ACUS

whats up boys. i found this article on google. Things are looking on the up and up for acus. should we get some now or wait until right before the meeting in December?? thoughts?

On October 24, 2008, Acusphere (ACUS) and Cephalon (CEPH) signed a definitive agreement whereby Cephalon will provide $20 million in upfront financing to Acusphere in the form of $5M in cash and $15M in a senior secured convertible note. The deal is very positive for Acusphere shareholders, as the company exited the third quarter with only $4.1 million in cash on the books and was going to run out of operating funds by mid-November 2008. The financing avoids any near-term bankruptcy risk or the need for a massive dilutive offering. We also note that should Cephalon decide to license Imagify, Acusphere was able to maintain a significant portion of the economics. The deal entitles Acusphere to a sizable approval milestone of $40M and royalties -- which we estimate to be around 20% -- on U.S. sales of the drug. There seems significant, and perplexing, confusion around this deal. We are surprised at the stock price decline in the past few days. Perhaps this is profit-taking after the run-up last week on the news that the FDA would hold an advisory panel meeting in December 2008 to review Imagify. We discuss this panel meeting and our prediction for the outcome in our October 13, 2008 report. This report also has our analysis of the RAMP-1 and RAMP-2 data, and our forecasts for Imagify sales. Nevertheless, this is a very good deal for Acusphere. The current market conditions and financing opportunities for small-cap biotechnology companies are extremely challenging. The fact that Acusphere was able to secure $20M in financing and still maintain significant upside on its intellectual property for shareholders so close to bankruptcy is fantastic news. We think it is a testament to Imagify and potential billion-dollar opportunity it offers. Cephalon will most likely choose Option No. 1 (Imagify License) if Imagify is approved. However, even if Cephalon chooses Option No. 2 (51% Ownership), Acusphere shareholders can still reap significant financial rewards if the drug is approved. A post-approval deal on Imagify is most likely worth more than twice what the company will get with option No. 1, so investors, while disappointed with the 51% dilution, will still come out ahead. Investment in Acusphere still represents a risky and speculative play. However, in our view, odds favor a positive panel recommendation in December 2008, and the stock represents a very attractive "call option" at this level.

The Kick Is Up.....

Per Jim's request, I am pulling Korea Electric Power Corp. The company provides power to nearly the entire country of Korea and is citing increased fuel and coal costs as the reason behind their first quarterly loss in 26 years. I don't want to speculate how quickly they will turn the corner, but note that I brought their name up as a "watch" when we met early this month and they were priced at $12.50/s. As of this blog entry, they are dipping to $8.33/s.

My motion is to purchase 12 shares of the company at the current price and plan to unload it before the end of the calendar year at a target price of $9.60/s (a 15% return).

Wide Right

We totally shanked the uprights today in acquiring something for a quick turnover. Every one of our holdings saw growth from eight to as much as fifteen percent. Maybe we can keep a closer eye on futures going forward. Or, maybe not...

That said, it's going to be a an exciting week globally. The eyes of the world are on the United States as we approach the biggest election of our lifetime. If you've read the conflicting economic plans of the candidates, you'd understand the direction that markets will shift depending on the election. That said, with Barry leading by six points, does anyone project stocks to short or do we think sitting on our money market cash until '09 makes more sense?

Heeeeeeeeeeeere's Mikey

whats up fellas? Sorry I havent posted anything yet. This is honestly the first time I have had a chance. As you all know, I have been celebrating many holy holidays in the month of October, so I am pretty busy catching up on work when I am here. There is a computer at Stephs house but I dont really use it.

