Before I get into the mid-week updates, some of you requested that I post the PowerPoint presentations from my Monday morning appearances on Benzinga Pro for download on the website… so here you go:
IPOs Added to this Week’s Calendar:
Day One Pharmaceuticals (DAWN) – May 27, 2021
Day One is a clinical stage biotech that focuses on cancers that affect children. I’m not very knowledgeable on biotech and generally avoid them as an IPO play, the catalysts for significant movements in the share price are simply too distant, and the general retail investor is at a significant disadvantage to institutional investors who have special advisors on these topics and are looking to hold these for long term gains.
One pattern I’ve identified that appears to have some potential for extracting nominal gains from biotech IPOs is to wait for a dip below VWAP to RSI 30, and start building a small position there, stop adding once RSI returns above 30 and sell as the price approaches VWAP (ideally before). This is a very technical strategy, and the gains are generally modest at best… again, I generally avoid biotech.
Singular Genomics Systems (OMIC) – May 27, 2021
Singular Genomics is developing next generation gene sequencing machines that are used to sequence DNA and RNA. Sounds interesting, but there are a lot of competitors in this space, and I know very little about how their technology measures up to existing players in the field. There’s at least a reasonable chance that Cathie Wood steps in and buys shares in this, which would be announced in her daily recap of ARK investments after the first day of trading (if she buys in on Day 1). This could buoy the stock up from any potential Day 1 drop, but like I said before, I generally don’t play biotech for the simple reason that the products in this space are somewhat difficult for retail investors to understand.
Centessa Pharmaceuticals (CNTA) – May 28, 2021
Another biotech. Well, sorta… read this off their website:
”A NEW KIND OF PHARMACEUTICAL COMPANY DELIVERING ASSET CENTRICITY AT SCALE.
We represent a new kind of pharmaceutical company with a deconstructed R&D environment that prioritizes data driven decision making led by subject matter experts. Centessa companies are advancing a portfolio of high conviction programs with strong biological validation.
Ok, so like, they own a bunch of biotech companies operated under a united philosophy of making money. They also have at least one drug candidate in Phase 3, and two candidates in Phase 2… so they’re a little bit further along than many biotech companies. Again, nothing about a pharmaceutical company excites me enough to want to risk the money or invest the time in playing or potentially holding a position in these stocks…
Yeah, yeah, I know, you’re like, “Ok, thanks buddy, you made me read all that just to tell me you’re not playing any of these?”
Well yeah, NOT playing every IPO is part of the strategy. Knowing which ones are less likely to deliver an impactful win is arguably more important than knowing which ones are likely to deliver a win opportunity.
This doesn’t mean that some biotechs don’t make runs. It’s just that I don’t have any insights to offer as to which ones will or won’t, and the best strategy I’ve been able to come up with is to try and buy a dip, or just sit them out entirely.
Oh, and one note about FIGS (FIGS) tomorrow – May 27, 2021
It appears that FIGS is being offered to Robinhood traders as part of their new IPOs offerings, and is also being offered on ETrade for allocation requests… I put in a request on ETrade for 200 shares, and will post the result on Twitter tomorrow (I have yet to be granted an allocation for any ETrade IPO offering).
Suffice to say, that if I do get a full allocation request, it would indicate low demand for this stock, and a high number of retail investors holding IPO shares. If they are anything like me, retail traders are likely to dump their shares at any profit level. We can also assume that if all the retail traders that want shares of FIGS to trade the IPO get allocations before it debuts trading on the market, then there won’t be many traders left who want to BUY the shares once it starts trading.
So if I do get a full allocation, it’s a pretty good signal that the stock is not going to perform all that well out of the gate. If I don’t get any allocation, or only get a small, partial allocation then it means demand is probably pretty high. Either way, it will be interesting to see how this retail allocation affects the indication price in the price matching process before the debut, and it’s hard for me to imagine FIGS rocketing up off the debut.
So consider entering slightly BELOW the indication price on this one if you feel like playing FIGS for a day-trade. It’s an interesting company with strong long-term potential, but could be a bumpy first day of trading.
Having said that, it’s also a stock I wouldn’t be too bothered to hold for longer play, though not at a full position.
Anyway, good luck. This isn’t investment advice – it’s just informational and hopefully somewhat entertaining. Hope your week is going well.
Mine will be better if we see a Day 2 run on PAY… Good Luck!