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Bird Flu - Archives

 
Stock Market
 

A Good Look into Just How Stomach-Churning Pandemic Investing Can Be
There was a time when it seemed that it might be a good idea to invest in bird flu stocks. But with the pandemic panic abating, this no longer seems the case. CNN Money reports:

This time last year, Kleiner Perkins Caufield & Byers gambled big. Amid all the headlines and hand-wringing over fears of a looming flu outbreak that could kill millions of people, the prominent venture capital firm formed a $200 million fund to invest in new pandemic drugs and vaccines.

As the KPCB Pandemic and Bio Defense Fund marks its first anniversary Friday, this much is clear: Investing in pandemic prevention is enormously risky, with the promise of mega-returns offset by the highly uncertain odds that a pandemic, despite the predictions, will sweep the world.

Kleiner Perkins won't disclose all of the companies that its fund has bankrolled, but at least two of them are publicly traded and offer a good look into just how stomach-churning pandemic investing can be.
February 15th, 2007

 

Bird Flu - Another 9/11 for Wall Street?
The New York Stock Exchange was forced to close in the wake of September 11, 2001. A Financial Times report wonders if all the problems have been remedied:

The four-day closure of the exchange also underlined the serious disruption caused by the attacks on the World Trade Center, due partly to flaws in Wall Street's disaster planning.

Five years and billions of dollars of investment later, many of those flaws have been addressed and there is little doubt that financial markets in New York – and in other leading financial centres – would now be more resilient in the event of a similar disaster.

But concerns remain, not least about the key utilities on which the financial services sector depends and the industry's ability to handle other sorts of threat, such as a flu pandemic.

September 11th, 2006

Biota Shares Jump
Shares in local Melbourne company Biota have surged on reports that US authorities will boost holdings of the company's Relenza flu drug.
July 4th, 2006

 

Global Market Players Are Worried
Bird flu fears have hit the stock market.

Investor fears of avian flu, which started in Asia and other emerging markets, rippled through to U.S. markets and helped drag down many stocks Wednesday.

"Asian markets took this seriously and started the sell-off," said David Kotok, chairman and chief investment officer of Cumberland Advisors, a New Jersey-based money management firm supervising about $800 million in assets.

"In the last 48 hours, the global market players have started paying attention to bird flu, because it's suddenly front-page news."

May 25th, 2006

 

Bird Flu Pandemic – Forget about the Internet

Yesterday I reported (scroll down) on a Citigroup analysis of stock market winners and losers from a bird flu pandemic. Two “winning” sectors – telecommunications and internet technology companies, as workers are forced to stay at home and telecommute.

 

But an “Influenza Pandemic Simulation” from Booz Allen Hamilton (pdf file) suggests otherwise:

 

The telecommunications infrastructure will be severely strained and likely overwhelmed early in the pandemic (some experts opined that the internet would shut down within two to four days of the outbreak). This implies that government and businesses must coordinate and plan for the use of alternative communications channels – telecommuting will not be a viable option. A prioritization scheme for the internet will need to be put in place so that key organizations and individuals can access information and communicate actionable steps.
May 2nd, 2006
 

Bird Flu Winners and Losers

The Chicago Tribune carries a lengthy report, titled “Wall Street placing bets on bird flu outcomes,” on stocks to buy and sell in the event of a bird flu outbreak. It evaluates the sectors as follows, based on research from Citigroup:

POTENTIAL WINNERS

Drug companies that make antiviral medicines

Drug companies that make vaccines

Hospital health care

Cleansing product-makers

Home entertainment providers

Telecommunications

Internet technology companies

 

POTENTIAL LOSERS

Airlines

Luxury goods

Hotels

Insurers

Shopping malls

Major oil firms

Mining and metals

Travel and hospitality

Brewers

May 1st, 2006

 

Media Coverage – Not Yet at Peak Intensity

An interesting commentary on media coverage of bird flu comes from Donald Luskin, who has originated his own investment index of bird flu stocks. His article discusses whether it’s time to start selling stocks in his index, on the ground that they have made good profits. He reasons that it is still too early, because media coverage of the flu outbreak has still not peaked.

 

Here’s a little of what he has to say:

 

As both an investor and a journalist, I think I'm pretty good at judging when stories have reached their peak intensity in the media. That's when you want to sell. We're not there yet.

