Welcome back to Baby Breakerdom! This week's quest to uncover budding Rule Breakers finds good news for the bespectacled and another big reason to be on the lookout for buyouts.
First up this week is Neurotech Pharmaceuticals, which specializes in biotech that helps the human immune system safely deliver treatments for ocular diseases such as retinitis pigmentosa and glaucoma. Earlier this month, the firm received $35 million in private equity financing.
What's the attraction, you ask? First, some of our best Breakers are biotech specialists. Consider Vertex Pharmaceuticals (Nasdaq: VRTX ) , which is making considerable inroads into treating hepatitis C. The stock has more than quadrupled since being selected for the portfolio in February of 2005.
What's more, treating eye disease is anything but simple. Part of the problem is what's called the blood-retina barrier, which is designed to protect the eye from foreign substances. Short of injecting therapies directly into the eye (ouch!), there are few ways to deliver needed care.
Neurotech addresses the problem via what it calls Encapsulated Cell Technology, or ECT. According to the firm's website, ECT creates a hollow-fiber membrane for carrying genetically altered protein cells. But the membrane is unique in that it blocks the immune system from destroying the genetic intruders while, at the same time, allowing required nutrients and oxygen to reach the proteins as they travel through the bloodstream.
Investors appear to sense a massive business opportunity. The numbers say they're right: According to Prevent Blindness America, a nonprofit organization that helps to test for eye diseases, more than 2.5 million Americans suffer from glaucoma, which gradually causes blindness among the elderly. Better keep an, um, eye on this one, Fool.
Next up is the California Public Employees' Retirement System, otherwise known as Calpers, which happens to be the nation's largest pension system. VentureWire reports that the fund's managers plan to commit $9 billion to private equity by the end of the year while simultaneously whittling down the number of firms it works with.
Got that? We're talking about more money for fewer firms. If you're at all like me, you've got to wonder what this means for buyout funds, if only because $9 billion would be a 67% gain over last year's $5.4 billion private equity commitment from the pensioner.
Think about it. Buyouts are suddenly all the rage, and private equity funds are already flush with cash. Among the big deals to grace the headlines recently are hospital operator HCA, purchased for $20.97 billion; REIT Equity Office Properties (NYSE: EOP ) , for $20 billion; chipmaker Freescale Semiconductor (NYSE: FSL ) , for $17.6 billion; and broadcaster Clear Channel Communications (NYSE: CCU ) , for $18.8 billion.
Rebel investors like you may be able to profit from the madness. Here's why: Cash-rich blue chips could come under pressure to snap up emerging firms before private equity funds steal the best prospects. So, look for fast movers in important, growing industries which sport obvious advantages that could bolster the prospects of bigger rivals. Or, in Foolish parlance: Get ready to bet on the Breakers.
That's all for now. See you back here next week when we continue the quest to find the next Wal-Mart.
For more Rule Breaking Foolishness:
High tech. Biotech. Nanotech. Any tech. David Gardner and his Foolish band of analysts cover it all for Motley Fool Rule Breakers, and they've unearthed six multibagger stocks in two years as a result -- Vertex is one of them. Want to find out the names of the other five?Try the servicefree for 30 days.
Fool contributorTim Beyers, ranked 1,190 out of 13,993 inMotley Fool CAPS, didn't own shares in any of the companies mentioned in this story at the time of publication. Get the skinny on all the stocks he owns by checking Tim's Foolprofile. The Motley Fool'sdisclosure policyis a rebel on Wall Street.