Friday, June 5, 2009

Conspiracy: Swine Flu Stocks Update

Pardon me while I slip my Reynolds Wrap turban on.
On April 28th we introduced our readers to the Tickerspy Swine Flu/Bird Flu Index (RXFLU).
Although I glanced at the index from time to time I didn't follow it closely.
Today, when I saw a couple of the components get whacked, Novavax (NVAX) down 20.25% on the day and Hemispherx Biopharma (HEB) down 27.20%, I assumed the index got hit pretty hard.
And it was, closing down 9.8%. But what struck me was the action over the last month:

Today: -9.8%
1-month: +47.7%
All-time: -7.4%
Today vs S&P 500 : -9.9%
1-month vs S&P 500: +45.0%
All-time vs S&P 500: +92.6%

Even though the media frenzy has passed and the public seems blasé, someone has been buying these stocks and buying in enough size to gun the index to be the #1 performer through Thursday, out of 250 indices that Tickerspy tracks. Which leads to the the questions:
Who's buying?
What do they know?

On April 30, wise old MarketWatch's wise old Chuck Jaffee wrote:

Stupid Investment of the Week
Commentary: 'Swine-flu stocks' are hazardous to your wealth
For average folks, the swine flu is not a speculative investment opportunity.

So while investors might be able to get a bump out of big-name stocks touched by the crisis, plays for penny stocks such as NanoViricides or low-cost-but-mainstream issues like Novavax or Biocryst Pharmaceuticals are nothing but a siren's song, likely to leave the typical speculator screaming like, well, a stuck pig.

That's why "swine-flu stocks" collectively are the Stupid Investment of the Week...MORE

That is probably still true but now I am starting to wonder if our May 5 post "Swine Flu Called Off: Smithfield Up 42% in Two Days (SFD) "See You in September":

...Oh well, according to the epidemiologist poobahs we'll get another, better, chance this fall....
Might be worth saving for more than just the Tempos' version of the old song.