New buys -- MYGN and IMAX
I've made two purchases recently of companies that I found out about from my newsletter subscriptions.
First one: Myriad Genetics (MYGN)
Bought July 21, 2005 at $18.28
This one has so far been a short term bust, but obviously I consider my biotech investments to be just that -- investments for the long term, not trading vehicles to bump in and out of. I like the prospects for this one over the next several years as they ride the trend of predictive genetic medicine.
Not unlike Protein Design Labs, which is my most successful investment so far this year, Myriad Genetics pulls down a solid cash flow with one part of their business that is fairly predictable and lower risk, and uses that cash flow for the risky and potentially more lucrative business of developing new products, and in particular new drugs. That makes this a little less boom and bust than some other small biotechs that do not already have ongoing businesses or sales, and their expertise in developing and selling predictive tests should also give them a leg up on drug research and marketing as they work to develop new therapeutics for the same kinds of diseases as those tested for by their genetic tests. It's going to be several years before this one pans out, so unless they are bought out I have no plans to sell at any particular price point in the future.
And the other recent addition is Imax, which I just bought this week.
Imax (IMAX)
Bought August 18, 2005 at $9.90
I think if anyone is going to survive in the movie exhibition space, it's Imax. And I don't think the movie theater will die anytime soon -- there's just something unique about seeing a movie with a crowd, especially a big Hollywood event movie or epic.
It's true that the movie theater is becoming more and more of a hassle for regular visits -- high concession prices, traffic and parking, growing ticket prices, and ads in the theater. But I think the event movie will survive -- will your local enthusiasts be lining up at IMAX theaters for the next generation's Star Wars because the standard theater just doesn't cut it? Maybe.
After all, more and more, those event movies are going to be available on Imax. Batman Begins was a huge hit on Imax this summer, as was The Polar Express during the Christmas season. Imax is contracting out to grow their installed base (that installation is where they make the biggest portion of their income) at a very rapid rate. No longer will these theaters be only in a few big cities, and only in museums or other nontraditional theater spots. There will be more and more stand along Imax theaters, and, most importantly, there will be mini-Imax theaters at your local multiplex. Imax the company gets royalty revenue from the distribution of the films it converts to its format, and it makes money building and servicing theaters and leasing equipment, so although their installation cash is front-loaded they do have a solid and steady cash flow that grows with their installed base.
This phenomenon of event/action/epic movies on Imax is, I think, the key. I've opened a small position here, and I'll make future decisions about what to do (buy more, sell) when I see how they do through a couple key movie seasons -- this Christmas and next summer. If they choose the right films to convert and continue to draw significant crowds, which will cause more theater owners to want to add Imax to their mix, things will be looking rosy. This is a volatile one that has threatened to implode before and has a lot of debt, so step carefully.
technorati tags: MYGN, IMAX, Myriad Genetics, biotech
First one: Myriad Genetics (MYGN)
Bought July 21, 2005 at $18.28
This one has so far been a short term bust, but obviously I consider my biotech investments to be just that -- investments for the long term, not trading vehicles to bump in and out of. I like the prospects for this one over the next several years as they ride the trend of predictive genetic medicine.
Not unlike Protein Design Labs, which is my most successful investment so far this year, Myriad Genetics pulls down a solid cash flow with one part of their business that is fairly predictable and lower risk, and uses that cash flow for the risky and potentially more lucrative business of developing new products, and in particular new drugs. That makes this a little less boom and bust than some other small biotechs that do not already have ongoing businesses or sales, and their expertise in developing and selling predictive tests should also give them a leg up on drug research and marketing as they work to develop new therapeutics for the same kinds of diseases as those tested for by their genetic tests. It's going to be several years before this one pans out, so unless they are bought out I have no plans to sell at any particular price point in the future.
And the other recent addition is Imax, which I just bought this week.
Imax (IMAX)
Bought August 18, 2005 at $9.90
I think if anyone is going to survive in the movie exhibition space, it's Imax. And I don't think the movie theater will die anytime soon -- there's just something unique about seeing a movie with a crowd, especially a big Hollywood event movie or epic.
It's true that the movie theater is becoming more and more of a hassle for regular visits -- high concession prices, traffic and parking, growing ticket prices, and ads in the theater. But I think the event movie will survive -- will your local enthusiasts be lining up at IMAX theaters for the next generation's Star Wars because the standard theater just doesn't cut it? Maybe.
After all, more and more, those event movies are going to be available on Imax. Batman Begins was a huge hit on Imax this summer, as was The Polar Express during the Christmas season. Imax is contracting out to grow their installed base (that installation is where they make the biggest portion of their income) at a very rapid rate. No longer will these theaters be only in a few big cities, and only in museums or other nontraditional theater spots. There will be more and more stand along Imax theaters, and, most importantly, there will be mini-Imax theaters at your local multiplex. Imax the company gets royalty revenue from the distribution of the films it converts to its format, and it makes money building and servicing theaters and leasing equipment, so although their installation cash is front-loaded they do have a solid and steady cash flow that grows with their installed base.
This phenomenon of event/action/epic movies on Imax is, I think, the key. I've opened a small position here, and I'll make future decisions about what to do (buy more, sell) when I see how they do through a couple key movie seasons -- this Christmas and next summer. If they choose the right films to convert and continue to draw significant crowds, which will cause more theater owners to want to add Imax to their mix, things will be looking rosy. This is a volatile one that has threatened to implode before and has a lot of debt, so step carefully.
technorati tags: MYGN, IMAX, Myriad Genetics, biotech
This article posted by One Guy @ 8/19/2005 11:03:00 AM 0 comments
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