Daily Archives: December 15, 2006

Asia Markers December 15, 2006 Bridgestone, China Netcom Up

Stocks:  (CAJ)(FUJ)(HMC)(NIPNY)(SNE)(TM)(NTT)(CHL)(CN)(PCW)(HBC)

Martkets in Asia were up.

The Nikkei rose .5% to 18,914. Bridgestone was up 2.9% to 2665. Canon was up .8% to 6700. Fuji Film was down .6% to 4890. Hitachi was up .6% to 721. Honda was up 1.2% to 4250. NEC was up 1.2% to 568. NTT was down .8% to 60000. Sharp was up 1.2% to 2080. Softbank was up .4% to 2535. Sony was up 1.6% to 6050. Toshiba was down .1% to 770. Toyota was up .1% to 7380

The Hang Seng was up 1% to 19,111. Cathay Pacific was up 1.3% to 19.22. China Mobile was down .2% to 62. China Netcom was up 5.2% to 19.16. HSBC was up .5% to 141.4.PCCW was down .4% to 4.8.

The KOSPI was up .3% to 1,422.

The Straits TImes was up .5% to 2,931.

The Shanghai Composite was up 1.1% to 2,274.

Posted on: December 15, 2006 – 5:22 am in International Markets

No Decisive Word on Encysive Pharmaceuticals

From BioHealth Investor

Things aren’t looking good. I wrote about Encysive Pharmaceuticals (ENCY) on Friday after their stock jumped on news they were restarting a Phase 2 clinical study on TCB3711. My sugestion then was this stock was still all about their response to a second approvable letter for Thelin, and adding to a short position on the price hike, while risky, might pay off.

Last night the FDA informed Encysive their response was incomplete. The stock dropped 7% to close just above $5.50 (20% off the high of $7 last Friday), putting the short position I suggested in the black.

I listened to Encysive CEO Bruce Given in the conference call ENCY hosted this morning and was not impressed. While initial press releases stated the problems were just in formatting, specifically that the FDA wanted some of the data in tables, Dr. Given backed off from being so definite and said the deficiencies were "for the most part just reformatting". As well, while initial reports suggested Encysive would refile within the week, Dr. Given also equivocated on this, saying he had to speak to the department involved.

It’s impossible to know for certain what this all means. What can be know is that any decision on whether the FDA accepts the resubmission will likely be pushed off until at least January or February. While the CEO didn’t say "stay the course" at any point, his answers to questions seemed straight out of Donald Rumsfeld’s playbook. Maybe I’m too suspicious, but I think there’s more to the story than is being told: perhaps an "unknown unknown". So, while this remains highly speculative, and is based purely on intuition and in no way on science or fact, I continue to think this will go down further.

http://www.biohealthinvestor.com/

Posted on: December 15, 2006 – 1:33 am in Biotech

Thursday’s Top Biotech and Medical Stocks

From BioHealth Investor

Biotechnology

SHEFFIELD PHARMACTLS [SFPH.OB] +34.33%
IMMTECH PHARM INC [IMM] +19.09%
CYTORI THERAPEUTICS [CYTX] +9.96%
VERNALIS PLC ADR [VNLS] +9.09%
EMERGENT BIOSOLUTION [EBS] +5.94%

Diagnostic Substances

EPIX PHARMACEUTICALS [EPIX] +7.11%
SYNOVICS PHARMACEUTL [SYVC.OB] +6.25%
MONOGRAM BIOSCIENCES [MGRM] +2.96%
ORCHID CELLMARK INC [ORCH] +2.42%
EZ EM INC [EZEM] +2.39%

Drug Delivery

DELCATH SYSTEMS INC [DCTH] +21.78%
GENEREX BIOTECH CORP [GNBT] +8.00%
QUIGLEY CORP THE [QGLY] +5.83%
IOMED INC [IOX] +3.43%
BIOPROGRESS PLC [BPRG] +1.14%

Drug Manufacturers

ALEXZA PHARMACEUTICA [ALXA] +25.38%
AP PHARMA INC [APPA] +8.93%
INYX INC [IYXI.OB] +5.24%
CARDIOME PHARMA NEW [CRME] +3.93%
LIGAND PHARM CMN STK [LGND] +3.84%

