精华 苦辣酸甜难书尽，成败得失笑谈中

[加京游子]

Thanks a lot for all your hard work and sharing

Also for the suggestion on SYK. I will take a closer look when I can free my hand and let you know.

I could be wrong but I had a feeling that BIO may not be right for you simply because you have mentioned DNDN's current MCAP (valuation) and no revenue several times. You are 100% correct that DNDN has no revunes. Even assuming an FDA approval for Provenge (Learning from the devastating 2007 experience, I realize that when it comes to the FDA, nothing is written on the wall. The risk of non-approval is still there, however small that may be), precise estimates of annual sales are simply impossible, without knowing pricing. The co has given guidance of US $2.5B annual sales numerous times when all three facilities are online (by the end of 2012). Street estimates of US annual sales are also in that ball park, assuming equivalency of similar biologics made by Roche and Amgen. Let's take US annual sales of $2b for modelling sake. For fast growing drugs, a P/S multiple of 10 is not out of the question. I have even seen it as high as 20. Now, figuring in ROW sales (I don't think DNDN will go solo for the ROW markets. I firmly believe it will partner and take royalties). Taking rough estimates of these exercises, I see a 3-digit pps for DNDN by the end of 2012. Where you end up with an estimate of current pps really depends on how aggresively you discount all risks. I see a gross undervaluation as of today's price and that has everything to do with the fact that Provenge is yet to be approved.

I make all my decisions based on my own DD. I put a significant portion of my portfolio in DNDN and I have made a rule that 30% of profits from any trade goes to increase my stake in DNDN. My TFSA holds only DNDN shares and that is not for trading (Frequent trading with TFSA in non-Canada securities is simply not worth the commissions and related charges).

My friend, I was pretty right going puts with the selected issues I mentioned. Unfortunately, this was the first time I was practising this new strategy and did not have the conviction to hold through. I closed all my puts positions last Wed. and Thurs (WFC with a heavy loss and the rest with satisfying profits) and missed profits could be measured in the counting unit of k's. It was a pity that I was right but not rewarded accordingly due to my lack of convictions. But profits always take care of themselves while losses never. I pat myself on the back that I am adopting a new strategy that has profited in a small way. The year is still very young. For the short term, I think the market is over-sold, especially big banks. Thus, I will build calls positions come Monday. But over the medium term (6 months), I see the market in lower values. Apart from DNDN, I am only doing front-month options. I used to kick myself hard if I missed a good chance or being right yet not rewarded with profits. I am taking a much relaxed attitude now. Opportunities will present themselves day in and day out. The key is maintaining a working capital.

 

[lazycatcat]

Bio - event-driven

Thanks for sharing on DNDN. For bio companies, I am only comfortable at event-driven speculation using short-term options. Like the ones of DNDN and ARNA. In such operation, I could say lose $100 for a potential gain of $5,000.

I will appreciate your sharing of some of these events.

 

[lazycatcat]

DNDN versus WFC

DNDN could be over $100 per share in the next years as you mentioned. However, my feeling is that the degree of difficulty is also high.

As a comparison, I think WFC can also return $100 in next ten years including all dividends etc. The degree of difficulty is relatively low. The math is rather simple:

1. WFC has pre-tax and pre-provision earning of around $40 B per year.
2. Normal provision per year is around 1.5% of $800 B loans and thus is $12 B per year.
3. At tax rate of 30%, net profit is around $20 B per year and is equal to $4 per share.
4. Total return is $40 in ten years and the remaining value of WFC shares is another $40, assuming P/E of 10.

There could very well be major problems for WFC while DNDN enjoys a smooth ride. However, based on current valuation and assumptions, WFC is obviously not fully appreciated by the market while enthusiasm for DNDN is very high....

 

[加京游子]

DNDN could be over $100 per share in the next years as you mentioned. However, my feeling is that the degree of difficulty is also high.

