Buying BTX

Another buy in the Port - 1200 BTX (Biotime) @$7.31. I am not selling calls right away.

Cash: $10,593.85
Position (calls against)
2600 CLDX (26)
1200 BTX (0)
2000 NBIX (20)
7000 NNVC (0)
7000 ONTY (70)
1600 DCTH (16)
3600 PZG (0)
9000 CLSN (0)
2000 MITI (0)
800 SGEN (8)

Regards,
Trond

Port 24 update

April options expiration came Friday and for the first time in three years my Port24 is without some Dendreon.

DNDN had a great run in the last month - moving from $32 to $42 - and my gamble that it wouldn't break $40 was a bad one. I will probably hold on to the cash for a few days to assess what I want to do. I really am not comfortable with the overall market but there are always places to put money to work.

PZG had a bad week - the first resource report came out and I feel was badly prepared-for by the company. I still look forward to a very good year for Paramount but it may be a couple months of sitting and waiting.

The Port's return is about 18% annualized, as of 4/15. In one month, it turns 3 years old! So I am lagging my desired return of 24% a year quite badly - by 6%! In my defense, for newer readers, I have made two stupid mistakes: 1) with Elan in not taking enormous profits when I could have, and 2) in neglecting the Port for about 9 of the 35 months I've been running it. Those nine months of "lost" covered call returns very well could have made up that 6%.

Even with the mistakes, I will concede that 18% is pretty good. And better, in comparison to the S&P 500 (SPY) and the Nasdaq (QQQQ), I am handily beating the market in the same period. The SPY has returned -0.6% in the 35 month period while the QQQQ's are at 5.7% annualized. So I'm still beating the better of the two by 12.4% per year. That is respectable.

Cash $19,372.85 Position (calls against)
2600 CLDX (26)
2000 NBIX (20)
7000 NNVC (0)
7000 ONTY (70)
1600 DCTH (16)
3600 PZG (0)
9000 CLSN (0)
2000 MITI (0)
800 SGEN (8)

Regards,
Trond

More covered calls & Port24 update

Seeing as how option expiration is next week, I decided to get some premium this morning. DNDN Apr $40s for $0.38, DCTH May $9s for $0.50, and SGEN Jun $17.50 for $0.85. Nanoviricides (NNVC) is having a good week, up the $1.50s on more FluCide news. I actually sold a little in my real money portfolios, as I try to trade this one more actively than I sometimes do (this is in an IRA so I don't have to worry about taxes). If you have a 2 to 5 year holding time, this is still not a bad time to buy but I suspect it will be 10 to 20 cents lower in a month or two. The Port24 is back over 20% annualized returns... Dendreon's return to the high $30s as well as Nanoviricide's pop contributed. Celsion has been lagging but I expect within three months it will be the star of the show. I am loaded in CLSN in my real money accounts as well. Cash = $3,390.35 2600 CLDX (26) 400 DNDN (4) 2000 NBIX (20) 7000 NNVC (0) 7000 ONTY (70) 1600 DCTH (16) 3600 PZG (0) 9000 CLSN (0) 2000 MITI (0) 800 SGEN (8) Regards, Trond

Another covered call sale

On Friday I sold 20 NBIX calls - the May $8s - for $0.25 in the Port. That brings us up to a 16.5% annual return and rapidly closing in on three years of the Port24. I have the holdings listed below. Of them all, the only ones I would consider buys right now are Celsion, Nanoviricides, and Paramount Gold. I would expect PZG to release their first resource report this coming week, and will probably sell out of the Port when that occurs. I have quite a few shares of PZG in my real-money accounts, however, and will only sell modestly there... I think 2011 will be a great year for PZG. Nanoviricides may not have any news for months but then again it may announce something any time. I wouldn't add massively today, but to start a position it's a great time in the $1.20s. Celsion also may not move for a couple months but it really is time to fish or cut bait here. By May or June it will have started its runup, and I expect to have a double from here by the end of June. Regards, Trond Port24 holdings (calls against) 2600 CLDX (26) 400 DNDN (0) 2000 NBIX (20) 7000 NNVC (0) 7000 ONTY (70) 1600 DCTH (0) 3600 PZG () 9000 CLSN (0) 2000 MITI (0) 800 SGEN (0) $1,814.37 cash

Portfolio strategies and March options expiration

Investing for a blog is slightly different than investing in your own real money portfolio. I try to keep things as true as possible to what actually happens -- commissions, fees, and whatever the bid/ask happens to be.

