Author Topic: Lucky Moderna pick- what would you do?  (Read 1007 times)

Darian

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Lucky Moderna pick- what would you do?
« on: September 13, 2021, 07:58:55 PM »
Though most of my money goes into TSP/Vanguard index funds, I allocate myself a portion of my portfolio as fun money to gamble with on individual stocks. In January 2020, I put $1000 into Moderna (along with several other COVID-related stocks that didnít do nearly as well). Now that Moderna stock is worth $21,000. Woohoo!

The Moderna stock is worth over 4x as much as any other individual stock I own, but still makes up less than 5% of my total stock balance.
 
My biotech industry SO believes that with its COVID windfall and its mRNA tech, Moderna has the potential to become the next Genentech and leans towards me holding onto it. On the other hand, I think some of the price right now is hype. One BofA analyst argued recently that to justify its current valuation, Moderna would have to sell a billion covid shots each year for the next 17 years and have every single drug in its pipeline be a success.

And finally FWIW, watching this stock bounce up and down has provided me with significant entertainment value in the last year and a half of pandemic boredom :D

What would you do?

secondcor521

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Re: Lucky Moderna pick- what would you do?
« Reply #1 on: September 13, 2021, 10:09:17 PM »
I'd follow my plan that I laid out before I bought it.

My IPS for something like that was that I never let any stock get above X% of my net worth.  For my temperament, I set X% to 4%.  So if something got to 5% before I noticed, I'd sell some to get back down to 4% or less.  Any cash raised would just cascade down to the next goal, whatever that happened to be at the time.

I don't pick individual stocks, and I don't do active management, so I never ended up in your situation.  The only reason I had the rule in the previous paragraph was because I ended up with my employer stock at two different companies and had to determine how much was too much.

If it were a company that were not my employer, then logically it would make sense to allow it to go somewhat higher than one's employer stock.  There are rules of thumb out there that you can google.  Interestingly, when I did that research, I found two things:

1.  The rules of thumb were vague and covered a range:  "You want to hold 5% to 15% of your employer's stock" - OK, 5% to 15% of what - net worth, assets, investable assets, stock allocation portion of the portfolio?  What would make one lean towards 5% or 15%?

2.  The rules of thumb were more generous (i.e., higher percentage allocations - like 10% to 20%) when the stock market was going well for several years.  Then a crash or recession happened, and the rules of thumb became more conservative (like ~5%).  Incidentally, the rules on the size of emergency fund followed a similar path from more aggressive to more conservative after the recession/crash.

svosavvy

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Re: Lucky Moderna pick- what would you do?
« Reply #2 on: September 14, 2021, 06:53:24 AM »
Congrats.  When I have a winner I am conflicted on, I do both.  Sell some and keep some.  If you turned 1k into 21k book some P.  They say you never go broke booking a profit.  If you kept half it would still be fun to watch.  If it is a trivial amount to you then sell 2k worth, then you technically doubled your money and let the big ball roll.  Sell some way out of the money leap calls (to the upside) on some of it.  Then do something fun with the proceed which would be a non trivial amount. I remember when FB ipo'd and it went from $50 to $25 in a few months.  I bought a bunch of $50 leaps and sold them a year later when it was trading at a $100.  It was a ton of fun to book a non typical gain.  Anyway enjoy it.  Like pee wee herman said "take a picture it will last longer."  You will have fond memories and a fun story to tell people. 

GuitarStv

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Re: Lucky Moderna pick- what would you do?
« Reply #3 on: September 14, 2021, 07:43:07 AM »
I'd figure that I had gambled and won.  That's awesome, but I wouldn't expect it to happen again.  Cash out while ahead, and invest in a whole market fund.

MustacheAndaHalf

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Re: Lucky Moderna pick- what would you do?
« Reply #4 on: September 14, 2021, 08:04:23 AM »
It's an appealing company, with a clever combination flu shot + Covid-19 booster shot planned for later this year.  The company has upside, but I think the downside risk is greater.  If you had $21,000 and no MRNA stock, would you buy it?

Look at Feb 12 2021, after which Moderna's performance over the next month was -30%.  Meanwhile, in that same time period, Carnival Cruises rose 38%.  What happened is that fears of Covid-19 eased, which hurt Moderna stock significantly.  The delta variant has raised new concerns, and Moderna has spiked upwards as a result (and CCL downwards).

What Feb tells is that Moderna will take a significant hit when Covid-19 ends.  In 2019, MRNA stock gained +11%.  Then in 2020 Covid-19 hit, and MRNA stock went up +450%.  Did they make radical discoveries that one year?  Or did Covid-19 vaccines provide a huge boost to the company?  What happens when that huge boost goes away?

