Biovail (BVF) down 26% to 52-week lows — for those of you who disagree with my views on 52 week lows, you will find this a bargain at $15.52!

I have neither a positon nor an opinion about Biovail — but I got lots if email telling what a wonderful value strategy buying 52-week lows was, so by all means, please put your money where your mouths are.

Me? I’d rather buy strength and a healthier trend — or fade extremes in sentiment.

Bvf

Category: Technical Analysis

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

27 Responses to “Attention 52-Week Low Buyers: Biovail!”

  1. possum says:

    Blindly buying 52 week lows isn’t a very good “value strategy”. Equally, condeming buying only because the stock is trading at a 52 week low seems pretty shallow too.

    Buying when price is less than value makes good sense and many times, candidates can be found on the 52 wk low list.

  2. wcw says:

    I’m putting BVF on the screen to watch going forward. I’ve always had a distracted affection for their work. Give me some more nice downside and continued good work on their pipeline and I might bite, 52wl or no.

    No time soon, I think. I have bought falling knives, but only when really, really cheap. You get cut then, too, but it’s easier to hang on.

  3. curmudgeonly troll says:

    So… is it OK to fade an extreme in sentiment when it happens to be a 52-week low?

    a. cut losses. b. ride winners. c. keep bets small. d. follow the rules without question. e. know when to break the rules.

    Surrender to the reality that volatility exists or volatility will introduce you to the reality that surrender exists.

    - Ed Seykota

  4. joe says:

    Barry, for a complex thinker like yourself, this strikes me as an extraordinarily simplistic argument. I begin each morning by reading the 52 week lows, precisely because I’m looking to buy things that everybody hates. If you’re looking to exploit the difference between “price” and “value” the new lows list is often fertile hunting ground. Now you’re much less a business analyst and much more a market analyst, so I understand that in the short term, the technicals or whatever it is that you use to trade individual names, may not be compelling, but for those of us taking long term concentrated positions, buying at or near 52 week lows is our bread and butter. The trick, as with any strategy, is to buy the right ones.

  5. jul says:

    Buying 52-week lows —
    RealMoney.com columnist James “quant-jock” Altucher’s take:

    I took all Nasdaq 100 stocks since 1996, including stocks that have been deleted from the index (to avoid survivorship bias). What happens if you buy stocks hitting 52-week lows that are trading for greater than $5 (avoiding penny stocks) and sell them one quarter later?

    The results actually demonstrate that, over this period, the odds were on your side to outperform the market if you bought stocks at 52-week lows. The average return per trade was 7.34% (over 662 trades), including wins and losses. This far outperforms the average return per quarter of the Nasdaq during this period of 2.6%.

    Some 60% of the trades turned out favorably and 40% were failures.

  6. mlong says:

    ‘The average return per trade was 7.34% (over 662 trades), including wins and losses. ‘

    Man, that’s a lot of transaction costs. I wonder what the expectation is or the geometric mean. We know the average per trade doesn’t mean much. Every slick newsletter and trading scheme uses that rationale. When you actually compute the numbers, when you can get their trades, the actual return is way lower or negative from the average, not to mention transaction costs.

  7. phil says:

    i find James Altucher’s articles and books interesting but this “xxx out of xxx” trades were profitable stuff is moronic. if i tell you that 66% of my trades were profitable and the avg return of these trades is 18.3% would you say good job? what if these were the results of my trades:
    1. +5%
    2 +10%
    3. -40%

    2/3 were profitable yet i ended up with less than i started-

  8. Brian says:

    What, did Biovail miss by a penny? Cut it in half! But I’m not bitter because I don’t own it. I do own MDT which is down 7% after hours because revenues for the first quarter will be a measly $2.9 billion and the analysts expected $2.98 billion. Arg. What a lousy market.

