精华 苦辣酸甜难书尽，成败得失笑谈中

[加京游子]

DCTH: a very dis-spiriting venture

Off more than 50% of the high in a matter of a couple of weeks. Way oversold, I would day, but the market can remain irrational longer than a trader can say solvent. In any event, a bottom has to be reached somewhere. I simply have no idea what that is. But a decision has to be made. I have decided that I will max out my position if the pps comes down to 7 (GTC buy order in).

This is not only one device nor one drug, it is a platform to treat cancers. And the trial results prove it works. I strongly believe in the science and its long-term prospects. Buying DNDN sub-3 and holding through the 5, 10, 20, 30, 40, 50 and missing UAUA from the low 3's have taught me a valuable lesson: conviction based on hard DD should not change by account close value on a daily basis. Emotions can run high as a significant position values less and less day after day after day but that is the nature of the beast --- biotech investing/speculating!

 

[加京游子]

MBS grand opening: even the Chinese media report about it

http://news.wenxuecity.com/messages/201006/news-gb2312-1111198.html

I am very disappointed that LVS retreated by a point rather than advancing by a couple of points today!

 

[加京游子]

Russell rebalance yesterday evening

If you are watching AH trading, you will see a ton of volume as long as the stock belongs to Russell 3K (especially those joining). This is due to the index rebalancing.

VHC: the record day is July 1 and xdiv day is Monday (the last day of ownership for the special dividend, 3 days to settle). The pps will likely drop by an amount close to the dividend (0.5) Tuesday but owners from Tuesday on won't get the dividend. This is a keeper for the next few years (for the licensing of the patents as well as likely buyout).

 

[加京游子]

DCTH: one of the most shorted stocks.

The drop from the high of 16.5 to Thursday's 7.5 in a matter of a couple of weeks was accomplished by short selling (legal and naked). As a result, this is one of the most shorted stocks.

Since my re-entry at 9, it had only 1 green day (over 10% right after my buy and I chased to add at 10.5) until yesterday. I thought the momentum would push it to 7 and hence missed the addition.

With such a low float and this much shorted, extreme volatility will be the rule rather than an exception. If and when a catalyst is triggered (and there should be plenty in the mid term), it will witness a mother of all short squeezes.

I have done my DD on the trial results and firmly believe in the science. Should have maxed out my line of position Thursday at 7.5 but keeping some dry powder is always a good thing. Have no idea where it will go short term. But in the end, I am extremely confident that a sizable investment will ultimately pay out handsomely. My re-entry was intended as an investment rather than a trade and it will be treated as such. This is a post-data entry, very different from my re-entry back to DNDN below 3 last year (pre-data).

Reward is always closely correlated with risk. This is not a stock for those with a low appetite for risks. It also requires hard work, conviction and paintaking patience!

 

[加京游子]

CAT: what is your take on the financial reform?

Now that agreements have been reached betweent the two houses and market reactions to the banking sector seemed positive yesterday, what is your take? You know a lot better than I do about banks and I would like to hear what you have to say. My short-term options plays with BAC had burnt me badly since June last year (March to May were simply too good to be true) and I will stay away from that. What do you think about getting 100 BAC Jan 2012 20 calls around 1.7?

 

[lazycatcat]

Now that agreements have been reached betweent the two houses and market reactions to the banking sector seemed positive yesterday, what is your take? You know a lot better than I do about banks and I would like to hear what you have to say. My short-term options plays with BAC had burnt me badly since June last year (March to May were simply too good to be true) and I will stay away from that. What do you think about getting 100 BAC Jan 2012 20 calls around 1.7?

Was away last two days and haven't gone through your postings on bio and the new company yet. Will go through later.

The bill is rather complicated and it is hard to master all. On surface, it doesn't appear to affect banks like JPM and BAC too much long-term. The real danger is the "hatred" and banks-as-ATM-for-workers attitudes. Obama is talking about $92 B over ten-years levy on banks in addition to $19 B in the financial bill. They are essentially using the money to subsidize their own agenda. I think this is probably the real danger - not the amount of money but the attitudes.

