasonable outcome that’s really terrible for the preferreds, given what I perceive to be the value of the business that’s already there," says portfolio manager Jeffrey Lewis, an owner of the shares. Investors in the common stock, however, are making a bet Fannie Mae (FNMA +12.4%) and Freddie Mac (FMCC +13.4%) will be allowed to become dominating private companies again and keep their profits.It's up to the courts to decide how investors will be treated, says Sen. Mike Crapo, who co-wrote the bill to wind the GSEs down. "We are not necessarily going to dictate the outcome."As for whether a bill actually becomes law anytime soon, former Senate banking panel aide Mark Calabria gives it maybe a 10% chance of getting to the president's desk this year. The dim prospects look to be giving a boost to the common shares today.
http://seekingalpha.com/news/1625313-frannie-wind-down-could-spare-preferreds-faces-hurdles-in-any-caseI wouldn't count on the courts to favor investors, either, but that's just me.
How do I find top ranked funds within a category??? MFO...
Here are top ranked moderate allocation funds over past 20, 10,
5, and 3 years (aka Great Owls):
Obtained using
Miraculous Multi Search =).
How do I find top ranked funds within a category??? MFO...
Gives quintile rank, here again for
VWENX:
For past 1, 3,
5, 10, and 20 year periods, as applicable. Based on its risk return measure (Martin Ratio).
How do I find top ranked funds within a category??? Morningstar...
Here is result for
VWENX:
Gives rank order placement of fund each each based on its risk return measure (MRAR).
Pimco's New Managed Futures Fund Out. Scott,
I agree the new fund is something most won't understand but it has a fancy name. I also followed the Long-short fund but decided on a cheaper fund. That Pimco fund has done well.
I just think maybe the Pimco fund appeals to some advisors and that's probably it. I just don't see retail interest.
There are managed futures hedge funds that have exceptional records and have both the management and the technology.
However, they also have the flexibility to be highly nimble - and they get paid 2 and 20. You have some of these managed futures mutual funds that adjust around once a month (see RYMFX), which just continues to be whipped around by trying to adjust monthly to a market that is far more minute-to-minute and being frequently positioned wrong.
The giant managed futures hedge funds have massive amounts of research and tech.
"The scientists at Winton say one thing that sets them apart is the sheer amount of data they base their algorithms on. More historical information, they say, helps put price trends into context.
The company's London offices display charts tracking the prices of commodities going back hundreds of years, old maps and bank notes and even a dividend cheque from the 18th-century South Sea Company.
Winton sends researchers to libraries and archives across the world to find numbers held in books and on microfilms. It has found barley and sesame prices from ancient Babylon, and English wheat prices going back to 1209.
It now employs more than 90 researchers, including extragalactic astrophysicists, computer scientists and climatologists. The company hired a meteorologist who had researched the "El Nino" phenomenon. The physics graduate - Winton wants to keep his name secret for fear a rival might poach him - works in London correlating weather data to crops such as corn, wheat and soybeans. That data can be used to forecast how prices might fluctuate with the weather.While traders in commodities have long looked at weather statistics and forecasts, the attempt to computerize the process creates the basis of an industry."
http://www.reuters.com/article/2012/05/21/us-trading-blackbox-idUSBRE84K07320120521That reuters article from a couple of years ago is titled "The algorithmic arms race" and while one can debate the merits of these funds, the idea is that you have exceptionally well-funded managers who are trying to go to the ends of the Earth for any little bit of data that will give them an advantage.
The managed futures mutual funds just cannot compete, both in terms of research/data and flexibility. Maybe the AQR one, to some degree, but even that is hampered by lack of flexibility.