Anyway, I read all the posts and comments that have follwed, and this seems like a great idea! I always learn something new when I read your intelligent comments. I think it is obvious that the market blows right now, but it will bounce back! I think we are getting our feet wet at the right time. I read the article that Joe posted on ACUS and Stephs dad seems to think that we need to buy it up. I am suggesting we do it sooner than later. We could make a killing on this, or the company could go bankrupt. Its a chance that I am willing to take.

ok I gotta go now, my boss is a real D-Bag!!!

odds are, it's going BACk up

The markets are about to close, and today is another doosie.  When the markets close today (barring some nonsense in the final 15 minutes) it will mark yet another historic low.  People will come out and say it's the bottom again.  It seems every time we hit a low, a group of analysts come out and say it's the bottom - and they'll keep saying it till a group of them finally gets it right, but what's more telling in all this is one key fact - the analysts don't know what they're talking about.

One thing to look for is a stock that's beaten down again - and one stock comes to mind in particular - Bank of America (BAC).  Down 10% today it will close around $21-$22.  Let's watch it again as I predict in the next two weeks BAC hits back around $26/share again with the high volatility in the stock market, and as institutions pick up chunks of BAC stock when it's beaten down.

My guess, an entry around $20.85, with a sell of $25.50 in the next 2 weeks, representing a quick 20% recovery.  

Against The Ropes And Taking Punches

It's no secret Ford (F) is in dire straights, as their stock is down 60% this year. But as previously reported, Chrysler and GM are talking takeover, which would trim The Detriot Three down to a dynamic duo.

Potential suitors are negotiating terms, but it's possible that Chrysler (sitting on $14b of cash) could dump their lineup to GM and keep only Jeep. In exchange, GM would receive rights to vehicles and ton of dough.

Dialing into this situation could create an opportunity for us to short an investment so keep your eyes open. Well, some may not read this until after a deal is done, but for those who do- stay tuned.

"We Like To Let People Go On A Friday When There's Less Chance For Confrontation."

I'm reading "Beating The Street" by Peter Lynch, an older book but renowned for its insight on stock trading. He talks about watching for companies that downsize. When a company downsizes with layoffs, it's sole intent is to cut overhead. By cutting jobs, workers who remain employed pick up additional tasks and work harder, as not to threaten their own employment. As a result, a company gets the same work performance, if not better, and they pay less overhead costs. Lynch explains that these companies are likely to see a quick boost in profits and may make a good stock to short. The key, however, is knowing the company well enough to attain the information before the market does.

Today, Business Week reported that Cemex (CX) will lay off ten percent of it's 60,000 employees worldwide, in addition to selling over $2b in assets. There's more to the move, such as loan extensions and equipment sales, but waiving six thousand people is a major event. With third quarter net income down 74%, the company had to do something to drag up the bottom line.

If Lynch's theory is accurate, we should see a steady rise in Cemex for the remainder of the calendar year. That and the conclusion of the U.S. Presidential election should help the housing market and hopefully pull CX out of the muck.

Born in the E.S.L.R.

Today, Evergreen Solar (ESLR) released earnings for Q3 that were slightly lower than The Street had estimated.  They attributed this to the declining value of the dollar vs. the Euro (50% of sales were in Europe last quarter), as well as to their link to Lehman brothers (for more info on that, google LEH ESLR capped call transaction - and wake up..).  What is interesting about the LEH connection is that when LEH declared bankruptcy, and Barclays bought it out, Barclays also purchased 12 million shares of ESLR stock that ESLR didn't even know still was in LEH's possession!  

The light at the end of the tunnel?  ESLR is entering legal proceedings demanding that Barclay's either returns the 12 million shares to ESLR, or formally agrees to be 100% responsible for the repayment of those shares to ESLR per the terms of the original agreement with LEH - BOTH of those outcomes would result in a surge in ESLR share price.  I don't see any judge thinking that what Barclays did was a legitimate deal -- and I think ESLR will be rewarded handsomely in the deal.

Another bright light?  Evergreen officers on the call today stated that they are still on track to acheive significant profitability in 2009 per their original guidance - AND - Evergreen also announced two large sales contracts today that brings their new Devans facility to 100% production capacity... so there isn't much keeping them from achieving their profitability goals as they have already reached their sales goals.  The return of the LEH shares would just be icing on the cake as they are already priced as "gone" in the current share price.

