Six takeaways from the 2,165-page final rule:
This HUGE regulatory oversight is one of the main reasons I stay away from healthcare stocks. Teladoc was one exception but only for the “Tela” part of the equation. Livongo was the other exception because I did not see it as healthcare but as cost cutting for healthcare payors. Livongo is gone with the merger and TDOC has been falling for over four months.* I’ve been looking for replacements for TDOC for several months. Last week I had a good look at ARK Invest whose largest position is Tesla, not to invest in their ETFs but to get to know their investing strategies. Some turn to Bert and Beth. I prefer to study ARK Invest’s philosophy. At the core of ARK’s strategy is Wright’s Law (similar to Moore’s Law), a law that predicts how much the cost of production drops with increasing volume. Similar to economies of scale but taking into account the learning curve. This is not a magic wand. Part of the 2000 bubble bursting can be attributed to the fast falling cost of fiber optics as technology figured out how to send multiple signals in parallel down the fiber. The stiff competition drove prices so low that optic fiber communication networks did not have enough cash flow to pay off their investments so they were bankrupt. Too much of a good thing!
Currently Saul’s focus is on Growth via SaaS which has delivered fantastic returns. While I’m heavily invested in SaaS I’m also looking for segment diversification to counteract my low position count concentration. While price regulation keeps me from most healthcare some areas are less affected. I found three that ARK Invest likes, Twist Bioscience Corporation (TWST), Pacific Biosciences of California, Inc. (PACB), and Invitae Corporation (NVTA) plus one specialty 3DP outfit, Nano Dimension Ltd. (NNDM). I started researching these companies as substitutes for TDOC but I have yet to take a position in any of them:
Nano Dimension Ltd. (NNDM)
Ness Ziona, Israel
Speculative, specialized 3DP - small position
Nano Dimension Ltd., together with its subsidiaries, provides additive electronics in Israel and internationally. Its flagship product is the proprietary DragonFly lights-out digital manufacturing system, a precision system that produces professional multilayer circuit-boards, radio frequency antennas, sensors, conductive geometries, and molded connected devices for prototyping through custom additive manufacturing.
Why Nano Dimension Stock Skyrocketed 110.5% in November
Twist Bioscience Corporation (TWST)
South San Francisco, CA
Twist Bioscience Corporation, a synthetic biology company, manufactures and sells synthetic DNA-based products. The company’s DNA synthesis platform enables the manufacturing of synthetic DNA by writing DNA on a silicon chip. It offers synthetic DNA-based products, including synthetic genes, tools for sample preparation, antibody libraries for drug discovery and development, and DNA as a digital data storage medium.
About Twist Bioscience Corporation
Twist Bioscience is a leading and rapidly growing synthetic biology and genomics company that has developed a disruptive DNA synthesis platform to industrialize the engineering of biology. The core of the platform is a proprietary technology that pioneers a new method of manufacturing synthetic DNA by “writing” DNA on a silicon chip. Twist is leveraging its unique technology to manufacture a broad range of synthetic DNA-based products, including synthetic genes, tools for next-generation sequencing (NGS) preparation, and antibody libraries for drug discovery and development. Twist is also pursuing longer-term opportunities in digital data storage in DNA and biologics drug discovery. Twist makes products for use across many industries including healthcare, industrial chemicals, agriculture and academic research.
Pacific Biosciences of California, Inc. (PACB)
Menlo Park, CA
Pacific Biosciences of California, Inc. designs, develops, and manufactures sequencing systems to resolve genetically complex problems. Its single molecule real-time (SMRT) sequencing technology enables single molecule real-time detection of biological processes.
Invitae Corporation (NVTA)
San Francisco, CA
Invitae Corporation, a medical genetics company, processes DNA-containing samples, analyzes information related to patient-specific genetic variation, and generates test reports for clinicians and their patients in the United States, Canada, and internationally. It offers genetic tests in various clinical areas, including hereditary cancer, cardiology, neurology, pediatrics, metabolic conditions, and rare diseases; prenatal and perinatal genetic tests; and non-invasive prenatal screening products.
Furthermore, the actual care that you receive is changing due to the science of information technology applied to biology, commonly called precision medicine, which is starting to make patient care better and more tailored to your unique biology. We’ve seen some multibillion-dollar deals shining a light on the precision-medicine space recently, including Illumina’s [ticker: ILMN] acquisition of Grail and Invitae’s [NVTA] acquisition of ArcherDx.
Invest like the best with Cathie Wood (ARK Invest)
I [Jimb05] had a started position in ILMN and sold it because of valuation. I was an idiot.
As you can see, I’m more interested in the stories that back good numbers than just in the numbers. There is a lot of “old school” in medicine but science and technology about genes and DNA should be the fast growing “new school.” In case you didn’t notice, all three bioscience outfits are located in Silicon Valley! The reason for the post is that I’m going to sell out TDOC, probably tomorrow. It’s not that TDOC is not a good investment but I think there are better ones.
- The TDOC price chart wedge suggests there should be breakout soon. Hard to tell if up or down.
By GORDON SCOTT, CMT
What Is a Wedge?
A wedge is a price pattern marked by converging trend lines on a price chart. The two trend lines are drawn to connect the respective highs and lows of a price series over the course of 10 to 50 periods. The lines show that the highs and the lows are either rising or falling and differing rates, giving the appearance of a wedge as the lines approach a convergence. Wedge shaped trend lines are considered useful indicators of a potential reversal in price action by technical analysts.