Medical Appliances & Equipment

SPECTRASCIENCE NEW [SCIE.OB] +10.00%
SIGNALIFE INC [SGN] +9.24%
ATS MEDICAL INC [ATSI] +8.70%
BSD MEDICAL CORP [BSM] +8.24%
STEREOTAXIS, INC. [STXS] +6.31%

Medical Instruments & Supplies

VYTERIS HOLDINGS NV [VYHN.OB] +8.51%
PROTHERICS PLC [PTIL] +7.76%
CPC OF AMERICA INC [CPCF.OB] +7.22%
LEMAITRE VASCULAR [LMAT] +5.82%
THORATEC CORP [THOR] +3.83%

Medical Laboratories & Research

BIO-REFERENCE LAB [BRLI] +4.66%
BIO-IMAGING TECH [BITI] +1.56%
PSYCHEMEDICS NEW [PMD] +0.89%
NATL DENTEX CP [NADX] +0.79%
LABORATORY CORP NEW [LH] +0.14%

http://www.biohealthinvestor.com/

Posted on: December 15, 2006 – 1:32 am in Biotech

GoAmerica Jumps 7%, Volume Spikes with No News!

From Volume Spike Investor

Shares of GoAmerica Inc(GOAM) gained more than 7% on Thursday as volume spike 10 times the 3-month average daily volume.

There were no significant news releases or other significant events that could be detected, although the stock has been on a tremendous run over the last week or so.

GoAmerica provides various accessible communications services to people who are deaf, hard of hearing, and/or speech impaired primarily in the United States.

The company is very tiny, having a market cap of only $21 million. It only holds about $3.5 million in cash but carries no longterm debt. The company has not made a profit over the last few years.

Shares of GoAmerica closed at $9.16, after making a new 52-week high during the day.

GoAmerica has made VSI’s Watch List.

http://www.vsinvestor.com/

Posted on: December 15, 2006 – 1:30 am in Small Cap Stocks

Fund Focus #2 – Alternative Investment Strategies Ltd

From World Alpha

Just when you thought hedge funds were becoming mainstream, the government raises the bar and places them out of reach for the vast majority of Americans. The SEC voted unanimously to propose raising the minimum financial requirements for entry into hedge funds to $2.5 million in net worth, excluding primary residence. Under current rules, an individual must have at least $1 million in net worth(including residence) or annual income of $200,000 to qualify. The proposal will be open for public comment over the next two months before a final policy is adopted.

Likely, this ruling was in part influenced by the blowup at Amaranth. This rule would place hedge funds out of the reach of even more investors. However, as readers of this blog understand, there are plenty of great opportunities trading on the exchanges of the world that do not require the net worth requirements listed above.

We consider the fund below to be a great option.

Alternative Investment Strategies Ltd
Listed: London
Assets in Fund: ~$240M
http://www.aisinvest.com/
Current Share Price: $137
AvgVolume Last 50 Days: ~300,000
UK: AIS

AIS was initially listed on the London Stock Exchange in 1996, and is managed by International Asset Management (IAM). (IAM has been in existence since 1989, but was acquired by ABN Amro Asset Management in 2006). The management fee is a standard 1% of assets, and 10% performance fee of new gains.

AIS invests in between 20 and 40 funds – with a bias to long/short funds – and no single fund representing more than 10% of the gross assets of AIS at the time of investment. Some of the top names in the portfolio include Eminence, Karsch, and Renaissance Equities Fund.

Performance since 1996:

Equities = MSCI World
Bonds = Citi World Govt. Bond Index

The fund has not had a down year since inception in 1996. Returns have averaged ~10% with a maximum drawdown of around 10%.

http://worldalpha.blogspot.com/

Posted on: December 15, 2006 – 1:29 am in Technical Analysis

Targeting Market Winners for 2007

By Chad Brand of Peridot Capitalist

I’ve been spending time on Peridot’s 2007 Select List lately, hence my blogging frequency has slowed a bit. At any rate, my strategy for 2007 is going to be a bit different than last year. With the market having done extraordinarily well since August or so, my tendency to take a very contrarian approach will be even more apparent than usual as we head into early next year.

I forget the exact number of days, but it has been a very long time since we have had a 10% correction. I’d be surprised if one didn’t come next year. After we get a sell-off, and therefore digest these outsized gains we’ve seen, I’ll likely become more aggressive. Until then, my investment selections (as readers will see when the 2007 Select List is issued during the first week of January) will focus on large caps that have lagged the market in 2006, as well as smaller cap growth stocks that should continue to do well regardless of the domestic economic environment in 2007 (I’m not going to try and predict when, if at all, a recession will hit, as it’s anyone’s guess).

