Overall, a screen of about 1,650 mid-cap U.S. companies shows biotech stocks, on average, have a short interest ratio of about 11.6 percent, compared with the average mid-cap name's 6.4 percent in short interest, according to Starmine, a Thomson Reuters company. This suggests a greater number of bets on these stocks falling than the rest of the market. Read More Biotech woes: Deja vu all over again That is occurring as other fund managers boost their bets on the high-flying names. Fund managers now have an average of 4.1 percent of their portfolios in biotechnology companies, nearly double the level of three years ago, according to Lipper data. We think that investor sentiment is a bit overdone, said John Fraunces, a co-portfolio manager of the Turner Medical Sciences Long/Short fund, whose fund is in the top 1 percent among long-short funds tracked by Morningstar over the last three years. Read More 6 trades on surging biotech sector The problem is that investors are giving people the benefit of the doubt and instantly giving a company billions in market value when there still need to be more studies to determine whether or not a drug is therapeutically effective," said Fraunces, who … Continue reading
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