Promising Bargains in Biotech Stocks

What I like about BioDelivery Sciences is not so much that there are many ways to win as that there are almost no ways to lose.

Back in the old days, stocks of small biotech companies virtually defined investment risk. News about the results of a drug in trials could cause a stock to soar or crater. There was no middle ground. So value investors ignored biotech. But with a seemingly endless flow of new drugs emerging from biotech labs, that has changed. The Baupost Group’s Seth Klarman, one of the sharpest value investors around, regularly invests in biotech stocks. He recently made a killing in Idenix, when Merck said that it would buy the developer of hepatitis C drugs at a 240% premium to the pre­announcement share price.

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Andrew Feinberg
Contributing Columnist, Kiplinger's Personal Finance
Feinberg manages a New York City-based hedge fund called CJA Partners.