Despite the double digit gain in the S&P 500 so far this year, my research recently has uncovered many large cap growth companies that are trading at market multiples. Earnings growth for these firms should be above-average, but for some reason their P/E multiples are not. The common debate among Wall Street strategists right now, as they try to gauge the market’s overall direction in 2007, seems to revolve around whether or not the S&P 500 multiple should remain around 15 or 16, or perhaps rise to the 17-18 area. I’m not really comfortable forecasting P/E expansion in 2007, but for companies that are set to grow earnings per share at 12 to 15 percent annually for the rest of the decade, there is no doubt in my mind that a 15 or 16 P/E is too conservative. So, while I believe market gains overall in 2007 will be below 2006 levels, there are still values to be had.

Stay tuned for more details, both in the upcoming second annual Select List, as well as future blog postings.

http://www.peridotcapitalist.com/

Posted on: December 15, 2006 – 1:24 am in Technical Analysis

Analyzing Procter & Gamble (PG)

By Yaser Anwar, CSC of Equity Investment Ideas

  • P&G maintained FY10 targets for 5-7% sales growth, operating margin expanded to 24% vs 19.4 in ‘06 and EPS growth of around 10%. The sales and operating margin goals suggest EPS growth of 13%-15%.
  • Gillette integration should produce upper end of $1.0-$1.2 billion in cost synergies. In the last six months PG has increased Gillette’s distribution by 50% in China with the placement of its products in 70K new stores. Increased Duracell’s penetration in Mexico to 90% from 55%.
  • Fusion is growing Gillette’s share in Europe and Japan; the Phantom and Venus Breeze are soon to ship. P&G reached 1 bn new consumers between 01 and 06, and plans to reach 1 bn more by ‘10.
  • PG’s competitive strengths are a diverse portfolio of businesses, scale, strong brands, and a strong focus on product innovation. Combined with geographic diversity, category diversity provides PG with a consistent revenue stream. With $68 billion in sales, PG has the benefit of scale, which provides greater sales opportunities and cost savings compared to its peers.
  • P&G invests over $200 million annually in consumer understanding and interviews 4 million consumers a year.
  • These core strengths have created examples of what I think P&G should continue to produce in the future. For example, in skin care, the Olay sub brands have been introduced with premium pricing and minimal cannibalization.
  • Total Effects was targeted to women who wanted to repair skin damage, Olay Regenerist was targeted to women who take a regimented approach to skin care and the new Olay Definity is target to women who also take a regimented approach but who are also concerned about the tone and texture of their skin.
  • PG’s debt increased by 56.6% to $38.10 billion at the end of 06, as a result, d/e ratio improved substantially from 1.39 at the end of 05 to 0.61 at the end of 06.

    According to Goldman Sachs

  • The stock is currently trading at a 36% premium to the market on FY07E – versus five and ten year averages of a 21% and 14% premium, respectively, and the HHPC large cap group at a 28% premium. The rich valuation is the key reason we are not more constructive on the shares.
  • Nonetheless, the fundamental story is compelling and we believe valuation is sustainable for now given the healthy sales and volume trends as well as the macro backdrop of slowing GDP growth which is helping staples in general.
  • Our 12-month price target, derived using a blended PE and DCF analysis, is $68, implying 7% potential upside.

http://www.equityinvestmentideas.blogspot.com/

Posted on: December 15, 2006 – 1:21 am in Consumer Goods

Why the Chipmakers Are Down for ‘07

By William Trent, CFA of Stock Market Beat

It isn’t quite the same as having a cover story, but we’ll take it. Business Week tells us Why the Chipmakers Are Down for ‘07:

Semiconductor companies may be looking forward to a boom year in 2008, but first they’ll need to struggle through 2007—which is shaping up as anything but great.The beginning of January typically signals a seasonal slowdown in demand for chips used in PCs, digital cameras, wireless phones, and other popular consumer-electronics gadgets. And it usually takes two quarters for that demand to heat up again in anticipation of another tech-crazy holiday season.

We’ve been harping on this theme for months. The remaining question is how far ahead the market will look as the fundamentals (sales and margins) continue to deteriorate. The fact that mainstream media has taken notice may be another signal that it is (at least mostly) played out.

