The difficulty in the markets the last few weeks has forced us to take a step back and evaluate our best investment strategy going forward. While there has been renewed worry and discussion about a "double-dip" recession, those who've been unemployed for the last 2+ years might fairly argue that the up-tick never happened and that the economic news has been nothing but bad for a while now. Some of the greatest bull runs in the history of stock markets (like the one we left a few months ago) have happened during - and given back most of their gains to - tough economic times (which continue). Depending on your positions, now might be a time to wait and see with the markets, with the hope that cheap buying opportunities are on the horizon. The continued low-yields on 10 year treasury notes suggest that many investors are holding their cash on the sidelines with concern that near-term movements will be in the negative direction. The combination of market factors and events affecting specific companies means that in the short term it will be valuable to consider alternative investment
strategies.

We also believe that this market needs to be hedged, adding to the value of new short sale recommendations. The market has been very punishing to companies that have had mis-steps - as was experienced by IMGN this week when the T-DM1 filing was delayed. This also makes it attractive to find short sale candidates that might have bad news, such as ARNA, because this market can destroy a company that faces real setbacks. We are making some significant sales in both portfolios as we need to raise cash to for specific trades and new recommendations. In addition, we want more flexibility given the continued fluctuations in the broad market which have made it almost impossible for sustained moves in stocks. We also believe that this market may have some very attractive short-term opportunities that we want to fully participate in now, and in the near future.

In the Model Portfolio we are selling: All of the CELG, ELN, GNVC, and MDCO. We will sell one half of the BMRN, INCY, ISIS, and ONXX positions.

In the Trader’s Portfolio we are selling: All of the BMRN, CELG, ELN, GNVC, ISIS, and MDCO. We will sell one half of INCY and ONXX.

In the Model Portfolio we will purchase 15,000 shares of ASTM, 3,230 shares of ALKS and short sale 10,000 shares of ARNA.

In the Trader’s Portfolio we will purchase 2,000 shares of ALKS and short sale 5,000 shares of ARNA.