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The Best Kind of Biotech Dilution

The "d' word -- dilution -- gives biotech investors cold sweats at night. It can strike with little warning, leaving investors with devalued shares.

Dilution is always better if avoided entirely, but it is a key source of funding for development-stage drug companies. For biotechs planning secondary offerings to raise capital, a good role model would be Clovis Oncology. Shares were down about 2% today, but investors at the beginning of the year are still enjoying a healthy four-bagger.

In this video, health-care analyst David Williamson discusses the offering in further detail and why the market made Clovis one of 2013's top performers.

Legendary investor Warren Buffett is worried. After famously cheerleading for American stocks at the bottom of the financial crisis, Buffett has identified a looming threat to the American system that could jeopardize future growth, employment, and profit. He accurately labeled this dangerous trend "the tapeworm that's eating at American competitiveness." Fortunately, the Motley Fool has prepared an important special free report "What's Really Eating at America's Competitiveness" that explains Buffett's pessimism, why the government is throwing billions of dollars at the problem, and most importantly, names one stock with a unique and disruptive solution that could dramatically reshape an entire industry. Click here for free, immediate access.

Follow David on Twitter @MotleyDavid.

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