I think the biggest question next year will be - do you sell when ESLR hits $18-$20/share, or do you hold onto it for 5 years and wait for it to hit $150?

the pawn is mightier than the sword

With the downward swing of the economy, I look to a stock that I think will be strong through a recession - pawn shops and payroll loan shops.  There are two that first come to mind, Cash America (CSH), and EZCORP (EZPW)- Cash America being the largest.  Think about it - these places are cash cows as it is, CSH will surpass 1 billion in revenue in 2008, that's huge and I'm sure it's more than you would of guessed for a "pawn operation".

People are going to need cash for a variety of reasons now more than before with a recession on our hands.  $100 for that Playstation 3 - sure, you have to pay the electric bill... etc, etc.  It seems predatory, but it is what it is, and it's a sound business model right now that almost makes me want to open my own Cash America shop now... (perhaps this is Theta Mutuals next venture?) http://cashamerica.com/Franchising/FranchiseOpportunities.aspx

Cash America and EZCORP should see increased profits and revenues through Q4 of 2008 and through all of 2009, let's see what happens.

Don't make a mist-ACUS

I mentioned this week via email that ACUS is on the move. Have we found out what their projections for growth are? They were one of the few companies that we're tracking to show improvement this week, from $.41 Monday to $.63 this afternoon. Are we going to play it by ear until they approach the FDA in December. Target price? Is the next best move a non-move?

From Zacks.com Chief Financial Analyst Jason Napodano, published 10/14/08:

Acusphere, Inc.’s (ACUS) Imagify is an investigational new drug developed to assess perfusion using ultrasound for the detection of coronary artery disease. Imagify is a billion-dollar product if approved. However, an abysmal stock price and a desperate need for cash have backed management somewhat into a corner. Acusphere remains a highly speculative play. We view the name as a biotech call option.

Acusphere will need to raise cash before the U.S. PDUFA date of February 28, 2009. This will come from either signing a U.S. partnership or dilutive stock offering. The FDA has scheduled an advisory panel meeting to discuss and review Imagify on December 10. We view this as very good news for Acusphere as it not only improves the odds of approval, but also moves forward a significant catalyst for the shares and could allow management to secure much need financing before the need to dilute shareholders with a big offering or split the stock.

If we apply a 20x multiple to our 2012 EPS estimate of $1.46, and then discount back to present day at the aggressive rate of 40% to account for the 60/40 odds of approval we arrive at a fair-value of $5. At $0.39 per share, the upside is enormous. The downside is bankruptcy. Our Buy call remains extremely speculative and for high risk tolerant investors only.

GE / solar interests and investments

General Electric just invested 2 million in a new solar company out of California - while that doesn't seem to be a big deal at first, what is interesting about it is that a spokesperson said it is "part of a greater focus on renewable energy in general, and solar power in particular", Which clearly means they are looking at other renewable/solar companies and we should see more speculation from them in this field. I think we'll be seeing more investments like this, and perhaps even a buyout of a company that brings enough to the table for them to want to take over. Here is a link to the full article - http://money.cnn.com/news/newsfeeds/articles/djf500/200810141115DOWJONESDJONLINE000409_FORTUNE5.htm

Evergreen introduces new products

Evergreen Solar Inc. has debuted its new American-made ES-A Series Solar Panels. This new line of 200 W, 205 W and 210 W solar panels features a -0, +5W power specification and provides the best power tolerance currently available in the industry, the company says.
(source - solarindustrymag.com)
These panels are made in their Devans, MA facility, and should offer yet another competitive advantage over the competition. They are really working hard to differentiate themselves from the other smaller guys.

CX

Mexico’s Cemex (NYSE: CX) has lost 75% of its value in one year. But emerging markets expert Irwin Greenstein says the company is like the IBM of cement. And a new public-works stimulus package from the government should breath new life into business activities. Irwin says Cemex is approaching the bottom… and could soon become a great contrarian buy.
http://www.contrarianprofits.com/articles/why-battered-cemex-cx-could-be-a-great-contrarian-buy/6062