(Bloomberg) -- The search for a Covid-19 cure and an end to global shutdowns has created a new type of investor in health-care stocks: the biotech tourist.

They’re generalists who are “throwing money at headlines” about any Covid-19-tied companies that are generating “pockets of froth,” according to Brad Loncar, chief executive officer of Loncar Investments. Goldman Sachs analyst Asad Haider also pointed out concerns arising from mom and pop investors jumping into and then quickly exiting vaccine and drug developers on any sign of progress.

The ups and downs of Gilead Sciences Inc. shares may provide some pause for speculative investors. The biotech behemoth added roughly $20 billion in market value from the end of January to the end of April over its Covid-19 medicine before peeling back from a more-than two-year high after its therapy, remdesivir, received an emergency-use authorization from U.S. regulators.

Biotechs like Sorrento Therapeutics Inc. and Moderna Inc. may be at the beginning of that boom and bust cycle and eventually follow Gilead even lower, Loncar said in a phone interview.

“Virus stocks are trading at unrealistic expectations with no fundamentals driving valuation,” he said. Since mid-May, Sorrento has doubled its market capitalization to $1.1 billion after its chief executive officer touted results from an experimental antibody not yet tested in humans. Those gains were driven on “all hype,” and there may be about 20 companies potentially ahead of Sorrento in antibody development, Loncar said.

Haider at Goldman also highlighted the quick pop and fades in biotech. The Covid trade “has exacerbated concern about ‘non-sticky’ retail-driven setups trafficking in this theme,” while also whetting the appetite of hedge funds to short positive news on single stocks, he wrote in a note dated Friday.

Meanwhile mutual funds have been increasing their health-care exposure especially in Gilead, Eli Lilly and Co., Regeneron Pharmaceuticals Inc. and Vertex Pharmaceuticals Inc., Haider said after analyzing quarterly filings. All of the drugmakers except Vertex are testing some sort of medicine for Covid-19.

‘Short-Term Frenzy’

“Some of these companies and the market cap additions relative to the quality and quantity of data they’ve released just seems bizarre,” John Porter, a fund manager at Mellon Investments Corp., said in an interview. “You’d be surprised to see just how much retail interest there is in these names. Retail is still a pretty small part of the market in the scheme of things.”

Porter called it a “short-term frenzy” in biotech and said he was sensitive to companies latching onto the enthusiasm for Covid-19 when it wasn’t part of their strategy three months ago. “We’re not looking to buy companies that are looking to put out press releases to get some short-term pops in their stocks.”

Experienced investors don’t understand the valuation but they’re learning some Covid-19 stocks are almost “unshortable,” Loncar said. “Stock prices can do anything when valuations are thrown out the window.”

Indeed short interest in the sector is about $49 billion with short-seller losses totaling $4.3 billion this year through Friday, according to Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.

The top two most unprofitable short plays so far this year: Moderna and Regeneron, according to S3’s analysis. Loncar said that other experienced biotech investors he has spoken to have backed off shorting and are staying away altogether.

There are already cracks in Moderna’s foundation. The vaccine developer dropped as much as 12% on Tuesday after StatNews interviewed one of the patients who experienced severe side effects in a trial of the experimental inoculation.

Other vaccine stocks riding high include Novavax Inc. which has rallied almost 1,200% this year and Inovio Pharmaceuticals Inc., whose stock price has climbed more than four-fold.

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