Update on H&Q Life Sciences Investors (HQL)

In my original writeup on HQL on October 27 I noted that I was interested in this closed-end fund after reading about it on BioHealth Investor, but something was bothering my intuition and I was deferring purchase of shares.

My subconscious mind must have realized that Democrats would gain control of congress in the November 7 elections and that would be negative for health care stocks.

The health care sector did react negatively at first, but the market now seems to be getting used to the idea that Democrats will be running things, and life will go on.

After all, many of the Democrat congressional leaders are wealthy and they have a vested interest in the status quo. For example, Nancy Pelosi has a huge stock portfolio. (Clicking the link will open a .pdf file which is her financial disclosure statement.) Pelosi’s stocks include a large position in Johnson & Johnson. It’s not likely that she is totally anti-business, or that she has an agenda of sabotaging the health care industry.

I believe this little correction in health care stocks has created a buying opportunity and I plan to buy HQL as soon as I feel confident the bottom is in. The shares yield 8.3% and they were selling at a discount of 6.82% to the net asset value as of November 16.

Advertisements

3 Responses to “Update on H&Q Life Sciences Investors (HQL)”

  1. Steve Says:

    I agree with you that HQL is a great fund and that the Dems aren’t going to sabotage the system. They system may get tweaked but everyone saw what happened to Hillary in the early 90’s when she tried to get wholesale change to take place – it didn’t happen.

  2. adam Says:

    After the Fool’s Stock of the Year 2007 pick, I have been interested in the fund. When I look at the last 5 years of performance however, I yawn. It has done little year to year and declined recently. Not a trend which inspires confidence. Unless there is another surge in ‘the promise of biotech’ in the popular press, it looks like it will march time or grow 10-20%. If I had owned it since 1999 I’d be up only 1.50 a share (13%). This is pretty risky stuff for that paltry reward.

  3. Alligator Investor Says:

    You are right about past performance, Adam. That is why the fund is selling at close to a 6% discount to net asset value, and the discount helps to level the playing field. Future performance is another issue. Some people I respect are predicting the health care sector will outperform the broader market next year. The HQL chart does look very good to me, and this fund does appear to be poised for a rally.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: