Covid-19 stocks: Who should you believe?

In today’s Exponential Investor…

  • The debate raging behind closed doors
  • Two sides to every story
  • Who should get the decision?

I love working at Southbank Investment Research.

I almost don’t even see it as ‘work’. I see it as a chance to freely publish my investment ideas, my investment views and ultimately deliver to investors my expertise, knowledge and experience that helps you to be better investors… and maybe better people.

Okay a little grandeur there I’m sure. But what we do here is to help encourage and foster independent thought and decision making about investing, your investments and how you go about building a better financial future for yourself and your family.

To achieve this you can’t live in an echo chamber.

If you want to really get ahead with your investments you need to look at both sides of a story, accept and analyse all angles that may exist and consider and appreciate there isn’t always just one clear cut answer to a problem.

This is somewhat an approach you should take in life and investment.

At Southbank we pride ourselves on the fact there is no ‘house view’.

We’re not like the big investment houses of the world that push an agenda or enforce a certain way of writing on their analysts.

We don’t go and publish a puff piece on a stock to then start a roadshow the day after to help secure funding for a capital raise.

Note: if you’re not sure what I’m talking about there, just have a listen to Friday’s podcast with myself and Kit winder and the actions around the NIO company.

What we are all about is independent research without vested self-interest all to ensure that you get the best, clearest, most valuable information and analysis about investment opportunities in the market.

This level of independence is very rare in the market. It’s a huge factor in what makes us successful.

But… it also has its downsides…

Game on!

I say ‘downside’ but I don’t really mean it.

You see, one of the things when there’s no ‘house view’ no editorial bias is that as Editor’s we are free to publish our ideas to you. We aren’t told what to write, when to write it. We aren’t told to say certain things about certain companies.

We aren’t afraid to slam a company when it needs slamming, and we’re not afraid to talk about a company that’s virtually unknown that the mainstream might deem too risky.

However, in doing this, in having this editorial freedom, it can from time to time lead to clashes.

Clashes where one Editor might disagree with the views and analysis of another editor.

These are the kinds of debates that sometimes rage on behind the scenes in long, fascinating email thread between editors and analysts.

Where one editor has a strong view on the direction of an investment or market, and another editor says, ‘no. I think you’re wrong. And here’s why.’

I LOVE these kinds of threads and debates. It makes us all jump in and participate with our two-bobs worth. It helps us to formulate and present more comprehensive, detailed and useful ideas to you.

If we just lived in an echo chamber where we all agreed with each other editorially all the time…well how boring would things be then?

Thankfully with many editors with such deep, extensive experience in markets and industry we get a broad range of views and some of the best debates you can imagine.

This doesn’t necessarily make it easier for you, when one Editor says one thing and another Editor says another – who do you decide to go with?

But that all comes back to our view that we’re here to help you develop independent thought processes. Not to just agree and ‘sheep think’ with the masses. When two editors have opposing views, you get to see the debate rage out and then make your own call as to who you think presents the more compelling case.

This is how markets work, how the world works…how we work.

And boy, was it game on this week when two of our Editors had quite divergent views on one of the most controversial topics of 2020 – and possible of the 21st century – Covid-19.

Make your choice…

On Tuesday, Eoin Tracey published a video report in our Exponential Investor Premium publication.

If you’ve not seen Exponential Investor Premium, every day investors get a new market commentary about a particular segment of the market with a chart and commentary from Eoin.

You can click here to find out more and subscribe.

Anyway in Eoin’s premium video report on Tuesday he made note of Coronavirus vaccine producers – are they worth the investment?

This covered the number of people recruited for Covid-19 vaccine trial recruitment.

There have been a large number already given the vaccine administered.

Those people also need to be exposed to the virus. Hence there will be some questions around who gets it Covi-19, who doesn’t and how that rolls out as these trial complete.

Eoin’s point was, looking at the trials, starting in July and September, and the results due sometime in October to December, we might have a large number of vaccines coming to market all at the same time.

That could flood the market with Covid-19 vaccines.

He drew comparison to a hypothetical market where Samsung, Google, Nokia, LG and other smartphone companies all brought out a smartphone at the same time as Apple did with the first iPhone. In that scenario if the game-changing tech hit the market all at once from multiple manufacturers, would Apple have captured the same market share as they did?

He argues that many of the companies delivering these potential vaccines are trading at values as if they’ll capture the whole market share of the vaccine market.

There may be a load of competition in this space and these values right now might be the peak of the Covid-19 ‘easy money’.

He suggests now we should look beyond these ‘easy money’ movers and that perhaps Covid-19 vaccine producers might not be the best place to invest money right now.

It’s a fair and thought-out argument as Eoin always delivers.

However, Gerrard Pontonnier, the Editor of our premium biotechnology publication, New Drug Speculator strongly disagreed with Eoin’s analysis. In fact it was borderline incensed by it.

Gerard fired off an email in rebuttal to Eoin’s view saying,

Primarily, [Eoin’s video report] doesn’t reflect,

1/ the reality of the current healthcare strategies to cure coronavirus,

2/ the pharma vaccines market and,

3/ gives a misunderstanding on any Covid-19 stocks at short-term.

Speaking today about a future Covid-19 market split at short-term for vaccine winners on October/November is a reductive and false vision (millions of doses were pre-ordered and already pre-paid but numerous gov.)

For a day-trader, a swing-trader or mid/long-term investor, the timescale and expected returns are so different as we can’t speak in a general way.

Investing in profitable multi-billion pharma stocks like AstraZeneca or Pfizer is not comparable to buying BioNTech or Moderna stocks for examples. We trade the newsflow at short-term, not the vaccines market and sales potential.

Gerard has worked in drug development and pharmaceuticals for decades, holding top level positions at global pharma such as Pfizer. So he knows his way around this market. And he doesn’t share Eoin’s view.

As you can see he doesn’t think you can be general about this market, and that you need to play the stocks on their own merits, on their own pipeline and their own timeframes.

So… who’s right? Well, I’ve got my view on it, which isn’t too hard to find. But that’s not the point here. Today the point is, what do YOU think?

Is Eoin right? Are Covid-19 vaccine companies not the best place for investment right now?

Or is Gerard right? Should you be making sure that you get the right guidance from someone who sits on the inner sanctum of the biotech world about each and every unique play into the most critical biotech story of our generation?

I’ll leave that choice up to you.

What you see here is two very smart, very reasoned and very experienced experts in their own right with their view and take on this market.

In this case, it’s likely one will be right and one wrong.

One of them you will agree with, the other probably not.

Either way you should be listening to what they both have to say and you should absorb both their points of view on this market.

Then, and only then should you make the call as to who you think is on the money and who is not.

That’s the power of what we do, the intelligence we have access to and the strength of independent. This is what gives you the upper hand in the market so you don’t have to just go along with the ‘sheep brain’ mainstream view.

Regards,

Sam Volkering
Editor, Exponential Investor

Category: Commodities

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