SubscribeGood News for Dendreon, Bad News for Prostate Cancer
January 15, 2008
These days all eyes are on the state of the economy, not to mention the obsession with the financial sector. Maybe today is the day when we try to think about some of the other pressing matters that are important. Take as an example the good news announced today for Dendreon NASDAQ: (DNDN).
For months, there has been a monstrous backlash over the FDA’s approval letter that was… not approved. That was a big blow to the stock back in May, 2007. Since then, there has been an ongoing battle which was recently taken to the courts for further exploration. The assertion/scuttlebutt is that the FDA did not vote for reasons related to the drug. Rather, it is one of competition and greed. Whatever the outcome will be, today’s news brings those with prostate cancer, one more glint of hope that they will be able to gain access to what has been tagged as a “miracle drug.”
If nothing else, maybe that hope will be only a plane ride away as Europe has granted a patent to their lead product candidate, Provenge.
Dendreon Receives European Patent Covering PROVENGE(R) and Company’s ACI Platform Technology
Dendreon Corporation DNDN today announced that the company has been granted a broad European patent covering the company’s lead product candidate PROVENGE(R) (sipuleucel-T), the Company’s investigational active cellular immunotherapy for the treatment of advanced prostate cancer. European patent No. 0 870 022 B1 covers the composition of matter of PROVENGE as well as the company’s other active cellular immunotherapy (ACI) product candidates, such as NEUVENGE(TM) (lapuleucel-T), which utilize Dendreon’s Antigen Delivery Cassette(TM) technology. The patent also covers methods of activating antigen presenting cells in vitro with certain fusion proteins developed by Dendreon, including the fusion protein that is used in PROVENGE.
The stock has been flat-lined since the FDA postponed their approval in May. Even as the company provides optimistic results and is fighting hard for their cause, it is tough to fight City Hall. Perhaps now the FDA will take notice and Read more
Out of the Credit Mess in 1-2-3: Blame, Blame, Blame
January 14, 2008
This week appeared an interesting article from the Wall Street Journal that is just one in a broad series looking to once again cast blame for the economic mess we are now experiencing. The author sites sources that explain how the mortgage brokers (among others) are the new villains in the ongoing credit market chaos. Unfortunately, that is only partly true. It seems that the brokers/scapegoats have been tagged as the ones that are originating mortgages with a high level of default. While that may have occurred, please forgive me, but who ultimately sets the approval standards for those loans?
The blame game continues and until someone stops the madness and bellies up with a plan that makes sense, we are going to continue down a path that leads to financial ruin. It is the same-ole’ political battle that now has Bank of America playing the knight in dull, but shining amour. They stepped in with a helping hand in August and now they are left with the responsibility of cleaning up the rest of the mess.
On this week’s Meet The Press, Senator Clinton proposed a plan to freeze mortgage increases for 
the next five years. In the interview with Tim Russert, she said, “…I want to freeze interest rates for five years, and I want to have a $30 billion package that will go in and try to stabilize the housing market and stabilize communities that are going to be affected by that.” To that, Mr Russert asked, “But, Senator, many people opted for those cheaper mortgages. They could’ve had a fixed mortgage at a higher rate, but they opted for a cheaper one. Should they not bear some responsibility?” Then with a gentle motion and a touch of pixie dust, Senator Clinton solved the entire problem with this exceptional plan; “…I think all of us should. But I’d say three things about that. The bankers, the mortgage lenders, the brokers, all bear a lot of the responsibility, because many of the practices that were followed were just downright predatory and fraudulent. There is no doubt about that. I started talking about this last March. A lot of people got into subprime loans who frankly could’ve been in a conventional fixed-rate loan. They were basically told that this was a better opportunity for them. Should they take responsibility? Yes, but look at what will happen if we continue this cascade of foreclosures. Housing values are down. They’re down 6 percent. That’s over $1.3 trillion in housing values in the last year. So everybody bears some responsibility. I went to Wall Street last month to tell Wall Street they had to be part of the solution because they sure had been part of the problem.”
It seems that the politicians and the lack of any meaningful oversight had nothing to do with it. It is unbelievable how much Read more
Bank of America Bluffing or Holding the Nuts?
January 11, 2008
In Texas Hold ‘em Poker, the bluff is the definitive strategy that separates bracelet winners from ordinary card players. Today, there seemed to be a bit of card playing going on in a winner-take-all scenario down at the Curb. Suspect as it seems, I wonder if this is an amazing bluff or does Bank of America hold the unbeatable, unbreakable hand also known as “the nuts”?
- Poker or Investing.. What is the Difference? -
Back in August, I speculated (Last Man Standing) that Bank of America (BAC) would become the logical suitor if Countywide’s (CFC) solvency problems continued. The idea that was presented was simple: If Mozilo took the $2 billion hand-out infusion, he would have to soften his attitude towards a merger since this would be one of the only ways to keep his beloved company intact.
The article concluded with the thought that, “Either way, Bank of America will surely be one of the last ones standing. The wild card will be if they do it with, or without, Countrywide by their side. Even though Countrywide CEO Mozilo currently denies any merger talks, he will surely warm up to the idea if the sub-prime mess worsens and his company continues to suffer.”
Now, after four tortuous months for the industry, Bank of America may be realizing that they may of been slightly premature with their $2 billion gift. Since August, with news circling along side of the vultures, CFC has been in a free-fall due to fundamentals and panic selling. The big problem for BAC has been that their money is evaporating faster than ice in the Gobi. Even thought the original deal calls for CFC to sell BAC 7.25% preferred shares that could be converted into common stocks at a price of $18.
