Short seller prompts 19% fall in Twist Bioscience shares

In today’s top stories, a short seller gives Twist Bioscience a price target of zero, analysts see 265% upside in Chimerix and investors turn bullish on biotech stocks. Meanwhile, Buffett’s TSMC investment draws scrutiny and an activist investor calls on Alphabet to take cost cutting measures.

Twist Bioscience targeted by short report

Synthetic biology firm Twist Bioscience [TWST] is the latest victim of a short report. Scorpion Capital, which targeted Ginkgo Bioworks [DNA] in October 2021, described Twist as a “cash-burning inferno” and a “swindle” with “absurd” technology – “so phoney it may be criminal”. Twist has responded, calling the report “misleading, with many distortions and inaccuracies,” but not before some damage had been done. The share price fell almost 20% on Tuesday.

Biotech breakout plays

With the Nasdaq Biotechnology index signalling a “biotech breakout” with gains of 11.2% in the past month, head of technical strategy at Fundstrat Mark Newton says that “[b]iotech looks to be strengthening materially”. In a research note seen by CNBC, which have screened the iShares Biotechnology ETF [IBB] for cheap plays, Chimerix [CMRX] is seen to have an upside of 265.9% to its average price target as of 15 November. Cullinan Oncology [CGEM] has a potential upside of 170.1%.

Buffett’s TSMC stake

Warren Buffett is not known for making many new purchases, so the $4.1bn Berkshire Hathaway [BRK-B] invested in Taiwan Semiconductor Manufacturing Company (TSMC) in the third quarter is an interesting one. The 60 million shares he purchased give Buffett’s company a 1.2% stake. MarketWatch noted that it’s a clear case of being “greedy only when others are fearful,” as Buffett himself wrote of his investment strategy in his 1986 annual shareholder letter.

Lithium picks amid supply-demand challenge

Long-term Buffett favourite BYD [1211.HK] could benefit from lithium supply catching up with demand. According to Goldman Sachs analyst Aditi Rai, EV demand in China is likely to slow in 2023 and 2024, leading to decline in prices. Because “decoupling [the] battery supply chain from China is not easy,” Rai wrote in a note seen by CNBC, investors should consider EV stocks with lithium exposure, such as BYD and Contemporary Amperex Technology [300750.SZ].

Activist investor addresses Alphabet

Activist investor TCI Fund Management has called on Alphabet [GOOGL] to take action to address headcount and salary expenditure to ensure the company can operate more efficiently. Addressing CEO Sundar Pichai directly, TCI’s founder Christopher Hohn also asked that an EBIT target be disclosed publicly. “In an era of slower revenue growth, aggressive cost management is essential,” wrote Hohn. As of 30 September, TCI held approximately 68m shares at a value of roughly $6.6bn.

Strong US dollar bites pet care stocks

The number of pet owners boomed during the pandemic, but now pet care stocks like Chewy [CHWY], FreshPet [FRPT] and Zoetis [ZTS] are facing headwinds related to a strengthening US dollar and supply-chain bottlenecks. While some owners may reduce their spending on pet care during the cost-of-living crisis, especially luxury pet food and toys, Morgan Stanley analyst Simeon Gutman expects total annual spend to rise 134% from its 2019 level to $277bn by 2030.

The lithium battery race

Albemarle [ALB], Ganfeng [002460.SZ] and AMTE Power [AMTE.L] are just a few of the lithium producers that are tapping into demand for white gold for use in lithium-ion batteries vital for electric vehicles (EVs). China currently controls 58% of the global lithium chemical processing market and the UK and US are keen to shift away from relying on Chinese producers, like Ganfeng. This is likely to boost Albemarle and AMTE in the long-term.