精华 苦辣酸甜难书尽，成败得失笑谈中

[lazycatcat]

DNDN and LVS tanked and APPY lost more than 1/2. Bloody, bloody, and bloody! These hurt like hell!

Sharp fall of DNDN is quite unexpected. I don't have any exposures but am keeping an eye on it. LVS seems to be pretty strong in current market condition.

It is a bit puzzling to see free fall of BAC, JPM, WFC etc. This doesn't seem to be in line with fundamental earning in Q2. However, market might be concerned with upcoming financial reforms, November capital request and Europe fall-out.

Personally, I don't think these are big concerns and there might be option related opportunities in July ...

 

[加京游子]

Sharp fall of DNDN is quite unexpected. I don't have any exposures but am keeping an eye on it. LVS seems to be pretty strong in current market condition.

It is a bit puzzling to see free fall of BAC, JPM, WFC etc. This doesn't seem to be in line with fundamental earning in Q2. However, market might be concerned with upcoming financial reforms, November capital request and Europe fall-out.

Personally, I don't think these are big concerns and there might be option related opportunities in July ...

I am not too much concerned about DNDN. This may sound funny but is indeed how I feel, although my equity tanked in it. Been in DNDN long enough to know that nothing surprises. A 20-point retracement from the peak in a month has taken a lot of people by a big surprise. It may still drift lower but I would have fully loaded today if not for the sold puts (I am fully loaded with the put shares though, 9 days left and I am assuming I am put the shares). It took BP a disastrous leak to drop 20 points. And DNDN dropped as much for no seemingly good reasons aside from market sentiments. That is how Mr. Market works. Very often, one simply cannot argue with it but to act in what one believes in.

What hurt badly today is APPY --- the PR was so vague. The results were what I was in for. If the reults were bad, I would abandon the sinking ship. But no results were released. So, my calls were dead and I managed to get out for 10 cents for my 2.5 calls and 5 cents for 5 calls but I did not buy back my sold 5 puts. I will be put the shares. I don't mind cutting loss but I need to know the reason. The facts were not known yet and I will hold those shares. This was indeed a big loss but I was fully prepared before I got in --- 7-8 or 1.5 pending on results (see my previous post).

Biotech is a space for strong stomach.

I am fine with LVS! The heavy May options expiration loss hurt a lot but I am nobbling back with baby steps. My concern is that I am not loaded enough when the big hit strikes.

I got out of BAC quite some time ago.

Fundamentals do not matter in these market environments but they are what I am in for.

Great buying opportunities ahead if one is equiped with dry powder and I have indeed hoarded some.

 

[lazycatcat]

Sometime during this year, credit loss from major banks shall come down quite significantly. In Q2, this trend could be more evident. Of course, it could also be in Q3. If financial reform passes in early July, this could be significant coupling with earning report by GS, JPM, BAC and C before July OE.

When money is dangling in front of market, it is irresistible. JPM at current level is interesting. I think the biggest concern is its exposure to derivatives and Europe. Latter shouldn't be an issue. Former is due to financial reform act. The most likely outcome is more regulation, transparency and capital requirement. The disruption to market is too big for the regulators to bear to forbid derivatives outright.

JPM's credit exposure in derivative is about $95 B. It is still within manageable range, provided Jamie Dimon doesn't have skeletons in the board, which I think is not likely.

Anyway, my idea for July OE option play if the big three can stay at current level till late June.

 

[lazycatcat]

June 26 is the target date for financial reform act. Two items that will impact bank profit:

1. Volcker rule to prevent banks from proprietary trading. This shall hit GS, BAC, JPM and C pretty significantly. Probably little impact on WFC.

2. Lincoln's rule on swap related derivatives. It seems she is not going to win primary today in Arkansas race. So this rule might be dropped. Not sure if swap trading is covered in Volcker rule or not. WFC's swap exposure is mainly from Wachovia. Shouldn't be a big issue for WFC but significant for JPM, BAC and C.

Not sure how GS will be impacted - whether it will convert back to investment bank etc or not ...

The book on GS "Partnership" is quite interesting in understanding the business ...

 

[加京游子]

June 26 is the target date for financial reform act. Two items that will impact bank profit:

1. Volcker rule to prevent banks from proprietary trading. This shall hit GS, BAC, JPM and C pretty significantly. Probably little impact on WFC.

2. Lincoln's rule on swap related derivatives. It seems she is not going to win primary today in Arkansas race. So this rule might be dropped. Not sure if swap trading is covered in Volcker rule or not. WFC's swap exposure is mainly from Wachovia. Shouldn't be a big issue for WFC but significant for JPM, BAC and C.

Not sure how GS will be impacted - whether it will convert back to investment bank etc or not ...

The book on GS "Partnership" is quite interesting in understanding the business ...

Cat: thanks a lot for sharing your deep DDs on the banks. Completely agree with your analysis regarding the impacts of reforms. WFC will be the least affected as trading is the least important. Derivatives exposure is too big to handle immediately. My concern with banks is not the fundamentals at the moment but the overall market conditions. I won't get back into banks until the reform provisions are in black and white. Somehow, my mind keeps flashing with DOW 9.5K.

Got hurt badly in APPY, a trade turns into an involuntary investment now.

I would advise you to get into DNDN if you intend to. I really think the retracement from 57.xx is way overdone but there are reasons --- CEO selling 70% of holdings, market turned sour, CNBC came out with an article saying that "Provenge's supply is bigger than demand" yesterday. When the damage was done (-10%), they came out with a correction, admiting it was a misprint mistake. Shit! CNBC never made mistakes --- it was a bash and buy scheme. The most trusted DNDN analyst, David Miller, sold and bashed. Rumours of only 6 patients treated spread. Worries about reimbursement are rampant. All these and others together contributed a retracement of 21 points in a month. But Greg Schiffman's presentation today put all of these rumours and concerns into rest for good --- all rollouts and rampups are going as planned, more than 1/2 of the authorized centres have registered patients for treatment, NJ plant is completed and waiting for the FDA inspection and approval (expected to be online early next year, given that the FDA very well knows that Provenge is supply constrained, I don't think the inspection and approval will take 7 months) --- some of the take aways I got from the presentation. I advise you to listen to it and make your move if you are on the sideline trying to time your entry. I think 36 is as low as DNDN gets.

My commitment is rather substantial already --- 300 2012 Jan 90 calls, -20 June 41 puts and -20 2011 Jan 50 puts (all badly under water) + my entire TFSA (165 shares and 15 2011 Jan 50 calls), which has lost more than 1/2 of its peak value just over the last month. I think I will be put the shares by OpEx. Once the shares are in my account, I will trade 1/2 for LEAPs. We may not see 3-digit pps this year but 2011 should be monstrous for DNDN. I want to be positioned to be a Dendreonnaire in about 18 months. DNDN won't be a get-rich-quick stock. Rather, it will require extreme patience and I truly believe patience will be handsomely rewarded! Due to lack of capital, I missed two great chances to get back what I lost in 2007. Not this time around!

Going forward, any short-term trading profits will be put into DNDN and LVS holdings. I don't plan to trade DNDN but a lot with LVS. Time LVS correctly with the right-strike calls and it takes only 2-3 days to get a double. I have consistently done that since Feb. with 200-400 calls a trade. I would have made more if I had traded both ways but I did not long any puts. It was my stupid greed with May calls that wiped out a huge chunk of my LVS profits --- I was up about 300% with 300 calls. Then the 1-day 2-point drop came. Instead of selling for still good profits, I doubled down and held too long --- expired. Together with BAC and MGM calls, May OpEx costed me about 100K. I was also put 2K shares + 1K HGSI. Seeing the market in red, I panicked out and lost another 10K. Now the big loss with APPY. May and so far in June have not been kind to me but it was my own executions. That is the way how it goes.

 

[加京游子]

Cat: don't trust what I write or think

I have been wrong so many times. But I do advise you to listen to Greg Schiffman's presentation today and make your own judgement --- listen to it very carefully and go over each and every slide very carefully (GS is the CFO)!

p.s. The correct valuation metric for biotech with earnings is PS not PE. The industry PS is 3-25. A paradigm-changing multi-blockbuster cancer drug deserves a conservative PS of at least 10 (US Provenge sales alone should make DNDN a 25B MCap company. And I happen to think the pipeline is worth of a lot of money down the road).

 

[lazycatcat]

Thanks for DNDN details. I will take a look at the presentation and conference call.

I didn't understand your positiveness with APPY. I went through details of its product and thought the threshold was too high. Not that I know anything but the odds didn't seem good (as stated a few posts ago).

Are you interested in BP and RIG ? At a very high-level look, I think BP stock might be overdone:

- Exxon spill was 250,000 barrels. At 15,000 barrel per day, BP leak would take 20 days to reach that scale. Since the leak started in April 20th, the amount of spill is over that limit by now.

- Exxon's cleaning cost is $2B and another $1B on settlement. It is still fighting $4.5B law suite now. The spill was back in 1989.

- BP has 18 B barrels of proven reserves. Since these are conventional oil, it costs about $10 per barrel for retrieval. Let's make it $20 per barrel and assume $40 per barrel long-term, net is $360 B. BP has 63 B barrel unproven resources.

At some point, RIG or BP should be a buy. The best trade would be to buy credit swap on BP's bond and buy BP shares at same time. Hope one day credit swap is available on exchange !

 

[nepean_01]

小心!

如果你看今天的盘面就不会现在买了。今天机构在大举不计成本地出货，两个原因:
一是股息基本肯定会取消，二是市场盛传BP会破产。我认为BP美国一定会破产!!!
它会把漏油的事先解决，然后将BP美国破产。小心吧。

 

[加京游子]

APPY, BP and DCTH

The reason why I was so upbeat about APPY was posted when I first got in. I did my hard DD and thought that they have overcome the huge site-to-site variability in the 600-people trial. There isn't much detail in the last PR but it seemed the current 800-people trial has exactly the same problem. The worst case scenario is that they will scrap this trial again and start the trial on the cassette version. Should that be the case, my position in APPY is dead money for quite some time (not to count the huge loss in my calls). Without knowing the details, I just don't think APPY is dead in the water yet. And I plan to throw some good money after bad to average down.

I told my friend that I would put BP when the leak news was first broken but I did not act immediately and then let it get away. I thought about it again when it rebounded to 39 but again failed to act. BP has been one of the prime oil companies for a long time. I also did a comparison between Exxom and BP --- the former leak was from a tanker but the latter from a well, i.e., the former had a limit of total to be leaked but the latter has no limit. Have no idea where BP will go but the easy money shorting/putting is gone. It may not be a bad idea to bet with a strangle for a few months out but I will not go in in one direction without protection if I do get in.

DCTH has dropped as much as DNDN and BP in %age terms in just the last 3 days, and for no apparent reason. It may still be a falling knife but the temptation was too hard to resist. So, I got in the common yesterday at the average of 9.1.

Apart from LVS, I may indeed go purely with biotech --- many good candidates in my mind, chiefly HGSI and AMLN. Depending on how OpEx settles, I also plan to aggressively add DNDN and DCTH. Just figured out with my broker yesterday how cash/margin is locked in with naked selling puts. Boy, oh, boy, that locks in a lot of buying room.

The big banks are indeed very attractive but they are too big for me to have a clear understanding and I can't pin down the catalysts. The best I can do is some speculation. But in biotech, I can exactly pin down the catalyst with exact timing. In the end, if I have to, I will ditch everything else but keep DNDN and LVS. I truly believe DNDN and LVS are both triples 18 months out and I don't see that in anything else. LEAPs are wonders should that scenario become reality. I act in what I believe in. We should see.

 

[加京游子]

DCTH: added as another of my biotech long keeper

Just went through the PHP results again (topline data, details will have to come in NEJM), ASCO presenation and Needham presentation. PHP is nothing shy of a cancer treatment revolution. Unlike Provenge which changes a paradigm and was heavily opposed by big pharmas, PHP is a delivery system that increases chemo up to 10x while reduces its toxicity. This should be welcomed and supported by big pharmas.

Glad I sold out at 15 upon the trial news. Even more glad that for whatever reasons (I suspect heavy shorting and naked shorting), Mr. Market gives me another chance to reload at 9.10. This may still drift lower and I plan to add more at phases. It will take a few months to file the NDA and possibly a year or so for the FDA action. While the long-term prospects are very bright, there will be plenty of trading opportunities along the path. I will try to trade it within the year to collect a bunch of shares for the FDA action firework. There is no date announced, so I will just stay with shares. I bought 2K yesterday and will add another 3K as my starting stake. Let's see how many shares I can own before the FDA action. When the action date is announced, I will get some calls. My DCTH play will be based on what I think I have learned from my DNDN experience.

Changed my plan regarding adding APPY. I will use that earmarked amount for DCTH.

If anything, I will label DCTH as my next DNDN and I expect the ride to be a lot easier and smoother than that with DNDN.

Just a reminder to myself: don't get distracted by many seemingly good opportunities!

 

[lazycatcat]

Thanks for mentioning DCTH. Is there any milestone date available ? The market cap is rather small and thus more room for future gains.

 

[lazycatcat]

如果你看今天的盘面就不会现在买了。今天机构在大举不计成本地出货，两个原因:
一是股息基本肯定会取消，二是市场盛传BP会破产。我认为BP美国一定会破产!!!
它会把漏油的事先解决，然后将BP美国破产。小心吧。

Thanks for the cautious note.

Dividend suspension and market rumours are not meaningful in BP. They could actually help.

Is $100 B (over time) enough to clean up this mess ? If yes, BP is a buy at some level around $20. If clean up is $50B, then BP is a buy at current level.

Of course, proper risk control is needed in playing BP. There is unreasonable price, there is only unreasonable ratio (reward versus risk).

 

[加京游子]

Thanks for mentioning DCTH. Is there any milestone date available ? The market cap is rather small and thus more room for future gains.

Here is a quote from a report, "The company initiated a rolling submission process for PHP in April, and expects to have everything filed by October. If the FDA fast-tracks the application, which is allowed for cancer treatments where patients have no other options, a decision could come as soon as April 2011.

In the meantime, Hobbs, who co-founded and ran AngioDynamics Inc. out of Queensbury for 20 years before leaving in 2009, said staffing at the Kingsbury production plant is up to 17 employees. Manufacturing at the present time is limited to devices for use in clinical trials."

Market cap is not a way to value a company, my friend. The talks of off-label use of PHP make my head spin and spin. And these talks are from the mouths of oncologists.

Provenge got approved exactly one year after data release. I expect the FDA's action more or less in that timeline.

Here is the link to the full report. This may explain the huge selloffs Monday to Wednesday.

http://poststar.com/news/local/article_81a410e0-742f-11df-91a5-001cc4c002e0.html

 

[nepean_01]

HGSI?

Jia, do you still hold HGSI? What is your outlook for the HGSI till the FDA's decision date? Thanks. I am holding some call on it.

 

[加京游子]

Jia, do you still hold HGSI? What is your outlook for the HGSI till the FDA's decision date? Thanks. I am holding some call on it.

I panicked out of HGSI at the very bottom as I have posted it, lost a few k's with it. I would have got back into it in the 23's if my buying power was not locked up in sold DNDN and APPY puts (I don't want to go into margin). I am very upbeat on HGSI long-term, that is post the FDA's decision but I believe there will be a powerful pre-approval anticipation runup (as the data are out so long by now and I believe the odds of being approved is very very high). The FDA action will definitely be a tradable event. This is a huge drug treating a very nasty disease. Any action will have to wait until June OpEx. But relatively, I like DCTH better as I see a number of mid-term catalysts (publication of the bottomline data in NEJM, completion of the rolling NDA application filing and the FDA's acceptance --- the co has a SPA with the FDA regarding the trial and the results exceed the SPA requirements, Asia partnerships). One area I need to do more DD is management. My knowledge about management so far is so limited that I feel ashamed to own the stock for the long term. But the data, the market potentials and the price are simply too hard to resist. I will learn more about management as days go by. Just hope DCTH doesn't have an extremely selfish and short-sighted CEO like DNDN's MG. My campaign to oust this SOB at the ASM failed and the SOB is still my CEO. It is a magic that a top-notch world-class management team works for, around and with this SOB.

For which month and at what strike are your HGSI calls? Again, it is a high beta stock. A few points either way can be a matter of days.