The author may hold a position in the securities discussed. The author’s current holdings are as follows: Long: FedEx (FDX) put options; Intuit (INTU) put options; Nasdaq 100 (QQQQ) put options; Bookham (BKHM; Ballard Power (BLDP); Syntax Brillian (BRLC); CMGI (CMGI); Genentech (DNA); Ion Media Networks (ION); Lion’s Gate (LGF); Three Five Systems (TFS); Adobe Systems (ADBE) call options; IShares Japan (EWJ); StreetTracks Gold (GLD); Starbucks (SBUX); U.S. Oil Fund (USO); Plantronics (PLT) call options; Short: Ceradyne (CRDN) put options; Lion’s Gate (LGF) call options; Dell (DELL) put options; Plantronics (PLT) put options

http://stockmarketbeat.com/blog1/

Posted on: December 15, 2006 – 1:20 am in Semiconductor

Sharp: “We’re not crooks. We’re inept.”

By William Trent, CFA of Stock Market Beat

We recently noted that the price-fixing investigation of LCD makers seemed a little tough to prove, given that the industry pricing model still looks awfully broken. Now it seems that the defendants are picking up on our alibi suggestion. According to the Times of Oman:

“Honestly, we are surprised at the investigation, as we have been doing our business openly and squarely,” said Sharp spokeswoman Miyuki Nakayama.“It’s unthinkable to us that cartel activity took place given the fact that prices of LCDs are dropping sharply in the market,” she added.

You tell ‘em!

The author may hold a position in the securities discussed. The author’s current holdings are as follows: Long: FedEx (FDX) put options; Intuit (INTU) put options; Nasdaq 100 (QQQQ) put options; Bookham (BKHM; Ballard Power (BLDP); Syntax Brillian (BRLC); CMGI (CMGI); Genentech (DNA); Ion Media Networks (ION); Lion’s Gate (LGF); Three Five Systems (TFS); Adobe Systems (ADBE) call options; IShares Japan (EWJ); StreetTracks Gold (GLD); Starbucks (SBUX); U.S. Oil Fund (USO); Plantronics (PLT) call options; Short: Ceradyne (CRDN) put options; Lion’s Gate (LGF) call options; Dell (DELL) put options; Plantronics (PLT) put options

http://stockmarketbeat.com/blog1/

Posted on: December 15, 2006 – 1:17 am in Consumer Electronics

Lattice Semiconductor Latest to Miss

By William Trent, CFA of Stock Market Beat

When Texas Instruments missed their earnings target we noted they were the latest in a string of semiconductor manufacturers serving the wireless food chain to miss. We also offered up a list of other potential candidates for a comeuppance, on the basis of serving wireless end markets and having a high P/E multiple.

Lattice Semiconductor is the latest to fulfill the prophesy.

Lattice Semiconductor (LSCC) today announced its business update for the fourth quarter of 2006.The updated guidance is as follows:

– The Company now expects fourth quarter revenue to be 2% – 4% lower than the third quarter of 2006 due to weaker than anticipated turns business in the fourth quarter, particularly from the Company’s major communications customers. This is a revision of previous guidance of 0% to up 4% sequentially.

– Total operating expenses are now expected to be in the range of $35 -$36 million, including an estimated $1.1 million of stock-based compensation. This is a revision of previous guidance of $36 million.

While Lattice didn’t make our list of names to watch out for, it certainly fit the criteria.

The author may hold a position in the securities discussed. The author’s current holdings are as follows: Long: FedEx (FDX) put options; Intuit (INTU) put options; Nasdaq 100 (QQQQ) put options; Bookham (BKHM; Ballard Power (BLDP); Syntax Brillian (BRLC); CMGI (CMGI); Genentech (DNA); Ion Media Networks (ION); Lion’s Gate (LGF); Three Five Systems (TFS); Adobe Systems (ADBE) call options; IShares Japan (EWJ); StreetTracks Gold (GLD); Starbucks (SBUX); U.S. Oil Fund (USO); Plantronics (PLT) call options; Short: Ceradyne (CRDN) put options; Lion’s Gate (LGF) call options; Dell (DELL) put options; Plantronics (PLT) put options

http://stockmarketbeat.com/blog1/

Posted on: December 15, 2006 – 1:16 am in Semiconductor