As a comparison, I think WFC can also return $100 in next ten years including all dividends etc. The degree of difficulty is relatively low. The math is rather simple:

1. WFC has pre-tax and pre-provision earning of around $40 B per year.
2. Normal provision per year is around 1.5% of $800 B loans and thus is $12 B per year.
3. At tax rate of 30%, net profit is around $20 B per year and is equal to $4 per share.
4. Total return is $40 in ten years and the remaining value of WFC shares is another $40, assuming P/E of 10.

There could very well be major problems for WFC while DNDN enjoys a smooth ride. However, based on current valuation and assumptions, WFC is obviously not fully appreciated by the market while enthusiasm for DNDN is very high....

For DNDN, I am a determined long-term bull unless the FDA rejects Provenge again, which will surely bankrupt the company and very closely wipe me out. Shall that materialize, I will pretty much call quit on the market.

I am also bullish on big banks over the long term and will surely build long-term hold positions in BAC and WFC, which I see myself doing by 3Q/4Q this year. As of yesterday's close, I have some BAC and WFC calls, both of which are severely under water and I intend to add Monday to average down (against my usual operations). I will try my best to build my positions free via swing trades from both sides of the fence in the next 6-9 months. I will also closely watch C but won't make any move until such a time when the USA completely sells its stake. I expect C to go through an RS following the USA sale. JMP will surely be the leader into the foreseeable future but valuation will surely keep me out of it.

I also want to build a long-term hold position in LVS due to its Asia exposure and MGM for its gross under-valuation. Both are highly volatile and great for quick swing trades (good calls will yield good profits but at the same time, wrong calls will cost dearly and both can happen quickly).

Regarding ARNA, I will have a long position no later than March in anticipation of a partnership. My decision on a long-term position will depend on the FDA ruling, which won't come until the tail end of the year.

As for other bio driving events, I will share with you once I come across with them. One I am already aware is ELN's AAB-001, whose Phase III results are expected to be available close to the middle of the year and presented at ICAD in July. With the joint venture in place with JNJ, ELN only owns about 25% of AAB-001 but if it indeed works, 25% of a roughly 10B market potential is still huge for an $8 stock.

The gigantic loss I have suffered in the last three months of last year has greatly reduced my working capital and I can't be everywhere I want to be now. I am fully planning to swing trade in the next 6-9 months. My goals are to gradually build up my target long-term hold positions with house money.

The possibility of a double-dip recession should not be ruled out completely, IMO. In such a case, DOW going back down to 7-8K may become real. The pivotal point for me is 10K. Once violated, panic may kick in, shorts pile up, and free falls follow. I want to guard against this seemingly impossible scenario. Fine BIO issues are typically recession-proof.

 

[lazycatcat]

DNDN

I thought DNDN's drug was a done deal. When is FDA's decision due ?

I am thinking of a way to associate issues like DNDN - along the line of selling puts. It requires understanding of market expectation of DNDN and lack of news before expiry date. Same probably could be done for RMBS.

This will be an interesting new line in addition to fundamental based operations.

 

[加京游子]

I thought DNDN's drug was a done deal. When is FDA's decision due ?

I am thinking of a way to associate issues like DNDN - along the line of selling puts. It requires understanding of market expectation of DNDN and lack of news before expiry date. Same probably could be done for RMBS.

This will be an interesting new line in addition to fundamental based operations.

When it comes to the FDA, nothing is a done deal until the approval letter is issued. At the March 2007 FDA's own Expert Panel, the voting results were 17:0 for safety and 13:4 for afficacy. Yet, the corrupted FDA, bought by the Milken network of short sellers, in May issued an approvable letter. The company lost over $2B in Mcap one day. Personally, I was robbed off multi-million dollars from my broker account, which completely changed my life destroying my early-retirement and other dream.

