Please ensure Javascript is enabled for purposes of website accessibility

Something Borrowed, Something Blue, Volume 2: It's Been a Roller-Coaster Ride for BLUE Shareholders

By Motley Fool Staff - May 30, 2018 at 7:40AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

David reviews why the Fool continues to recommend the volatile bluebird bio and why he invests in companies like it.

On this Rule Breaker Investing podcast, Motley Fool co-founder David Gardner revives a theme he first used early last year, based on the classic rhyme for wedding luck: "Something old, something new, something borrowed, something blue." It suited the hodgepodge of points he wanted to make then and a similar patchwork of ideas on his mind this week.

In his fourth segment -- something blue -- he talks about clinical-stage gene-therapy company bluebird bio (BLUE 6.50%). It's a RuleBreakers recommendation, and it has been for almost three and a half years. It's also a fine illustration of some key Foolish principles of investing.

A full transcript follows the video.

This video was recorded on May 23, 2018.

David Gardner: Something old, something new, something borrowed and now, as I said, something blue. We're going to have a stock pick here. This is not one of my five-stock samplers. I won't be checking in with this some years hence. It is an active Motley Fool Rule Breakers recommendation, so we're already scoring ourselves over there and I'll share our score with you right now.

But guess what the ticker symbol of this company is? Maybe BLUE? I see my producer, Heather, asking. Yeah, that's exactly right. The ticker symbol is BLUE is because this is Something Old, Something New, Something Borrowed & Something Blue, so obviously I need to talk briefly about bluebird bio.

bluebird bio I first picked on January 28th of 2015. The stock was at $99.47. That day about a $4.5 billion company. $99 [just short of $100] in January of 2015. In the intervening two years it went up to about $190, so I was feeling awfully good up 90% with our gene therapy company that's working at things like beta thalassemia and sickle cell anemia. Working at cures through gene therapy. And not many months later, within that two-year period the stock swung from $190 down to below $40.

So, if you've ever heard that biotech can be volatile [I bet you've heard that before], you may well have experienced it in your own portfolio. Yes, Motley Fool Rule Breakers members watched our 90% gain fizzle to a [60%]. That didn't feel very good. But by June of 2017 [about two and a half years after I first picked it], it had bounced back. Come back on some good results and the stock was back to $114, so not really very different from that initial $100.

Since then I'm happy to say the stock closed roughly at about $187 today, so it's back near that all-time high. If you are fully accounting for this, my first pick was up 88%, second pick up 64%. The stock market behind those by 40-50%. In other words, we've racked up about 90 points of combined total scoring alpha with our love, our appreciation of BLUE, something blue.

So, what is gene therapy? Well, it's a medical procedure where you're introducing alterations to a patient's genetic make-up. That's gene therapy. It's a very promising therapy. Does this company have any official drugs approved? Not really. Does this company have meaningful revenues or profits yet? Certainly not. This is still an early development stage company, but it's worth $9 billion today. [This] shows you -- because I don't think Mister Market's an idiot -- that there's a lot of promise and belief, and this is a company partnered with Celgene and some others doing big-time stuff.

So, what I'm here mainly to convey to you is that bluebird bio is a stock worthy of consideration, but I'm not here to pitch this stock to you personally. I'm not sure which of my listeners this stock makes sense for, which may already own it, which may have already owned and sold it, and which should definitely not buy this stock.

I'm here more to put forward BLUE as a concept. Do you have any "blue" in your portfolio? Do you have any speculation? Do you have a small percentage of your money on developing-stage technologies, innovations, therapies? I think we all should have a little blue in our portfolio.

In fact, feel free to tweet us out @RBIPodcast and let us know what is the blue in your portfolio this week. If you like, maybe we'll grab some of those for mailbag. Again, we should all have a little [not ticker symbol blue], but a little "blue" in our portfolio. What is your blue? And do you have enough blue? Especially if you have a lot more decades left on this Earth, I think you should be thinking with William Gibson, Kevin Kelly, and me [a lot of future-thinking people] that you should have some meaningful blue in your portfolio.

And while I hope it won't be as volatile for you as bluebird bio has been for Rule Breakers members, that's the note I wanted to close on. Something old, something new, something borrowed, and something blue.

David Gardner has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Bluebird Bio and Celgene. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

bluebird bio, Inc. Stock Quote
bluebird bio, Inc.
$6.72 (6.50%) $0.41

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/13/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.