One difference is the bid/ask - the amount you can sell or buy a stock or option for. Let's look at Dendreon - on a day where the price is $32.79, that might entail a bid/ask of $32.79/32.80. You can sell it for 32.79 but have to buy it at 32.80. In a real world portfolio, you can enter a limit buy at $32.75 - if during the day the ask price falls to $32.75, the order fills and you've bought at a better price. You might not, however, get filled at all! I almost always enter limit orders so as to "game" a few cents on my entry and exit price. I do not have such a luxury in the Port24, since I wouldn't know if I ever would have gotten filled or not! And the volume comes into play also... on microcaps such as Celsion that may only trade 50,000 shares a day, a 4,000 buy can drive the ask price up by a few cents.

A couple cents here or there, even on a thousand shares, really is not a big deal - $10 or $20. Options, however, present a wholly different challenge. The bid/ask spread tends to be wider on low price or low volume stocks, and can be as large as 30 to 40 cents difference. A limit order here is MUCH more necessary and "gaming" the order is important. If the bid/ask is $0.25/0.45, a sell entered for $0.35 -- maybe even $0.40 -- might well be filled. You can easily gain an extra $20, 30, or 40 on a trade simply by keeping that in mind. On a $5,000 buy in for the stock, where you are expecting a 2% return on your covered call, an extra $25 raises your return percentage-wise by another half percent. Half a percent over 12 months is an extra 6% a year! Always enter limit orders on options!!

Another difference in the way a real vs. fake portfolio can be managed is the psychological factor. I have staked myself to a 24% return in the Port24 (something I am far short of at the moment) and being long Celsion for so long (heck, even Dendreon over the last year!) has hurt my performance when measured over an individual month or series of months. I refuse to sell calls for the most part because there is the chance for a really good movement in the share price coming up and I want to capture that. However, I have opportunity cost in the meantime of the covered call premiums foregone. And monthly, I have to report "underperformance" of my 2% a month return. There is always the temptation to do something "wrong" to make the monthly numbers look better! (This, by the way, is very much why I mistrust a lot of companies' quarterly earnings - there are many things they can do to fiddle around with a particular quarter's earnings... a one-time charge here, etc.) All I can do is remember why I am in a particular stock and stay true to it. In the long run, assuming I'm right on Celsion, a 100%+ return in a year looks better than 2% in each of 12 months.

For March's opex in the Port24, both Delcath and Seattle Genetics expired without being called. Delcath, of course, went horribly wrong a few weeks ago with the FDA not even accepting the filing of the NDA. I'm holding here, as European approval is also in the works and should cause a re-runup towards the end of the spring. SGEN could well bounce around a buck or two up or down; I will simply wait for a small bounce up and sell calls again.

One extra note about the Port24 - several weeks ago I announced the intention to "move" the assets to Zecco from Scottrade. Immediately afterwards, Zecco announced a pricing change, adding a few dimes to their stock and option commissions. While it is still cheaper than Scottrade and for a new money account I would certainly recommend Zecco, for this situation where I'd have to pay "transfer" charges I am just going to keep basng my buys and sells for now off Scottrade's commission costs. Having said that, please don't let such costs deter you from doing transfers in real money accounts - many brokerages will compensate you for the transfer charges as an inducement for your business!

Real money wise, I am coming close to being an idiot with Celsion. I have been buying all the way down from the low $3s through the $2.30s. A large part of me wishes I'd only now heard of it and had bought the entire stake here! We should finally see some movement in the next 1-8 weeks... culminating in a really nice runup by June awaiting full enrollment of the HEAT trial, and the interim calculation announcement. While I don't truly expect a successful interim and trial stop, the increased eyeballs and realization of the microscopic float should cause a share price move of several dollars.

Paramount Gold & Silver should be releasing one of their resource reports within weeks. Not knowing exactly what regions will be included makes it hard to predict share price movement, but suffice it to say over the next year I expect a double or more. That makes it worth hlding on, or adding here.

