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Hello Readers,
Since the last Newsletter, we closed seven positions; four for gains and three for losses.
ACADIA PHARMACEUTICALS (11/20/08). Closed position 5/4/09 at $2.70 for a 87% GAIN.
INCREDIMAIL (2/20/08). Closed position 5/4/09 at $4.90 for a 53% GAIN.
O2MICRO (3/20/09). Closed position 5/1/09 at $4.42 for a 58% GAIN.
NETWORK ENGINES (6/5/04). Closed position 5/1/09 at 71 cents for a 77% LOSS.
TMNG GLOBAL (4/20/04). Closed position 5/1/09 at 38 cents for a 89% LOSS.
OPNEXT (3/5/09). Closed position 4/30/09 at $2.54 for a 50% GAIN.
REPLIDYNE (4/5/08). Closed position 4/30/09 at 66 cents for a 51% LOSS.
Acadia Pharma had sunk to a dollar and then pulled a Lazarus on news that it entered into a pact with Biovail to develop its Parkinson’s drug. Great revenue and earnings news sent IncrediMail jumping, which is what stocks are suppose to do on this sort of event, but, in this market, it has been a rarity. As we said in the last Newsletter, O2Micro had hit our 50%-plus target and that we were going to close it; the stock rocketed on pretty good earnings news. We have no clue as to what propelled Opnext to hit 50%, but we’ll take it. We, of course, closed Replidyne, since its merger was finalized a few months ago. And yes, we finally closed Network Engines and TNMG Global, our two oldest positions, for losses.
And so, the markets have kept going up, more so on perception than because of reality, thanks mostly to the Fed keeping interest rates artificially low; although there are signs that the markets may be leveling off. This, of course, has led investors into a buying panic on stocks, which they perceive as potentially having better returns than a 2% bank CD. The gist of the problem, as we have alluded over the last six to eight months, is that the government is more focused on restoring financial confidence than it is on fixing the financial system. What happened to all of the toxic assets that were such a huge concern just six weeks ago? They are still there and growing, hourly, as are credit card debts and commercial real estate defaults. So, once again, we warn you to exercise extreme caution.