 

Yes, there's been a lot of coverage, as more and more nations in Europe and Asia deal with an increasing number of infections and deaths in humans and animals….The publicity has spread as rapidly as the disease. On just a single day this week — Tuesday — the New York Times ran no fewer than six stories about avian flu.

 

But I'm not concerned that the theme has become overexposed yet. That's because so far the media hasn't quite figured out what the conventional wisdom on avian flu is going to be. As media critics put it, they have yet to settle on a consistent "narrative." That means that public perception is still in flux, and still has room to go.

 

Let me give you a sense of what I mean. Of those six Times stories Tuesday, some were end-of-the-world apocalyptic and others were don't-worry-about-it reassuring. In one Times story, a United Nations official who is terribly worried about a catastrophic global pandemic is nevertheless quoted griping that the media always hypes the risk by quoting only his worst-case global death estimate. Then another Times story — the very same day, mind you, and this time a story intended to be reassuring — does just that: It quotes only his worst-case death estimate.

 

Until the media is unanimous — until there's a deeply embedded "narrative" — the avian-flu stocks are going to continue to soar.

 

In unrelated media news, the Israeli Health Ministry wonders if journalists covering the bird flu outbreak in the country have actually become responsible for helping it spread further.

April 1st, 2006

 

The Avian Flu Index
I didn't know about this. A US fund management advisory firm, Trend Macroanalytics, has created a stock market "avian flu index", based on 17 stocks in the health care sector. These include Embrex, Hemispherx, BioCryst and Generex. The index has more than doubled since August last year, and is up 40.5% in 2006. You can read more about the index here.

March 30th, 2006

 

Sell, Sell

A major stockbroker is advising clients to start adjusting their portfolios in readiness for the arrival of bird flu in the US. According to Britain’s Daily Telegraph:

 

Investment bank Bear Stearns has advised investors to start dumping airline and retail stocks in favour of blue-chip utilities as a hedge against bird flu, warning that a full human pandemic of the H5N1 virus could set off the worst global stock market crash since the 1930s.

 

In the first detailed study of its kind, the US bank suggests buying Scottish Power, biotech companies such as Amgen and Medimmune, and the US health group St Jude Medical Inc, citing them as the sort of companies that would hold up well or even rise in the first phase of a pandemic.

 

"We believe the imminent arrival of bird flu in the United States will bring this potentially devastating disease back into the limelight," said the report. If bird flu turns out to be a 'worst event in 100 years' then extreme risk analysis suggests it could push the market down 46pc over a 12-month period. "We believe investors should consider a basket of stocks to inoculate their portfolio from this source of risk," it said.

 

Any stock slide would most likely be followed quickly by a V-shaped recovery, creating a rare chance to snap up shares at super-cheap prices.

March 22nd, 2006

 

Don’t Chicken Out

Bloomberg News looks at bird flu and the stock market (with the headline: “Avian flu? No Time to chicken out”):

 

Now that bird flu outbreaks have driven down poultry exports and caused prices in the United States to plunge to a 19-year low, investors like Brian Barish at the Cambiar Investors are buying shares of Tyson Foods, one of the country's biggest poultry companies.

 

Barish said the stock may jump 71 percent this year as the disease is contained, leading to a rally of U.S. producers like Sanderson Farms and Pilgrim's Pride.

 

"Avian flu is in the headlines now, but it will not continue," said Barish, who holds 7.8 million shares of Tyson. "The upside is gigantic."

February 22nd, 2006

 

Bird Flu Boost to Drug Companies

Forbes reports that stockbrokers are raising their profit forecasts for Tamiflu developer Gilead Sciences, such is the strength of demand for the drug. Tamiflu marketer Roche is seeing higher-than-forecast profit growth.

February 2nd, 2006.

 

New Drug from Avi BioPharma

Avi BioPharma, a small biotech company based in Portland, Oregon, has announced that three independent laboratories have confirmed that its new drug, Neugene, appears effective in fighting H5N1 flu. The company now plans to file with the Food and Drug Administration to begin human clinical trials. Shares in Avi BioPharma rocketed 50% on the news.

January 21st, 2006

 

Sometimes We Should Keep These Thoughts to Ourselves.”