Regards,
Trond

CSLN and DNDN

I bought 4000 more shares of Celsion for the Port24 - this is only a (hopefully) quick trade as I just don't see hanging out sub $2.50 much more than a few more weeks. I also bought it in my real-money accounts this morning!

The real news of the morning was for Dendreon, even though the market is treating it with a yawn. The remaining 36 workstations at their NJ facility were approved by the FDA this morning -- which quadruples the amount of Provenge they can administer. It will be a gardual ramp up, rather than an immediate x4, but within two to four months all that capacity should be utilized.

They guided for $9-10M a month with the existing 12 stations, so we should be looking at $36M a month. later this year. That equates to $432M a year on a forward-looking basis... and does NOT include the additonal 72 workstations in GA and CA later this year. For calendar year 2013, after fully ramping up, they should be at $1.2B of sales.

Regards,
Trond

Port24 update - SGEN

Cash was freed up by selling CLDA. I am allergic to holding on to cash and have bought 800 Seattle Genetics (SGEN) at $15. I turned around and immediately sold 8 Mar11 $15 calls for $0.40 each. 2.5% return in just over 2 weeks, assuming we hug $15 for awhile.

Regards,
Trond

CLDA

Sometimes investing can be very frustrating. CLDA was north of $33, with buyout rumors swirling in the $40s. And then we get the news that they are being acquired at $30, plus up to another $6 cash based on future sales.

Huh???? With the stock at $33+?

Unfortunately the board and insiders own enough of the company that this will probably go through regardless of shareholder discontent. I sold all 600 shares in the Port24 this morning at $30.40. And I can't be too sad as we bought around $17 and made a couple bucks a shares in covered calls as well -- all in less than three months.

DCTH had bad news as well, with the FDA refusing their NDA filing. I will not sell these Port24 shares, since we have Europe coming up as another catalyst in the spring/summer. Too, Delcath will refile the NDA in the fall with the additional information requested. So this is a delay, and probably a buying opportunity overall.

Regards,
Trond

Port24 update - back to 18% annualized

Last Friday was options expiration day for February. I made a good choice on selling the CLDA calls for $35 instead of $30, as it rocketed at the end of the week to $33.90. Similarly with NBIX, selling the $7.50 Febs was excellent as the stock closed Friday at $7.45.

So while that makes me happy, I'm even happier on seeing that I'm back to a 18.2% annualized return, approaching my third full year of this blog and the Portfolio24. Obviously I'd like to be able to point to a 24%+ return, but I've pointed out in past entries the two major things that have prevented that: A very large position in Elan that I continually refused to sell calls against (and that eventually went bad) and two fairly long periods of time (several months each time!) where I did no trading at all in the Port. I do not intend on repeating either of those mistakes!

Some housekeeping: I will be "transferring" the Port24 from a ficticious Scottrade account to a ficticious Zecco account later this week. Although I like Scottrade, and still have one IRA there, I have moved most of my accounts to Zecco. Although they have a $30/year fee for IRAs, the commisions there are $4.50 for stock and 4.50+ 0.50/contract for options, as opposed to Scottrade's $7 and $7+1.25/ commisions. The exercise/assignment fee is only $4.50 instead of $17. There are no account minimum or inactivity fees. Best of all, for accounts of $25,000 or more (or if you perform 25 trades per month), you get ten free trades a month. With the Port at $150K+, this will kill most commission costs and keep it as real as I can.

I will have to research a little to determine how much it would cost to transfer the actual positions from Scottrade to Zecco and I will hit my cash for that amount. As a reminder, I am keeping this portfolio as close to real life as I can. Before posting any trades, I actually look at the current bid/ask for whatever position I am trading and use those listed for the sale or buy. My real accounts tend to be slightly better on the executions because I can set a limit order and end up a nickel or dime better per option trade. That may not sound like much, but with an average 1,000 share lot covering ten contracts, a nickel difference ends up being $50.

I've been asked about my favorite stocks for 2011 and I have to say that basing anything on a calendar year is pretty silly. That said, I do have some stocks that I am in, and feel will do quite well over the next 3 months to a year time frame.