I am taking an nearly all-in plunge again in DNDN, albeit with a much smaller stake. Let me stress again and again that the regulatory risk still exists for DNDN, leaving alone market risks. The PDUFA date is May 1. It goes without saying that FDA's expected decision means do or die for me. My market life nearly completely depends on it. In case of a rejection again, my broker account will be wiped out and I will surely kiss Wall Street goodbye for good.

I simply want to own calls outright and will switch the hold portion of 2011 LEAPs into 2012 LEAPs and the swing portion to May calls. After the ruling and in case of approval, I will swing the front-month options.

As for RMBS, Samsung settled and I expected Micron and Hynix to follow suit. But the timing is every outsider's guess. Consequently, I will let go given that my hands are tight at the moment. I will put it after all expected settlements.

How you want to play depends on your own circumstances, I don't advise one way or another. It is great we are sharing info here.

 

[加京游子]

Cat: the first Bio significant event that I am aware of is GNVC at the end of March

I played GNVC many years ago and it stayed on my watch list. It has rocketted up from around 0.75 about a couple of months ago triggered by a series of positive news. But all of these are noise compared to what is coming up at the end of March, the 2nd interm peek of TNFerate's pancreatic cancer Phase 3 trial (1st gene therapy). Due to its low pps, there is no options to play with. I am keeping an eye open on it.

 

[加京游子]

Cat: please resort to email should you continue to be interested in DD sharing

Weekends/early mornings are when most of my DD's are done. It just occurred to me that a public forum like this may not be the best vehicle to share DD. Starting the thread, I intended it as a record keeping effort. Then it grew and now to a point wherein you and I are constantly writing back and forth about our private thoughts. Let's resort to email should you continue to be interested in DD sharing.

 

[lazycatcat]

DNDN

I will keep an eye on DNDN May event. According to your opinion, what caused FDA to refuse DNDN application last time and what might disturb it this time ?

GNVC doesn't have option trading and thus large amount of capital is needed to play it. Thanks for sharing this company.

I like Sun Zhi Bing Fa's comments on how to achieve victory. It says victory can not be created (Shen bu ke wei) but can be deferred (er ke zhi). It also says if one is able to handle failure well, one won't be extinct. I think these words apply to investment and speculation pretty well.

 

[加京游子]

I will keep an eye on DNDN May event. According to your opinion, what caused FDA to refuse DNDN application last time and what might disturb it this time ?

GNVC doesn't have option trading and thus large amount of capital is needed to play it. Thanks for sharing this company.

I like Sun Zhi Bing Fa's comments on how to achieve victory. It says victory can not be created (Shen bu ke wei) but can be deferred (er ke zhi). It also says if one is able to handle failure well, one won't be extinct. I think these words apply to investment and speculation pretty well.

Cat: if you are interested in knowing why the FDA rejected DNDN's Provenge BLA back in May 2007 against its own Expert Panel recommendation, please refer to my earlier numerous posts and www.Deepcapture.com. What do I see that may cause the FDA to reject Provenge again this time around? 9902B's data have been announced last April and the entire world should have known about them by now. The one potential factor I see is manufacturing hiccup, which may cause some delay.

Enough sharing DD in this forum. I need to make moves to make or lose some serious money.

 

[加京游子]

How to play State of the Union Speech tomorrow night?

No matter how one cuts it and no matter what Obama says or doesn't say tomorrow night for the State of the Union Speech, markets will move significantly comes Thursday. This is a very difficult political event to position with. I am very afraid of this American Socialist opening his mouth ever again for any long positions. Given the market reactions to what he said last week, DOW is surely to violate 10K if he bashes banks again (the intension is for political gains only, nothing else), possibly in one session. But learning from what he did last week, he may refrain himself from being a stupido again. Really wish I could have his speech tomorrow before market closes. To call or not to call? To put or not to put? Hard, hard moves. Just think out loud after another bad day.

 

[lazycatcat]

Thanks for DNDN information. I will keep an eye on it in April.

