Bookkeeping: Cutting WuXi PharmaTech (WX) Sharply

WuXi PharmaTech (WX) is a Chinese medical outsource company that has caused me a lot of confusion by it's actions, but I really like its business and ability to undercut competition in pricing in the long run, so I've stuck with it. I went against my normal methodology and simply began buying this stock in small pieces as it broke all support levels on its chart the past 2 weeks, with most purchases in the $17s, but a a bit in the $16s. Yesterday the stock spiked out of the blue to the $18s where I flipped out about half the position and today I am selling the rest (except for a small holding stake of 0.1% of portfolio) in the $20.40s, for a quick 20%ish gain (the position was just over 1% entering the week). There is some very good news out today as the company has partnered with U.S. player Covance (CVD). There is no way this information was leaked yesterday was it? Nah... that never happens in the markets. ;)

While this is good news, it's good news for the long term and I don't really justifies a 20% price spike "today"... but I won't complain ;) We are still down since the original purchase in November by $2000, but faring a lot better than 48 hours ago. Considering how poorly the stock has done since it's initial IPO spike, this is not a bad loss... hopefully into 2009/2010 we can start getting some upside.

• Drug development services companies WuXi Pharmatech and Covance Inc. said Tuesday they will create a joint venture to provide preclinical development contracting in China.
• WuXi, based in China, and Princeton, N.J.-based Covance will evenly split the joint venture. Operations will be located at 323,450 square-foot-facility in Suzhou, China, expected to be completed in 2009 and designed to meet the Food and Drug Administration and worldwide regulatory standards.
• Preclinical research refers to the stage of development a drug candidate goes through before being tested on human beings. It can involve both animal and laboratory tests
• "This joint venture will create a powerful partnership between China's leading provider of discovery and development services with the world's largest public contract research organization," said Joe Herring, Covance chairman and chief executive officer.