The bill is not 100% sure to pass yet due to illness of a demo in senate. If it fails to pass in July, it will drag out to November, when Republicans may take over both Senate and Congress and thus kill the bill forever.

BAC July 18 call was at 0.04 cents per share. Maybe a type of suicidal attack there ?

To risk 100 calls at $1.7 is a large commitment. At $20, BAC is worth $200 B. Without surprises, this is a reasonable price target. On the other hand, BAC's balance sheet is rather complicated with derivative exposure similar to JPM...So, it is hard to say if such position makes sense or not. BAC will report before July OE. So the cheap calls may worth trying as first step ...

 

[加京游子]

Was away last two days and haven't gone through your postings on bio and the new company yet. Will go through later.

The bill is rather complicated and it is hard to master all. On surface, it doesn't appear to affect banks like JPM and BAC too much long-term. The real danger is the "hatred" and banks-as-ATM-for-workers attitudes. Obama is talking about $92 B over ten-years levy on banks in addition to $19 B in the financial bill. They are essentially using the money to subsidize their own agenda. I think this is probably the real danger - not the amount of money but the attitudes.

The bill is not 100% sure to pass yet due to illness of a demo in senate. If it fails to pass in July, it will drag out to November, when Republicans may take over both Senate and Congress and thus kill the bill forever.

BAC July 18 call was at 0.04 cents per share. Maybe a type of suicidal attack there ?

To risk 100 calls at $1.7 is a large commitment. At $20, BAC is worth $200 B. Without surprises, this is a reasonable price target. On the other hand, BAC's balance sheet is rather complicated with derivative exposure similar to JPM...So, it is hard to say if such position makes sense or not. BAC will report before July OE. So the cheap calls may worth trying as first step ...

Thanks a lot for your analysis on the financial reform, CAT!

BAC always reports on OpEx and I have been burnt way too many times since July last year. There has always been a pre-earnings runup but I always held until OpEx and lost a ton. I have decided to give up earnings plays on it. I think I will stick with my plan --- get some in Q3 for long holding.

As for bio, my plate is quite full already. Down a lot with both DNDN and DCTH re-entry.

LVS has generally been great to me up to this point but I made some directionally wrong calls and cost me a ton.

VHC is new to me but I think its patent portfolio has a bright future ahead.

APPY is a big sore spot --- it will take me years to coup the loss. I am not giving up on APPY yet. At some point, I will aggresively average down and wait.

I am watching HGSI and AMLN. As for other new bio, I have burnt way too much profits with new ventures. From now on, I will stay away from binary events (data release, the FDA AC and ruling). These events are so big that a right call is indeed highly profitable but a wrong call can cost a ton (hedge plays are not that much risk/reward friendly either as the options premia are so high). It is very hard to recoup a big loss. It is better to wait until the result is known. Yes, miss good potential profits but at the same time, big loss can be avoided. DNDN, ITMN and DCTH all show that it is worth the wait (Mr. Market always provides good entry/en-entry points for those with patience. I thought I have some but made too many hasty entries).

For now, I will just stick with what I think I know.

 

[lazycatcat]

Thanks for sharing the bio information. I guess VVUS is the July event but it is pretty hard to find an angle.

Something should happen to stock price of BAC etc. GS is going to lead reporting followed by JPM and BAC and C. So, any position has to be established before GS report.

Since BAC July $17 call shall be pretty cheap a week later, provided no upward price movement, it is probably worth trying by losing a few hundreds. $17 is at around 10% from $15.30. If GS shows good trading profit and JPM shows good credit loss results, it is not inconceivable for BAC to rise towards 10%. Of course, it can always disappoint and that is why the overall exposure needs to be controlled - typical of Karmekaze operation....

A big theme of bank earning is normalization of credit loss reserves. This is offset by higher capital requirement and potential curtailment in trading profit. However, I think the credit loss is overwhelming to other factors. JPM is reserving at more than 3% of total loans and its credit reserve is at something like 5.5% of total loans. WFC and BAC are also reserving much higher than historical norm. If credit loss is reduced by 1%, it is $8 B pre-tax earnings annually in the case of WFC etc.

This reversal will happen sooner or later. If the trend suddenly becomes obvious, market shall revalue banks. Of course, it is hard to know when this will occur ... Jamie Dimon said Q2 and so we will see ...

 

[加京游子]

Thanks for sharing the bio information. I guess VVUS is the July event but it is pretty hard to find an angle.

Something should happen to stock price of BAC etc. GS is going to lead reporting followed by JPM and BAC and C. So, any position has to be established before GS report.

Since BAC July $17 call shall be pretty cheap a week later, provided no upward price movement, it is probably worth trying by losing a few hundreds. $17 is at around 10% from $15.30. If GS shows good trading profit and JPM shows good credit loss results, it is not inconceivable for BAC to rise towards 10%. Of course, it can always disappoint and that is why the overall exposure needs to be controlled - typical of Karmekaze operation....

A big theme of bank earning is normalization of credit loss reserves. This is offset by higher capital requirement and potential curtailment in trading profit. However, I think the credit loss is overwhelming to other factors. JPM is reserving at more than 3% of total loans and its credit reserve is at something like 5.5% of total loans. WFC and BAC are also reserving much higher than historical norm. If credit loss is reduced by 1%, it is $8 B pre-tax earnings annually in the case of WFC etc.

This reversal will happen sooner or later. If the trend suddenly becomes obvious, market shall revalue banks. Of course, it is hard to know when this will occur ... Jamie Dimon said Q2 and so we will see ...

It just so happened that I agree with you on the banking front on credit loss provisions. But note that most profits of the major banks (-WFC) came from trading the last few quarters. With the market conditions in May and now also finished June, I am not very bullish about major banks short term. I will pass this Q!

And there is another major reason --- DCTH took another 10% hit today. I am selling off almost everything else to get ready to max out my DCTH line of position. Shit, I may even get a big margin call because of my 20 sold DNDN 2011 Jan 50 puts. VHC ex-div day is today. So, I may pull off the trigger tomorrow. With the dividend, I more or less end up with a flat trade if I sell tomorrow. I can let everything else go but DNDN and DCTH. I have timed LVS wrongly a few trades lately but for DNDN and DCTH, I don't even attempt to time them --- this is the perspective of a die-hard believer who is sevevely under water. I need to fight the DCTH battle and war more than anything else --- as a small retailer, there isn't much I can do but to buy and buy as the price drops and drops. I did everying I could in terms of DD, I will leave anything else to the invisible hand. I shall do this come hell or high water.

After all the excitements with DNDN, LVS and ITMN in the earlier part of the year, I may end up with only DNDN and DCTH. Such is Street life! So be it if it has to be that way. If I can't retire early with Street participation, I will retire normally with my day job --- and I am fully mentally prepared!

 

[加京游子]

CAT: I may not post much from this point on

due to the market situation DNDN and DCTH are facing. You are mostly the only converser and I just want to let you know about the current difficulties I am in. My DNDN LEAPs have the expiry date until Jan 2012 and I am holding DCTH shares. I will either come out as a multi-millionnaire or be completely wiped out. I am hoping for the former but fully prepared for the latter. Life has got to the point at which I have to make a bet now. Give me a few more years and I don't believe I will have the courage to do what I am doing now. 英雄末路也 --- 深信治癌事业，输赢都不失我汉子本色 --- 充其量地不买、房不建、跑车不开、汽艇不买！

Every best luck to you for your investing/speculating and life!

 

[lazycatcat]

I guess we can still communicate good ideas - occasionally as good ideas don't come up often.

I wish DNDN and DCTH realize your dream of getting millions. For million dollar gains in stock market, one needs to endure unusual ups and downs and has good and thorough understanding of the holdings. If all goes well with DNDN, it is surely worth a lot more than current level.

Financials may go through rough patches ahead with regulations. On the other hand, good banks shall be in recovery mode regardless of regulation. Credit loss trend shall continue to improve ...

 

[加京游子]

Happy 25th Anniversary in Canada for me

Twenty-five years ago, I landed in the Vancouver International Airport, with US$44.95 in my pocket, left over from what I borrowed from Xiamen University after buying a pack of ************************ at the San Fransisco International Airport. I relived that memorial day with friends from Montreal at the lunch table today. What an event! You see, the Queen even came for this celegration, haha!

Twenty-five years amount to a drop in a bucket in the grand scheme of things. Yet, that amounts to more than 1/2 of my life thus far that I have lived in this land of my choice. A short night simply isn't enough to reflect all the events that have occured to me. I wanted to write a poem but not in the mood. So, let me get back to the topic of stock investing/speculativing before I resort to bed for a badly needed sleep.

Adversaries don't make one's characters but reveal them. The Lin's are born with strong back bones --- term that as pig-headed stupidity if you will!

If you watch DNDN, LVS and DCTH, you have no doubt that I went through a hell again. Will you shed a drop of tear for me? I have burnt all my trading profits so far this year (some realized, some on paper), which amounted to no less than 1000% in the first 5 months of the year. I can't find much to say with such wrong judgements but such is life with a betting man on the Street. I think I know some of the tricks that have been played against the securities of my holdings but it is my own fault not to guard against the unexpected and unexpectable. Nobody else to blame but myself. The tuition fees I have paid amounted to millions of dollars (own hard-earned dollars and paper profits). Yet, I seem not to be able to learn the lessons. I am starting to doubt if I am a piece of material for Street participation. However, the war is not over until I call a quit and I won't quit for as long as I can maintain a pre-specified stake (and I am not an easy-to-quit man, For good or bad that may be depending upon the perspective, but one has to be his/her own self) . As a small retail player, the enemies I am facing are deep-pocketed and enormously powerful in every sense. They wagered wars against my holdings and have indeed won this round of battle. But the war is far from over and I am still a warrior. To win the war in the end, I just revived a few tactics I thought I have learned but I haven't practised religiously, which I will not deviate from this day onwards: 1) Do DD as hard as possible before making a commitment; 2) Have faith in commitments based on DD's (in spite of day-to-day pps movements ; 3) Set the time horizon longer than expected; 4) Quit short-term trading altogether (no more front-month options, even in case of pending news for news can be priced-in already); 5) Don't ever be on margin and reserve enough cash to add to the existing position should Mr. Market moves against the expected (classic example: DNDN @25 AH yesterday); 6) Don't bet what you can't afford to lose; 7) Lock up profits tightly --- profits always take care of themselves but loss never does --- it takes 11% profits to offset a 10% loss; 8) Move ahead of the herd.

The loss I have suffered lately is unspeakably high but I maintain a puny stake in the market. I may drop by to update my situation from time to time but let me stop here.

I sincerely wish everybody a happy Canada Day and a healthy and prosperous speculating/investing life!

 

[lazycatcat]

Can't sleep tonight for some reason ...

As I said before, I admire your seriousness and perseverance in participating in the market. It is not for me to review your performance but just a few observations that might be useful. Please just ignore them if you don't like them.

I think your long-term tracking on DNDN is very respectful and intelligent. However, there are to major misses in the operation.

1. March of 2009: I don't understand why you didn't use short-term options (one or two months away from announcement) to control say 100K shares for two months. Market indicated in 2007 DNDN would be worth $20 on approval and this was obviously achievable with positive news. I think it would cost around $10K or $20 K to make such control but this seemed to be the sum you are willing to commit.

2. May of 2010: The surge to $55 after approval and subsequent stagnation was a high-probability sign for sale. As a matter of fact, some sale in the afternoon of the approval day should be done in my opinion. CEO sale was another sign and you caught it right on. However, re-entry without protection was very arguable due to change of game in DNDN case. It is one thing to capture the power of a country and another to rebuild it.

Other major bets on SVA and APPY were very arguable at start. I don't really understand why you didn't see them. It is not that I know but it is obvious that chances were too small.

However, your LVS operation was quite smart. I don't know if you knowingly or intuitively are aware of the 'sexy' nature of companies like LVS or MGM. I always admire and enjoy the grand views of the buildings and inside decorations (although I am very reluctant on putting money into them).

I like your future concentration on DD if that means digging into reports etc. I think your DNDN experience shows hardwork does work in the long-run when you develop insight.

Not sure if you are interested in studying oil sands while you are taking time off trading ... Maybe we can join efforts here.

As to banks, next two weeks would be interesting, especially if prices are further down.

I do hope you post here once for a while. Many posters (when market is up) are already gone. It is really strange that down market doesn't get people excited ...

 

[加京游子]

How is everybody doing?

My self-imposed market exile is finally over. Dug in and built long positions in DCTH over the past couple of weeks and ARNA today.

Expected DCTH catalysts: completion of rolling NDA filing and acceptance by the FDA with a priority review in the next 2-3 months; the FDA AC meeting and PDUFA decision by April-June 2011; Phase II trial results on primary liver cancer late this year/early next year; partnership(s), no timeline

Expected ARNA catalysts: the FDA AC meeting Sept. 16 with the FDA reviewing doc likely to be released by Sept. 14; the PDUFA date of Oct. 22. For those intereted in FDA binary events, there are only two trading days left to position ARNA (long or short) before the reviewing doc. The pps is expected to make big moves upon the release of the reviewing doc.

Best of lucks in speculating/investing!

 

[加京游子]

Added to my ARNA position yesterday

Bears and their shills, more often than not, release hit-job pieces right prior to a binary event and ANRA was no exception in trading the last couple of days. I increased my exposure yesterday by way of selling Jan 4P and 2.5P. In a make-or-break binary event of wihch the outcome is hard to predict (speculators can only make decisions based on reward-to-risk assumptions), the risk is always there (my own expectation is an overwhelming favourable AC vote). However, should the unexpected happen, with the BLOOM-DM data to be released by the end of the year, I will be happy to hold those shares in the event that they are to be put to me by Jan (effective buy price will be 2.9 and 2.05, respectively). If, on the other hand, the pps is above 4/2.5 by Jan OpEx, these premia will significantly reduce my existing share/calls cost bases (long shares and OCT 8C).

In my opinion, Lorcaserin is a huge drug and the market potentials are enormous. I intend to trade the binary events (AC and PDUFA ruling) and will hold for the long term should the drug be approved by the FDA.

I am fully loaded now under the normal circumstances but WS is never normal, especially right prior to a binary event. To guard against the possibility of a bear raid (stop-loss order harvest) in the next three trading days, I have kept some powder dry and a GTC buy order open at a much lower price.

The weather is gorgeous and I wish everyone a pleasant weekend!

My self-imposed market exile is finally over. Dug in and built long positions in DCTH over the past couple of weeks and ARNA today.

Expected DCTH catalysts: completion of rolling NDA filing and acceptance by the FDA with a priority review in the next 2-3 months; the FDA AC meeting and PDUFA decision by April-June 2011; Phase II trial results on primary liver cancer late this year/early next year; partnership(s), no timeline

Expected ARNA catalysts: the FDA AC meeting Sept. 16 with the FDA reviewing doc likely to be released by Sept. 14; the PDUFA date of Oct. 22. For those intereted in FDA binary events, there are only two trading days left to position ARNA (long or short) before the reviewing doc. The pps is expected to make big moves upon the release of the reviewing doc.

Best of lucks in speculating/investing!