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Hello Readers,
Since the last Newsletter, we closed three positions; two for gains and one for a loss.
INNODATA ISOGEN (5/5/11). Closed position 12/5/11 at $4.30 for a 65% GAIN.
MGIC INVESTMENT (10/20/11). Closed position 12/5/11 at $3.55 for a 51% GAIN.
MOVE, INC. (1/5/08). Closed position 12/5/11 at $6.50 for a 32% LOSS.
(price reflects 1 for 4 reverse split)
This was our second go-around with Innodata Isogen, and we had another positive result; nothing earth-shattering seemed to move the stock, which had been trading mostly on the upside since we picked it. And, nothing appeared to move MGIC Investment except maybe that mortgage insurers are a little bit more optimistic about the housing market; and, no, we did not expect the stock to reach our 50%-plus target so quickly. We closed MOVE, INC. for a loss, since they did that reverse split.
Up. Down. Up. Down. This is giving us nausea. The markets remain fixated on Europe and what drastic steps the European banks may or may not take. Or is the real concern how much our Fed is pumping into Europe through the back door? Here’s a secret: market pros would not mind at all if our central bank opened the spigots at full strength, since the ECB seems reluctant to do so. The European Central Bank wants to see more austerity from nearly two dozen countries before it makes any significant moves. Good luck with that! And, yes, all of this uncertainty is still playing havoc on our Current Portfolio.
Here are the headlines since the last Newsletter about companies in the Current Portfolio; dates in parentheses are when we first recommended them. We are not giving updates on companies that are on the “Endangered List” unless we feel any news to be highly significant.
Nexxus Lighting (NEXS)(12/5/11). Commercial web portal goes live.
FSI International (FSII)(11/20/11). To release earnings on December 20. Receives follow-on orders for its ORION and ANTARES systems from leading semiconductor producers.
ECOtality (ECTY)(11/5/11). Partners with Outcast to launch digital advertising network for Blink EV charging stations. To offer Silver Spring Networks’ platform to enable EVSE load control solutions. Opens four charging stations in Costa Mesa, CA.
Keryx BioPharma (KERX)(10/5/11). Announces Phase 2 data for Perifosine in Hodgkin’s Lymphoma presented at ASH meeting; says it significantly increased median progression free survival.
Celldex Therapeutics (CLDX)(9/20/11). Presents novel preclinical data on CDX-1127. Initiates ACT IV, a pivotal international Phase 3 trial of Rindopepimut in patients with Glioblatoma.
Glu Mobile (GLUU)(9/5/11). Celebrates 10 billion Apps downloaded in Android market. Expands social gaming portfolio with Bug Village on Google.
Synthesis Energy Systems (SYMX)(8/20/11). Provides update on status of China Energy strategic equity investment.
Antares Pharma (AIS)(8/5/11). FDA approves Oxybutynin gel product for treating overactive bladder.
Galena Biopharma (GALE)(7/5/11). Presents Phase 2 design for NeuVax combined with Herceptin. Also presents five-year NeuVax efficacy data. Enters into exchange agreements with warrant holders.
Gleacher & Company (GLCH)(6/5/11). US trustee objects to Lehman’s hiring of Gleacher for Archstone deal. Expands sales and trading team.
Idera Pharmaceuticals (IDRA)(6/5/11). FDA gives okay to proceed with a Phase 2 clinical trial of IMO-3100 in patients with Psoriasis. Presents data in preclinical models of lymphoma on IMO-4200.
Biodel (BIOD)(2/20/11). Balance sheet still looks healthy.
Network Engines (NEI)(2/5/11). Says it enabled Alert Logic to scale business by more than 40% in a year.
Great Basin Gold (GBG)(1/5/11). Executes $150 million credit facility.
Sprint Nextel (S)(1/5/11). The usual several dozen new stories, of which the most significant appears to be that AT&T is on the verge of quitting its deal to buy T-Mobile.
Inovio Pharmaceuticals (INO)(10/20/10). Closes $4 million underwritten financing.
China Direct Industries (CDII)(4/5/10). Receives minimum bid price non-compliance from NASDAQ. Yes, this concerns us, somewhat.
Cerus Corp. (CERS)(3/20/10). Contracts for 19 new INTERCEPT Blood System illuminators in Russia.
CytRx (CYTR)(1/5/10). Presents favorable Phase 2 results with Bafetinib in relapsed B-Cell chronic lymphocytic leukemia.
USA Technologies (USAT)(6/5/09). Provides preliminary 2ndQT results. Replaces CEO.
GlobalSCAPE (GSB)(5/20/08). GSB’s Tappln launches new remote access App for Amazon’s Kindle Fire. Acquires Seattle firm for $9 million.
LRAD Corp. (LRAD)(10/5/07). Year-end numbers look pretty good; so does balance sheet.
XATA Corp. (XATA)(9/20/07). Xata Turnpike certifies the Motorola Admiral.