The Boston Herald felt free to editorialize in its report of comments by Dell Corporation CEO Kevin Rollins. Under the headline “Bird-brained Dell exec sees profits in flu” it wrote:

 

In a remark that raised eyebrows for its apparent lack of sensitivity, Dell Inc. Chief Executive Kevin Rollins said the avian flu now spreading through Eastern Europe could help the made-to order PC company reap profits.

 

‘‘We deliver to homes,’’ Rollins said in an address at a business luncheon in Boston. ‘‘People don’t have to come to stores.’’

 

Explaining his logic, he said when panic surrounding the SARS virus took hold of China, Dell’s business in the emerging technology market picked up when people were forced indoors.

 

‘‘Our business in China boomed,’’ he said, because people were either quarantined or sequestered themselves at home in order to avoid coming in contact with the deadly virus.

 

But Rollins’ matter-of-fact phrasing drew an astonished chuckle from one veteran retail analyst. ‘‘It’s certainly putting it in its bluntest terms, isn’t it?’’ said Wendy Leibmann, president of WSL Strategic Retail, a retail consulting firm in New York. ‘‘It’s perhaps not politically correct or even appropriate. Sometimes we should keep these thoughts to ourselves.’’
January 14th, 2006

 

Playing the Hype, Playing the Cycle

Drug companies involved in bird flu research have seen their stock prices soar in recent months. But, warns a CNN Money report, the end of the flu season might also mean the end of the run-up in the shares.

 

Flu season typically peaks in the winter. During these months, Wall Street traders ride the subways with thousands of flu-stricken workers, and many of the traders become sick themselves. It's easy for them to imagine a flu pandemic.

 

So what happens to biotech stocks when flu season ends? "Influenza will become a less topical story come March," said Scott Henry, analyst for Oppenheimer & Co. "The flu does tend to be a seasonal event."

 

…But Henry added that "most companies that don't earn money are dependent on the news cycle," so if bird flu fails to generate headlines, it could also fail to generate investor interest. "If you think you're going to play the hype, you should probably play the cycle, too," said Henry. "If you're a trader looking for a quick move, you have to recognize the seasonality of the flu and the news cycle. You don't want to be the last one on the block."

January 7th, 2006

 

“Pump and Dump” – Bird Flu Get-Rich-Quick Schemes Target the Unwary

US securities regulator NASD has issued an investor alert, “Bird Flu Stock Scam Could Be Hazardous To Your Financial Health”:

 

The threat of bird flu is fueling stock scams touting large gains from companies that claim to be poised to capitalize on helping the world avoid a global pandemic. NASD is issuing this Alert to warn investors that fax and email investment scams may come your way trumpeting the promise of large gains for companies with products and services aimed at fighting bird flu.

 

One fax claimed its company "has the solution for tracking and containing the Bird Flu virus in turn preventing it from spreading." Citing the enormous cost of fighting avian flu, the fax stated the stock was "positioned to gain 250% or more." The fax went on to urge investors not to miss out on a stock that was "clearly missed by Wall Street."

 

In a press release coinciding with the alert, NASD Vice President of Investor Education John Gannon said: "This is an age-old pump-and-dump scheme with a brand new disguise. Unfortunately, fraudsters are quick to exploit every new crisis or catastrophe to peddle their get-rich-quick scams to unsuspecting investors."

December 29th, 2005

 

Making Your Blood Go Cold

The global investment firm Citigroup has issued a bird flu report for Australian investors, recommending that in the event of a pandemic they sell shares in companies that depend on people gathering in public places - such as shopping centre operator Westfield, casino owner PBL and betting shop operator Tabcorp – and in airlines and tourism companies. These should be replaced by the shares of companies that will benefit if people are forced to stay at home, such as phone companies, media companies and transportation companies.

 

The report allows The Australian newspaper to indulge in some business bashing. Under the headline “Outcry Over Bird Flu Hit List” it publishes the comments of a “business ethicist,” John Sweeney:

 

"This makes your blood go cold," said Mr Sweeney, leader of the Edmund Rice Business Ethics Initiative. Mr Sweeney also said that market behaviour may need to be regulated in the event of a bird flu pandemic.

 

The newspaper also quotes a fund manager:

 

James Thier, who oversees a $380 million portfolio at Australian Ethical Investment, said Citigroup should have kept its advice to "positive stocks" like vaccine makers and pathology. "These people are looking at avian flu and saying that these are potential winners for us. They are looking at the negative side," Mr Thier said. "But this needs to be approached from a positive perspective rather than saying, 'How can we profit from millions of deaths?'."

