Wednesday, January 02, 2008

You're on notice...

Writing (and bitching) about my stake in Biovail is par for the course around these parts, but there's a new development you all need to be kept abreast of. First, a recap. After taking an initial positiong in 2003 at a little over $30, I've watched and winced as the Biovail rollercoaster has rocketed around for the last several years. After dipping as low as $16, the stock inched all the way back up to the high 20s before crashing back into the teens in 2007 on a whole series of bad news. (Run Biovail through Google Finance for all the gory details if you must)

When it passed below $20 in late 2007, I thought it was madness, so I tripled my stake to 200 shares. I thought it had hit bottom, but it's since dipped even lower, to the point that it's been hanging out south of $14 for the last month. I've come close to selling countless times, just to cut my losses and move on, but ultimately, I'm stopped by two things -- I can't emotionally bring myself to sell at such a steep loss, and fundamentally, I still think the company is worth far more than it's being valued at now.

In general, I find this story from Dec. 26 jibes quite well with my own views on Biovail: "...all the bad stuff is priced into the stock. Meanwhile, any positive development in the spring could launch the shares back into the mid-$20 range virtually overnight. Until then, the company [and its generous dividend] will pay you to wait..."

I still think Biovail has a lot to offer as a somewhat-speculative, beaten-down dividend-payer for anyone willing to roll the dice a little in 2008. So the company hasn't completely lost me just yet. But I have my limits. For the first time, I've set a stop-loss order on the stock of $13. Essentially, after all I've been through, I think the stock still has some upside, and I'm prepared to wait, to a point, to see it realized. But I won't wait forever. If it dips below $13 (it's at $13.51 as I write this) then my brokerage will sell my stake, take whatever cash I can get and in all likelihood, I won't check the stock price on Biovail for a good, long while.

It seems ridiculous to talk of building in some downside protection for a company that I've already lost about 50% of my money on (not including dividends) but there you have it. I have shaken faith in the company's prospects, but I'm not willing to sit and watch my investment in their outlook whittle away to nothing. This stop loss order allows me to accomplish that.

So whatever you've got planned, Biovail, get cracking on it. The clock is ticking. And you're officially on notice...

4 comments:

mariam said...

GiV, I feel for you...

I was gulping a few times about Reitmans but I kept buying on the way down.

I guess it's true what they say, if you believe in it, it's a buying opportunity! I guess you don't believe BVF anymore...

FourPillars said...

If you still own it now - then don't sell at $13...

Stick it out.

FourPillars said...

Forgot to mention...

but don't buy any more!!

Mike

GIV said...

If you still own it now - then don't sell at $13...

Problem is, I said that at $25, and $18 and $16.......

I think it's moot anyway. I saw BVF dipped below $13 so my order should have been activated. I'm strangely zen about it.