YM Biosciences (YMI)(11/5/06). Stock rises on promising study data for its blood drug; says it was well-tolerated for dosing periods up to and exceeding two years.
Our picks for this Newsletter is a Greek shipping line, something out of the ordinary for us, and another biotech, which is pretty much ordinary, both trade on NASDAQ.
DRY SHIPS, INC. (NASDAQ: DRYS) – $2.13. Twelve-month hi-low has been $6.44 – $1.75. Based in Athens, Greece, with about 570 employees, this dry-bulk carrier has 423.76 million shares outstanding, $708.36 million in total current assets, $8.68 billion in total assets ($7.5 billion are fixed assets), and $4.06 billion in total non-current liabilities, of which $3.92 billion is long-term debt. Institutional ownership is around 20%. Two analysts rate the stock a “strong buy” eight as a “buy”, four as a “hold” and one as a “sell”. www.dryships.com
Yes, we know that Dry Ships, Inc. has over 400 million shares outstanding and its long-term debt, at first glance, is something to choke on, but the book value of the company is around $9 a share. Also, much of the debt is in the form of convertible notes and other instruments.
Founded in 2004, and public for almost six years, Dry Ships owns and operates dry-bulk carriers and drilling rigs that operate worldwide. Its fleet principally carriers various dry-bulk commodities, including bulk item such as coal, iron ore, and grains; and minor bulk items, such as bauxite, phosphate, fertilizers, and steel products. Dry Ships owns a fleet of 45 dry-bulk carriers, including new buildings, comprising 11 Capesize, 27 Panamax, 2 Supermax, and 9 new buildings Very Large Ore Carriers (VLOC) with a combined dead weight tonnage of over 5.1 million tons; and 12 tankers (including new buildings) comprising 6 Suezmax and 6 Aframax, with a combined dead weight tonnage of over 1.6 million tons. Of particular interest is that most of the company’s ships are less than ten years old.
Through its majority-owned subsidiary, OceanRig UDW, Inc., Dry Ships owns and operates nine offshore ultra deepwater drilling units, consisting of two ultra deepwater semisubmersible drilling rigs and seven deepwater drillships, three of which remain to be delivered to Ocean Rig during 2013.
For FY2010, ending 12/31/10, revenue was $859.74 million with $188.32 million in net income. During the first nine months of the current FY, ending 9/30/11, revenue has been $749.48 million (most of this from drilling contracts) with $49.49 million in net losses.
Because the world economy has been slowing for the last year or so, shipping has remained in the doldrums with a 15% to 20% over-capacity by some estimates. However, Dry Ships may be able to make things up with its foray into offshore drilling. We like this. We also like the fact that the company has a relatively new fleet, a $9+ per share book value, and that ten analysts feel the stock is a “buy”
Our 24-month target for the stock is $3.75 to $4.00.
For more information, contact DRYS’ spokesman Nicolas Bornozis at 212-661-7566; dryships@capitallink.com
NUPATHE, INC. (NASDAQ: PATH) – $1.95. Twelve-month hi-low has been $9.74 – $1.90. Based in Conshohocken, PA, with about 25 employees, this biotech has 14.75 million shares outstanding, $30.6 million in total current assets, $38.14 million in total assets, and $20 million in total liabilities, of which $7.54 million is long-term debt. Institutional ownership is around 8%. Three analysts rate the stock a “strong buy” and two have it as a “hold”. www.nupathe.com
NuPathe, Inc. is another one of those small biotechs with what appears to be some nifty product technology and a pretty good balance sheet. And yes, the company is relatively new to the public market.
Founded in 2005 and public for just over a year, NuPathe bills itself as a specialty pharmaceutical company focusing on developing branded therapeutics for diseases of the central nervous system, including neurological and psychiatric disorders. The company’s advanced lead product candidate is Zeltrix, NP101, an active single-use transdermal sumatriptan patch that is used for treating migraine headaches. The company filed an NDA with the FDA earlier this year, but the agency had some questions and NuPathe feels that it has made considerable progress with addressing those concerns. The company now plans to resubmit the NDA in the first half of next year.
NuPathe has two other proprietary product candidates in preclinical development, which are NP201 for continuous symptomatic treatment of Parkinson’s disease and NP202 for the long-term treatment of schizophrenia and bipolar disorder.
Since NuPathe is a relatively new small biotech it has zilch revenues and some nasty losses, i.e., during the last quarter ending 9/30/11, revenues were nil while losses totaled $7.44 million.
Our thinking here is that the FDA will, at some point in 2012, grant the NDA for the migraine patch, which could really juice the stock.
Our 24-month target for the stock is $3.50 to $4.00.
For more information, call PATH at 484-567-0130.
Look for the January 5, 2012 Newsletter to be posted on 1/2 or 1/3.
Have a great Christmas season!
George