December 1st, 2005

 

If Symptoms Persist, Consult Your Stockbroker

Britain’s The Observer newspaper provides bird flu investment guidance, under the headline, “Bird flu: if symptoms persist, consult your stockbroker…”

 

Research from the global portfolio strategists at giant American finance house Citigroup sums it up in a nutshell - sell British Airways and BP, buy Blockbuster and Nintendo. The lesson is that in the case of a serious outbreak, we will be too frightened to leave our homes.

 

….On the other hand, the best case scenario leads to a temporary blip - the markets hate uncertainty - but this is, in fact, a buying opportunity, just as happened during the Asian SARS crisis three years ago. Buy telecoms, internet and, of course, drugs companies. “While it is difficult to quantify the likelihood of a human pandemic, our analysis suggests avian flu is a rising risk to the global economic outlook,” says the report.

 

Or in other words: first see your doctor, then get a second opinion from your stockbroker.

November 21st 2005

 

Up and Down

Shares in bird flu companies Roche Holding and its Japanese partner Chugai Pharmaceutical fell yesterday after reports that Tamiflu – made by Roche – might have caused two Japanese teenage boys to commit suicide. Roche has said there is no clear evidence that the drug was responsible.

 

But shares in Avant Immunotherapeutics soared more than 10% on news that it is developing a bird flu vaccine.

 

Also developing a vaccine is the Russian Flu Research Center, according to the Novosti news agency. It believes it could be ready for commercial production by February or March next year. Just one problem – not enough money.

November 15th, 2005

 

Hot Stock

Shares in Rockeby Biomed, a tiny Singapore-based company listed on the Australian Stock Exchange, have rocketed on the announcement that it has international distribution rights to two new tests for bird flu. Company management claimed to be surprised by the market reaction.

November 9th, 2005


Flu Shot Long Shots

Forbes magazine reports on four small biotech stocks that could soar in the event of a bird flu pandemic. They are AVI BioPharma, BioCryst Pharmaceuticals, Novavax and Sinovac Biotech.

November 1st, 2005

 

Chiron Analysis

The Motley Fool investor website contains an analysis of Chiron, following the award to the company of a $62.5 million contract to supply bird flu vaccine. The report also mentions other stocks, all well-known to investors – GlaxoSmithKline (which is a Motley Fool recommendation), Sanofi-Aventis and Gilead Sciences. Motley Fool also mentions Chiron’s distributor, Henry Schein.

October 29th, 2005

 

Novavax Shares Surge

Business Week reports that shares in biotech company Novavax jumped 33% yesterday, following a 10% rise on Monday, on the potential for the company’s vaccine, which reportedly protects animals against avian flu. The shares, which dipped to 70 cents in August, are now trading at $5.53.

October 26th, 2005

 

Biota – The Little Aussie Bird Flu Battler

A couple of months ago you could have bought Biota Holdings shares for around 50 cents. Last week they hit $2.60.

 

The reason – bird flu.

 

For Biota is the pharmaceuticals company behind Relenza (the marketing name for zanamivir), the ground-breaking anti-viral drug that is rated second only to Tamiflu in ability to fight bird flu.

 

Biota has its headquarters near Monash University, a 15-minute drive down Blackburn Road from my home here in the Eastern suburbs of Melbourne....continue reading Biota – The Little Aussie Bird Flu Battler.

October 25th, 2005


The Flu-Resistant Investment Portfolio

Reuters presents “ways to make investment portfolios at least partly flu resistant”. Here are some of the suggestions:

 

"People are not going to be congregating where other people are. So I would think that eBay Inc. and companies that sell on-line would probably do very well because people just aren't going to go to the mall to do shopping," said Jim Huguet, president and co-CEO of Great Companies LLC. Huguet also suggested companies that make home entertainment equipment and video games could benefit from a stay-at-home mentality. "It sounds gruesome but I guess you could invest in the funeral services companies. Obviously they would see a significant increase in business," added Huguet, mentioning Stewart Enterprises and Service Corp International.

