Bookkeeping: Restarting Thoratec (THOR)

It is interesting that 4 of the 6 names I outlined in Saturday's 'Potential Portfolio Candidates' in our "waiting for a pullback" category have pulled back to support in the first day and a half of this week. This goes with the broader view I am seeing in this market - people are now moving from the leaders of the past month and moving into far more speculative fare. I see a lot of small cap stuff (today the sexy choice outside commodities is technology) running hard for no good reason other than speculators want new playthings.

I am going to restart an initial position in Thoratec (THOR) as it pulls back to its 20 day moving average of $29.75 or so. It is currently in the $29.50s so I'm re-starting with a 1.5% stake. This is not a market I will be chasing all this speculative junk running up 30% in a week on "thesis" - even the quality stocks I don't want to chase. Because when they reverse a lot of people are going to get smacked... and abruptly.

As I wrote this weekend, I had a group of 6 stocks (QSII which we just talked about was one of them) I was interested in on a pullback. We added 1 yesterday and the second today. Thoratec is down from $33 on Friday, so we're getting it about 11% lower - that said, I am hoping to see it down in the upper $27s which is its 50 day moving average to make a larger purchase.

So the strategy from here (so you see in advance) will be to add more either (a) on a bounce off the current level - that would signify serious strength or (b) as it falls to the 50 day moving average - near $28. Conversely, if the stock falls below $27 or so on a closing basis I'll cut back, and take a small loss since the stock would of broken support and be weaker than I anticipated and could have much lower to go... ($23s or $24s in fact)

I identified Thoratec [Aug 4: One for the Radar - Thoratec] quite a while back but exited [Oct 26: Closing Thoratec First Thing Tomorrow] after a product scare which appears to be less scary than the original headlines (when the news hit, the stock was down 50% after hours before recovering in pre market the next session to "only" be down about 12%)

On a fundamental basis I really like this name [Oct 30: Thoratec Smashes Earnings; Somehow Guides Up] - I was just thrown for a major loop with the product issue. Since that time in late October the stock has rip roared higher without me.

We lost $2k the first time around so hopefully we have a better experience this time. The stock has a rich valuation but is a unique niche growth story in healthcare. And it is not a thesis stock; it is standing on it's own two feet.

[Dec 5: Thoratec with Positive Data]

Long Thoratec in fund and personal account