Bank of America in talks to buy Countrywide: sources: Reuters Business News: CFC - MSN Money
Looking back, the only thing that may have been keeping up down with the performance of CFC shares is CFC-A preferred shares. As the potential for a bankruptcy squeeze mounted, preferred shareholders were bailing out at any price. Here is where the plot thickens….
Fast Forward
It will come as no surprise when in a few days, after the excitement from the stunning rumorannouncement rumor dims, Bank of America denies any additional progress towards an acquisition. Mozilo will continue his general denial and continue to look for hope that he can do this without any physical intrusion or merger. Sure he will be glad to take your money and issue a few more shares of a convertible preferred. Of course he will also deny any wrong doing on his or management’s part. (Did you catch the recent news investigations into about oversight issues and improper practices?) If this is a poker game and Mozilo is one of cards from the deck, he would surely be tagged as the “Suicide King” by the way he runs his company. into the ground.
Reality Check
It is nothing short of dubious that on the day that Bernanke is scheduled to speak on the state of the economy along with the 100% probability built-in for a rate cut approaching 50bps that a well timed rumor/announcement appears, vaulting the shares of CFC. What is even more interesting is the fact that the day before, the stock was halted on concerns over the news of another investigation. Top it off with a troubling announcement by Goldman Sachs that they believe that recession is imminent and investors were set-up for Read more
The Sharks are feeding on Crocs
November 6, 2007
What am I missing? Wasn’t it was only a few months ago that Crocs was the golden child and was going to be the next Shoe-Google. Back then, I was the “stupid one” who had no idea what he was talking about, as once again I was told over and over that this time was different. It was only a few months ago that I warned about the over-valuation of the stock and that $40 was going to be a price to watch for if the stock did not meet investor’s expectations. Today, I write this trying to find answers, not rubbing salt in an open wound.
For the past 2 years or so, the Crocs bandwagon had many well-heeled fanatics buying shares as they were hopeful of a retirement based on the a fanciful valuation of their rubber-shoe empire. Along with that, it seems that the anti-bacterial component along with slipper-like comfort, had most looking the other way from the horrific fashion statement which the bold colors represented from the over-sized hole-ridden footwear. Add that most analysts had Crox at a BUY (or better) and several well known writers/bloggers were continually defending the company at all times. It is no wonder that most investors were in continual BUY mode.
The problem is this: If only a month ago many investors owned shares with the belief that there will be a steady growth of earnings moving forward; why did the stock take such a tremendous hit after posting, albeit disappointing, yet somewhat reasonable solid results? It seems that once again, emotions are the crux of the Crox.
Look at the fundamentals and it is exceedingly hard to comprehend how the stock is trading below the level it was when the essentially all of the information is similar to what was published in May 2007. Fundamentally, not much has changed except for the fact that growth is not expanding at the rate it had been for the past several quarters. Now, unless there is more that meets the eye with the latest announcement of earnings and projections, there is much more panic than logic involved in this sell-off - But you already know that. It is a well known fact that EPS growth slows once a company moves towards maturity. Look at Dell, Microsoft or even Merck. It is not simply the EPS growth percentage, it is also the ratios that are of importance here.
The truth is that Crocs has been the favorite of the “emotional trader”, those that are playing the home-game. The reason for the past run up being so strong was based on strong emotional ties to a stock because of love of past growth. These are the same investors who are now running for the hills – simply selling at any price because they are apparently holding low-cost-basis positions that they do not want to lose on. There is no logical reason for this massive sell-off. Really…
But what does logic have to do with this stock anyway? One more question: Where are all of the die-hard writers now? You know, the ones that were screaming to buy-buy-buy! Why are they not here now, helping you with the situation when the decisions are much tougher. Frankly, running away and pretending the stock did not get cut in half will not provide comfort or direction. So, here is a life-ring: Hold on for the bounce. It is coming and will be strong.
Just to be clear: We sold/shorted at the peaks, now we are buyers in the valleys. Use logic here and profit should follow.
Horowitz & Company clients may hold LONG and/or SHORT positions in CROX.
R U the Next Peter Lynch? (Contest)
October 15, 2007
R U the Next Peter Lynch? (Contest)
Peter Lynch was a master at finding stocks. We are looking for great new ideas for investing. Maybe you see an opportunity in a great new widget because you have watched all your friends buying it. Or maybe you have heard about a new car that will revolutionize transportation.
During the next 4 weeks, call in and record your pitch… 1-877-623-8473. Start with your name and email address so we can contact you if you are one of the winners for the week. Then give us your best pitch with all the frills in one minute or less. At the end of the week, we will open it up to votes and the “pitch” with the most votes wins!
Sample “Pitch”
Weekly: $50 AMEX Gift-card and a copy of book, The Disciplined Investor.
Grand Prize: (Top Weekly(s) will be voted on for Grand Prize) a $250 AMEX Gift-card, a TDI AudioBook, a Free Day-Trading Intro Class from CyberTrading University ($295), a Nokia N95 UNLOCKED Phone ($595) and a Copy of Harry Dent’s Latest Book.
Rules: Voting is open to all but we will accept only one vote per person. Each week, the top 3 entries picked will be presented on this site and voting will be open for 7 days. Winners will be announced on The Disciplined Investor Podcast and via the web. One entry per idea please, but you are able to submit unlimited ideas. No suggestions/recommendations or ideas presented by contestants are to be construed as buy or sell recommendations of Andrew Horowitz and/or Horowitz & Company. Please, play fair.
Links
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