Haven’t a clue

There are just some days that defy explanation and yesterday has to be one of them. Take a look;

Livongo down 9.94%
Dexcom down 9.42%
Insulet down 6.13%
Tandem down 9.36%

And the drug sector was not immune with Lilly down 2.61%, Novo Nordisk down 3.60% and Abbott down 2.12%

It was like someone got up on the wrong side of the bed couldn’t get their fancy coffee maker to work properly and decided for grins and giggles to sell any stock that was remotely related to diabetes. Some are attributing the selloff in Dexcom to comments made by their CFO at an investment conference, however this does not explain the selloff in Insulet and Tandem.

We can understand the continued sell off in Livongo as upon further review their earnings announcement didn’t go over well. It will be interesting to see after this very fast pump and dump when the stock experiences a dead cat bounce. Love’em or hate’em Livongo is setting new records first it was the greatest thing since sliced bread and soft soap yet after their earnings they have become the scourge of mankind. Keep in mind this company has been public less than two months and has had a total of 1 earnings report.

Yesterday with the exception of Livongo reminds us of something Momma Kliff used to say when something unexplainable happened, like Dad not burning something on barbecue, we’d ask why this time our food wasn’t burnt to a crisp and actually edible and Mom would say “Haven’t a clue.” Well we haven’t a clue why all these diabetes stocks sold off yesterday, but we will say this with the exception of Livongo we see no reason to panic.

We figured with Dexcom, Insulet and Tandem all hitting new highs and reaching crazy valuations that at some point there would be a sell off bringing valuations more in the semi-crazy range. Even after yesterday’s sell off Insulet is up almost 90% YTD Tandem up almost 64% and Dexcom up slightly over 21%. So again we aren’t all that surprised that investors took some profits and others followed.

Just to be clear we have not changed our long-term view on any of these stocks. All three of these diabetes device companies have solid talented management teams and positive long-term outlooks. We cannot however say the same for Livongo who’s team didn’t actually perform that well last Thursday. Some of this could be chalked up to nerves as it was their first rodeo, but nerves alone cannot explain their less than stellar performance.

Seriously we’d like to give you some clarity as to why this happened why everyone got killed on the same day but as Mom used to say we haven’t a clue. So let’s move on and enjoy the rest of the week for as Mom also said, “No matter how much we think we know there are days that show how much we do not know.”