Most buy-side funds are heavily invested in big-cap companies, some as much as 70%, because big-cap stocks offer solid growth, stability, and greater liquidity. The average biotech stock trades about 130,000 shares per day, while large-market caps like Merck & Co. Inc. turn over 5 million shares. But some aggressive fund managers, looking for higher-than-industry average growth rates, will put a disproportionate amount of their money in small, overlooked companies with exciting technologies, hoping to catch lightning in a bottle.
Over the last year or so, the phenomenal growth of Big Pharma stocks has turned this strategy on its head, making the low-risk play a high-growth strategy as well. Indeed,...
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