Retire-Canada

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Re: Lucky Moderna pick- what would you do?
« Reply #5 on: September 14, 2021, 08:49:17 AM »
I don't stock pick so if I suddenly had $21K of Moderna stock gifted to me I'd sell it and invest the proceeds into index funds.

If you want to keep it set a % or $ value target and keep selling if you get over that amount of stock.

For a 3rd option:
- total all the $$ you invested into COVID stocks in Jan 2020
- figure out what VTI would have returned over that time had you invested in that instead
- sell enough COVID stocks to get the equivalent value of VTI you calculated out of the picks and invest that according to your AA
- pretend you are in Vegas and let the rest ride since you got your principal back out
« Last Edit: September 14, 2021, 08:53:24 AM by Retire-Canada »

ChpBstrd

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Re: Lucky Moderna pick- what would you do?
« Reply #6 on: September 14, 2021, 10:01:21 AM »
Sell some way out of the money leap calls (to the upside) on some of it. 

This is what I'm thinking, but I would sell calls more aggressively because (1) you should be perfectly happy getting assigned and locking in your LTCG profit, and (2) this is a highly volatile stock with a beta of 1.5 that has expensive options. You could sell the October 15 call at the 500 strike for $13.20. The premium received is 3% of today's price and the stock would have to rise 13.2% for you to lose your shares. So one scenario is you make ANOTHER 16.2% in 31 days. The alternative is you end up 3% better off than you would be otherwise.

Darian

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Re: Lucky Moderna pick- what would you do?
« Reply #7 on: September 14, 2021, 11:48:56 AM »
I don't stock pick so if I suddenly had $21K of Moderna stock gifted to me I'd sell it and invest the proceeds into index funds.

If you want to keep it set a % or $ value target and keep selling if you get over that amount of stock.

For a 3rd option:
- total all the $$ you invested into COVID stocks in Jan 2020
- figure out what VTI would have returned over that time had you invested in that instead
- sell enough COVID stocks to get the equivalent value of VTI you calculated out of the picks and invest that according to your AA
- pretend you are in Vegas and let the rest ride since you got your principal back out

I like Option 3! I've calculated it below. I didn't buy them all at the exact same time, but going off the Moderna date:
Moderna Bought: 998 Today: 20582
VIR Bought: 1516 Today: 2821
Inovio Bought: 510 Today: 408
Emergent Bought: 1049 Today: 740
Total bought: 4073
S&P 500 gain January 2020 to today: 20.9%
4073x1.209=4924
 

Darian

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Re: Lucky Moderna pick- what would you do?
« Reply #8 on: September 16, 2021, 12:03:02 PM »
Sell some way out of the money leap calls (to the upside) on some of it. 

This is what I'm thinking, but I would sell calls more aggressively because (1) you should be perfectly happy getting assigned and locking in your LTCG profit, and (2) this is a highly volatile stock with a beta of 1.5 that has expensive options. You could sell the October 15 call at the 500 strike for $13.20. The premium received is 3% of today's price and the stock would have to rise 13.2% for you to lose your shares. So one scenario is you make ANOTHER 16.2% in 31 days. The alternative is you end up 3% better off than you would be otherwise.

That's a great idea, but I don't own 100 shares...

I decided to sell half and keep half. $9000 went straight into VTI. The remaining $1000 will wait in my gambling fund for the next pick :)

EliteZags

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Re: Lucky Moderna pick- what would you do?
« Reply #9 on: September 17, 2021, 05:14:32 PM »
I'm in a similar situation with a bit less shares bought Feb20, still holding

on one hand watching it shoot up the past few months and kicking myself for not buying more initially, however then I realized had I bought a significant amount to the point where it would have grown to a life altering amount- there'd be no way I would have held it all up til the recent peak value (I'm guessing would have unloaded a large portion when while it stagnated between 150-200 as shots were being widely dispersed earlier this year), and would be kicking myself for all the shares I sold on the way up and prob largely missing the 2X+ runup this summer

MustacheAndaHalf

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Re: Lucky Moderna pick- what would you do?
« Reply #10 on: September 20, 2021, 12:16:11 PM »
I want to counter-balance the risks I mentioned earlier of a post-Covid drop.  The most successful hedge fund of all time has MRNA as their #8 holding.  I don't know if Renaissance Technologies spotted it early, but they held it as of their last 13-F filing with the SEC.