The socialism schedule of Demo won't succeed in US. Moderate republicans shall be able to assert more power in the future. The hostility towards banks is very stupid and so is the fuss on executive pay. If you listen to Buffett's talk on CNBC a few days ago, you could get the feeling that Buffett wasn't very happy with current Demo schedule.

It is ridiculous trying to create jobs while going all out against businesses.

That said, I actually pretty like current environment. The biggest enemy in investing or speculation is high expectation. Expectation is surely pretty low and thus is good for market neutral type of plays.

I thought you were doing volatility plays instead of directional ones. One has to maintain the balance till sure signs emerge in this type of play....

 

[加京游子]

USA should have Bernanke as the president rather than Obama

Thanks for DNDN information. I will keep an eye on it in April.

The socialism schedule of Demo won't succeed in US. Moderate republicans shall be able to assert more power in the future. The hostility towards banks is very stupid and so is the fuss on executive pay. If you listen to Buffett's talk on CNBC a few days ago, you could get the feeling that Buffett wasn't very happy with current Demo schedule.

It is ridiculous trying to create jobs while going all out against businesses.

That said, I actually pretty like current environment. The biggest enemy in investing or speculation is high expectation. Expectation is surely pretty low and thus is good for market neutral type of plays.

I thought you were doing volatility plays instead of directional ones. One has to maintain the balance till sure signs emerge in this type of play....

This Obama SOB could be the destroyer of Corporate USA and by implications, the American Empire! He expectedly came out to harshly bash banks and big businesses after losing MA vote, a typical politically populist play (you made a wrong call following the vote whereas I was right to open my puts positions). Personally, I don't think his rhetorics will get anywhere. He himself knows very well deep down inside that his bank bashing is contradictory to his claimed job agenda but politics distates what he says. Unfortunately, markets in the short run are highly irrational and respond to political rhetorics more than anything else, especially in an overbought situation. It is pitiful that I exited all my puts positions just one day too early and also openend my calls positions one day too early too. The difference one day makes for an option player is between day and night. It is all water under the bridge now. Let's see what Obama has to say in about 1/2 hour. Hope he doesn't create another buying opportunity. Given the oversold market conditions, if he is not being stupid again tonight, I expect a strong rally tomorrow should jobless data be neutral. Then GDP figures should carry the market much higher Friday (I feel a good GDP report forthcoming). In case Obama creates another buying opportunity, I have reserved sufficent dry powder to forcefully add to existing calls positions and initiate new calls positions. At this or lower level, I am a bull in the short run. This is a chance for political plays combined with economic data. I will make my moves after confirmation.

For a laugh, your god (Buffett) organized fund raisers for Obama and he made it clearly that he regretted very much on his CNBC remarks. It is not hard at all to understand that the biggest living American capitalist can't simply be in bed with the biggest living American socialist.

It is my bad that I mistook the State of the Union address as at 7pm ET. The correct time is 9pm ET.

 

[lazycatcat]

I don't regard Buffett as God but I definitely have studied his experiences and thoughts. For someone that builds $100K to $150B in 50 years, you have to admit that he knows something.

People have substantial misunderstanding of Buffett and how to understand his words. In any case, it is not for me to clarify.

I think Obama just needs some experience in being president. His leadership is definitely needed to correct the direction US is going. However, some of his measures may overshoot and he needs to prioritize.

Good companies are not afraid of headwinds. They should shine then. I don't like strong bull market. It makes investment or speculation too difficult.

 

[lazycatcat]

Union Speech

Listening to union speech. Still attacked banks and wanted the 0.15% fee on bank's liabilities. Re-stressed Wall Street shouldn't be paid so much. Wanted to use $30 B paid by TARP to lend to small commercial banks. That is ridiculous !!!

In any case, if the bank stocks get hit tomorrow, I won't be unhappy. Holding down valuation of strong banks as long as possible is not a bad idea.

Strong banks are able to pass any fees to consumers....