 

If flu vaccines are to be produced the conventional way, a potential beneficiary could be egg producers, such as Cal-Maine Foods, noted Steve Brozak, president of WBB Securities….Should the worst case scenario pan out and a survivalist bunker mentality take hold, suggested Brozak, with tongue in cheek, "the best bets may be canned goods and shotgun shells."

 

Thomas Lydon, president of Global Trends Investments…said "hard currency or precious metals are the safe areas. In protecting yourself, maybe gold makes sense." That sentiment was echoed by Peter Schiff, President of Euro Pacific Capital, especially if Asia is the epicenter of a flu crisis as predicted. "Asia is where everything is getting produced. If Asia was less productive they'd ask for their money back from the United States and the result could be a selling-off of the dollar," Schiff said. "Gold should do well. If the dollar goes down, gold goes up automatically," Schiff added.

October 25th, 2005

 

Stock Market News

The Associated Press reports:

 

Shares of Quidel Corp. jumped Friday after the medical test maker said its QuickVue flu test not only showed high rates of accuracy in a recent study but can also detect the virus that causes avian flu….The company said an Australian study of its 10-minute QuickVue Influenza A+B test over the continent's summer flu season accurately diagnosed the presence of Type A flu virus 96 percent of the time and the absence of flu virus 97 percent of the time. In an earlier study conducted in Hong Kong and Japan, the test was shown to be able to detect the H5N1 virus.

October 22nd, 2005

 

Investor’s Guide to Bird Flu

MSN Money has presented an investor’s guide to bird flu, with a list of “flu” stocks and details on each. They are: Crucell, Novavax, Gilead Sciences, Roche, Biota, GlaxoSmithKline, BioCryst Pharmaceuticals, AIM Global Health Care Fund, Sanofi-Aventis, MedImmune, Acambis, Chiron and Novartis.

October 20th, 2005

 

Looking for Profits in Bird Flu

Reuters features an article on currency traders and their outlook on how a bird flu panic might affect currency movements. The main points:

 

"Speculators are already looking at this," said Craig Russell, senior foreign exchange dealer at Alaron FX in Chicago. "Negative news is a chance to make a profit. People will short the currency." Shorting is where an investor borrows a currency and sells it, betting he will be able to profit by repaying the loan with currency bought at a lower price….

 

The expectation is for an initial knee-jerk reaction in the currency of a country where any human epidemic breaks out, but that afterwards the currencies of countries most dependent on international trade and travel would be hit hardest. "I can't imagine it's good for any currency but the Aussie and kiwi dollars bear the brunt of global risk events," said Michael Jansen, currency strategist at National Australia Bank in New York. Investors see the fortunes of the Australian and New Zealand dollars as sensitive to even slight changes in global economic growth as they are commodity-based currencies, whose economies are heavily reliant on international trade….

 

"Since it is impossible to predict when and with what magnitude such a pandemic would hit, the only thing that would be fairly certain is that the market would experience increased volatility until the uncertainty of the situation wore off," said Global Forex Trading chief currency dealer Kurt Hoeksema….

 

If a bird flu virus were to infect significant proportions of the global population even safe-haven currencies and securities like the Swiss franc and U.S. Treasury bonds might come under pressure, analysts said. Then "we could potentially see an outflow from currency markets and into commodities such as gold for a short period of time as they could potentially be viewed as a currency substitute/store of value," said George Davis, chief technical analyst at RBC Capital Markets in Toronto.

 

The Motley Fool investor website also carries a report (registration – which is free – is required) on stocks that could benefit. They are Roche Holdings, Gilead Sciences, Biota Holdings, GlaxoSmithKline and Sanofi-Aventis. No surprises there.

October 18th, 2005

 

Bird Flu and the Stock Market

The Wall Street Journal has presented an investor’s guide to stocks that might benefit from their exposure to bird flu. The obvious name is, of course, Swiss company Roche Holdings, which makes Tamiflu, and whose shares have climbed 15% in three months. However, the article has put the spotlight on the small Australian company Biota Holdings, which makes the anti-viral drug Relenza. Biota shares have quadrupled in three months. Two other companies involved in bird flu vaccine developments are Sanofi-Aventis SA and Chiron Corporation. Also mentioned in the article is Gilead Sciences, which developed Tamiflu with Roche. Finally, the article highlights Korean kimchi (hot pickled cabbage) manufacturer Pulmuone. Some reports suggest that kimchi might help ward off flu infections.

October 14th, 2005