Trade Alert: Betting Against HIMS
Plus, a bullish bet on a GLP-1 beneficiary in our top ten names.
A Reminder About Our Trading Frequency
Before we get into today’s trades, a reminder for new readers: the reason we’re able to enter trades with a high frequency at times is because we are also exiting trades at a similar frequency. For example, we had nine partial or full trade exits last week, as you can see in our wrap-up post for that week:
Most of those trade exits happen automatically, as our preset exit orders get hit.
Betting Against HIMS
Although most of our trades here are bullish ones, we did place a bearish trade on Hims & Hers Health (HIMS 0.00%↑) last Friday, after a few accounts from our Market Watchers X list flagged its latest regulatory and legal risks. In a nutshell, the company had been using compounding as a loophole to essentially copy GLP-1 drugs, but it took this to new level by offering its own version of Novo Nordisk’s (NVO 0.00%↑) new Wegovy pill, which may not have been as effective as NVO’s version, because it lacked NVO’s proprietary absorption enhancer, cleverly called SNAC (sodium N-[8-(2-hydroxybenzoyl)amino]caprylate), which temporarily protects the peptide from stomach acid and digestive enzymes. Long story short, the FDA signaled it was cracking down, NVO sued HIMS, and HIMS withdrew its pill offering.
But now it looks like the FDA may crack down on compounding of GLP-1 drugs more generally. So far, the Trump administration’s tack on prescription drugs has been a unique combo of seeking to lower drug prices for American patients while also protecting drug companies’ profits. One example of this has been its policy of requiring drug companies to offer the lowest 1st world price to American patients, which essentially gave them justification for raising prices in Europe. A crackdown on companies like HIMS compounding GLP-1 drugs would be consistent with that. Given that, it looks like HIMS may have further to fall. Since our bearish trade on HIMS from Friday hasn’t filled and looks unlikely to fill as-is, I have canceled it and built a new trade structure for it today.
Betting On A Beneficiary Of GLP-1 Drugs
When a retail apparel company hit Portfolio Armor’s top names a few weeks ago, I wrote that it was unexpected, but the presence of more than one apparel name in our top ten suggested something was happening beneath the surface.
It didn’t click for me at the time, but now it seems obvious: apparel companies are likely beneficiaries of the boom in GLP-1 drugs. As women lose weight, they’re going to want to shop for fashionable clothes. Our second trade today is a bullish bet on an apparel company that hit our top names last night.
Full details on both trades are below, along with preset exit plans, as usual, so we don’t have to babysit them.
Today’s Market Watchers Trade
Telehealth / GLP-1 compounding skepticism theme
The stock again is Hims & Hers Health (HIMS 0.00%↑), and our trade is a bearish hybrid combo consisting of these four legs:
