Flow Traders Investment Competition: ‘Pharma bro’ Martin Shkreli’s adventure is over

Martin Shkreli, probably known best for raising the price of a life-saving drug by 5000% as CEO of Turing pharmaceuticals and being named ‘The most hated man in America’ as a result, has been sentenced to 7 years in jail for fraud. He covered up enormous losses of his hedge fund by taking cash from a biotech group, thus misleading his investors. His sentencing brings an interesting, but morally questionable, series of events on the stock market to an end.

Besides Shkreli, the Americans have done well in the past week. The S&P 500 is up by almost 4%, followed closely by the MSCI world index which made a gain of about 3.4%. This led to most groups making a profit last week. Europe is lagging behind a bit but also did well at 2.8%.

Rising Investments enjoyed a nice opportunity to sell Netflix at an all-time high. Borsa Valori also did well. Their investment in Baozun (Chinese e-commerce service provider) soared as the stock rose over 30% as a result of record earnings. The growth of Baozun is yet another example of the fast-growing Chinese e-commerce business and proves that the market isn’t anywhere near saturation for now.

Another group which performed quite well is ‘Succes is een Keuze’. They bought turbos on the German DAX index, which soared to about 12.350 after dipping to 11.900 last week, obviously turned out nicely for ‘Succes is een Keuze’. They were not the only group to make a play on the DAX index however, as Metrics Fund also took a chance at profiting off of one of the more stable countries in Europe. They did this through bonus certificates though, which means the payout comes at maturity as long as the DAX doesn’t drop too much. ‘Succes is een Keuze’ also invested in Berkshire Hathaway, which did very well last week too.

An interesting company to look at as well could be Rolls Royce. They did horribly in 2016, but have been recovering quite nicely in 2016 with pre-tax profits increasing by 35% and a tripling of free cash flow. The British aero-engine manufacturer could perhaps benefit off of a fine global economy, although Brexit might prove troublesome in terms of trade barriers. Interestingly enough, Rolls Royce has also been having a go at nuclear reactors. They are trying to build small modular reactors to replace polluting coal plants on a smaller scale. The first of these is supposed to be around in about 12 years, and given the fact that a transitory source of energy might be necessary before going full renewable it could be an interesting plan.

Written by Xander Gelink