  9. TRf says:

    Phil
    if you hold a stock to -40% without a stop, you should kill yourself ……. you have no business investing

  10. Jdamon says:

    Can anyone remember a period in time when PE multiples were so low, yet when a company misses either revenue OR Profits (even sometime due to Option expensing which has no impact on the underlying business) stocks are just destroyed? I mean look at Amazon, Yahoo, Aetna, and on and on. I really think the market has pretty much priced in a full-blown recession. If not, where do people think the NAZ, S&P and Dow will go down to in the next 3 – 6 months (i.e. what is the floor)? Can someone tell me the NAZ multiple now vs 1996? It has got to be lower now right? Also, wonder if the NAZ was higher than it is now. I believe we are headed for a recession (Democratic induced by the way), but I think the market has got this priced in. Thoughts?

  11. phil says:

    trf-i do use stops, they’ve saved my arse in this crazy market. i was simply showing the moronocy of “% of profitable trades” analysis, follow?

  12. Bob A says:

    or how about Ebay… you coulda bought it at it’s recent 52 week low and been wrong for the next 60 days in a row. WFMI.. buy it 14 days ago and wrong wrong wrong and more wrong…

  13. Bob A says:

    wouldn’t you at least at the same time compare the stats to those that had made a 52 week low and then reversed and broken out of the down channel?

  14. Bob A says:

    …for example DRYS and EXM.. anyone happen to notice these two

  15. Brian says:

    Jdamon – yeah, unless we’re looking at a really bad recession isn’t it pretty much priced in? If a bear is a 20% drop, healthcare had that earlier in the year. At least HMOs and biotech. Then there’s tech (rhymes with yech). Don’t even metion homebuilders. Energy is up on the year but got run over and left for dead in May/June. Emerging markets. Metals. What’s left? Banks have done ok I guess. As have consumer staples.

  16. CDizzle says:

    Bob A -

    Apparently you are a short term trader. Looking at multi-year charts on those two is SCARY if you are have been long for any period of time. EXM in particular looks like (fill in fave NAS 100 stock here) from 1999 to 2002…

  17. rockprotect says:

    jdamon,

    >> I believe we are headed for a recession (Democratic induced by the way),

    Who’s been in power for the past 6 years? How do you figure this is “Democratic induced”?

    -rock protect

  18. Jdamon says:

    Under Bush Hedge fund Dems won’t let the market go up (Soros), etc. Sounds whacky, but it’s how the world works these days. With the MSM on their side, doom and gloom is spread until a Clinton, Kerry or Gore get into the WH. Nothing good will happen until Bush is run out.

  19. T says:

    Tin hats for everyone! Funny, I always thought hedge funds worried mostly about making money.

  20. Gotta be kidding me says:

    Ever notice how many conspiracies there are out there…….. and that everyone knows about them ?!?!?!?!?!?

  21. rockprotect says:

    jdamon,

    Thanks for responding.

    >> Under Bush Hedge fund Dems won’t let the market go up (Soros), etc.

    Your original statement was: “I believe we are headed for a recession (Democratic induced by the way)”. “Recession[s]” happen to economies. But, now you’re referring now to the “market”.

    When you said “recession” earlier, did you mean “bear market”? Otherwise, how do bearish hedge funds impact real economic activity (e.g., consumer spending)?

    Thanks.

    -rock protect

  22. Bob A says:

    Cdizzle.. both EXM and DRYS up another 5%+ again today (day after I posted). The point is not long or short term, but to wait until the trend has changed before buying stocks that are and have been going down for a long time.

  23. rando says:

    Seriously obtuse and contrived.

  24. Ok, So I’m at the tussic of the list and who can read that long?!?
    Buy new lows. What a concept! How about Startek (STR) or RussBerrie (RUS)?
    Remember the limbo stick, Trini Lopez, Chubby Checker: “How low can you go.”??????????????/

  25. etbob says:

    How about buy the new sector funds always at the bottom.

    Such as the homebuilders ticker XHB?

    Can anyone show me that you will ever be better off in a sideways market, as we have been, buying at the highs?

  26. etbob says:

    Sorry about the multiple post,
    My computer screen was stuck!

    Now it’s the autos turn to shine, GM and F ! Plus the techy telecoms such as CSCO, JDSU, CIEN!