4th Quarter Stock Preview: Back from the Brink

The 38% run-up in biotech stocks since early March - combined with public biotech fundraising that has already surpassed the whole of 2008 - has investors wondering how long the magic can last. Buysiders and bankers expect that if the broader market holds, there will be continued upside as long as there are more clinical and regulatory successes.

Specialists, hedge funds and retail investors led the charge into small cap and microcap biotechs in the third quarter. Momentum investors also came into the group for the first time in at least a year, buying into the rush of follow-on offerings marketed last quarter. Generalist investors also were seen stepping back in cautious moves to restore some risk profile to their portfolios...