The biotech sector has been outperforming the S&P 500, and some money managers continue to buy even as others are concerned about a bubble, as reported by Motley Fool. The iShares Nasdaq Biotech Index (IBB) has nearly tripled since 2012. However, all good things must come to an end, and this includes rallies in a sector.
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Billionaire investor George Soros has been dumping biotech. Ariad Pharmaceuticals (ARIA) was one stock Soros thinned out. Even though sales for its cancer drug have been strong, its clinical trials have been costly, and Ariad has been spending quite a bit. It is not yet profitable and shareholders are worried about a dilutive secondary offering.
Soros sold all of his shares of Celgene, which has a successful blood cancer drug, Revlimid, trades at a rich and stretched valuation of 60. It might have reached its peak, or at least Soros seems to think so. Soros unloaded 52% of his position in Sarepta after the FDA questioned the veracity of its clinical trials.