Reshuffling the lineup for my Healthcare portfolio

Before commenting on the month of October in the Healthcare model on Covestor, let me wish all of my friends affected by the disastrous Hurricane Sandy a speedy recovery. Times like these force us to examine our priorities and sometimes our investment performance isn’t as significant as the welfare of our own families and friends.

The month of October was a difficult month for the Healthcare model, except for Schiff (SHF) which on October 30th became an acquisition target of German drug and chemical maker Bayer AG (BAYRY) for $1.2 billion or $34 per share.

I spent much of the month selling off many of my holdings on what appeared to be growing weakness in the market, the sector, and in the individual stocks held. Align Technologies (ALGN) sold October 18th, Alexion (ALXN) was sold October 24th, Biogen Idec (BIIB) was sold October 31st, Express Scripts (ESRX) was sold October 19th, HMS Holdings (HMSY) was sold October 4th, and  Healthstream (HSTM) was sold October 23rd.

In addition, the Medicines Company (MDCO) was sold October 5th. Regeneron (REGN) was purchased October 15th,  and then sold October 23rd on technical weakness. Finally, ResMed (RMD), another long-term favorite, and a holding in my Sustained Momentum model, was purchased October 24th, only to be sold on October 26th.

During the month, the only new holding that made it through this correction was Davita (DVA), which was purchased October 11th. DaVita operates a chain of kidney dialysis centers.

At the end of the month, the remaining holdings in the model consisted of Abbott Laboratories (ABT), Amgen (AMGN), DaVita (DVA), IDEXX Laboratories (IDXX), Lilly (LLY), Perrigo (PRGO), and Schiff (SHF).

I shall continue to search for new opportunities to put this growing cash position to work. However, the weakness in many of these holdings has led me to part company. Indeed, being aware that others besides myself may be following my lead, as is the case on Covestor, adds an additional emphasis on avoiding losses while looking for stocks that may offer all of us reasonable gains.

The investments discussed are held in client accounts as of October 31, 2012. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or that investment decisions we make in the future will be profitable.

Certain of the information contained in this presentation is based upon forward-looking statements, information and opinions, including descriptions of anticipated market changes and expectations of future activity. The manager believes that such statements, information, and opinions are based upon reasonable estimates and assumptions. However, forward-looking statements, information and opinions are inherently uncertain and actual events or results may differ materially from those reflected in the forward-looking statements. Therefore, undue reliance should not be placed on such forward-looking statements, information and opinions.