Celsion CLSN at $2.60 is something I have been buying hand over fist recently. I harbor no illusions that their interim look for summer-ish will halt the trial and allow early submission to the FDA (although it IS a chance), but they should easily run up to $5 or more before the summer in anticipation of the chance.

Neurocrine NBIX at $7.50 may be up and down a couple bucks either way in the next three months but I feel will enter 2012 in the double digits.

Delcath DCTH at $11.30 should hear from the FDA within a week or so, accepting their NDA. That may or may not move the stock, but I am certain that by the end of June they will get approval and be in the high teens, if not more.

Paramount Gold PZG at $3.90 (although not a biotech) is something I have had in my real money port since early 2009 around $1.25. I think they are the real deal, and will be double digits by fall.

Good luck to all. Thanks for reading!
Regards,
Trond

Port 24 update and new buys (Celsion)

Let's attend to the Port24 first... some activity today. I had $28K available and did not want to stall on my recent gains.

CLDA got approval and is at the $30 mark. I chose to keep the shares and sell Feb $35 calls for $1. I also sold Feb $7.50 calls on NBIX for $0.20 - the stock itself is at $7.50 right now.
Finally, I sold ONTY May $4 calls since it will be awhile since we get any news. With the stock at $3.06, it gives a 1% per month "dividend" while still allowing the sale at $4 if we do get any bonus news.

I bought 5000 shares of CLSN and 2000 shares of MITI. I have not yet sold calls since I think each will move upwards short term and allow better premium or better strikes than exist right now.

The Port now stands at $146,634.38, with $4,064.38 in cash and the positions and (calls) shown below-- a 46% overall gain and a 17% annualized gain. This compares, over the same period, to a -0.5% annualized gain in the S&P (SPY) and a 7.1% gain in the Nasdaq (QQQQ).

2600 CLDX (26)
600 CLDA (6)
400 DNDN
2000 NBIX (10)
7000 NNVC
7000 ONTY (70)
1000 DCTH (10)
600 DCTH
3600 PZG
5000 CLSN
2000 MITI

Real money wise, I have been buying CLSN hand over fist. They should have news this week of Japan restarting enrollment in the HEAT trial, after a planned halt and safety review.
Nanoviricides (NNVC) also gets some new cash, as they are involved in a dengue conference next week.
DCTH should get formal acceptance of their NDA very soon. I am holding this in real accounts as well, and will sell shorter term calls once it gets a spike around $12.

Regards,
Trond

CLDA and Port24 update (after options expiration)

Congrats to the CLDA shareholders who stuck through the approval process. Oh wait, the Port was one of those! :-)

I bought back the calls a week or so ago and so am holding the stock long in the Port - from a $15ish close of Friday, we got approval and a pre-market $25 price tag this morning.

Dendreon and Oncothyreon calls expired on me (a good thing - we keep the premium AND the stock) and my Elan and Sangamo were exercised (also a good thing, we got the premium and netted cash out at the strike price).

I now have another $27K to buy with. I'll keep you posted!

Regards,
Trond

MNKD, Port24, and real money update

MNKD received a CRL yesterday for Afrezza. I was almost all out here, but was truly hoping for and expecting an approval. Fortunately it appears that most of what the FDA is asking for can be provided within the next year or so. The stock price was only knocked down to the $5 in today's trading which I consider fair for the moment. I would expect it to come down some more in the couple months, and if it does go into the $3s or $4s I would be a buyer again.

I bought 3,600 PZG at $3.12 in the Port today; no options offered here but the price is simply too low for what is expected in their resource report sometime in Q1 2011. Hence this is only a trade, with a defined time limit of about 3 months.

In my real money accounts, I bought PZG and CLSN today. CLSN at $2.78 is simply irresistable, and is now my largest holding.

Regards,
Trond

Careful does it! And a Port24 update

I am hearing from all the various economists, bloggers, and folks I respect (market-wise) that we are due for a correction. I asked a month or so ago if you had your chair ready for when the music stops. I think you need to ask yourself that question again.


I put on one of my volatility plays last week: took TZA (bearish x3 small cap ETF, was at $15.04 at the time) and bought an equal number of Apr11 $15 puts and calls. I don't care what direction we go, as long as we move at least 4% in either direction in the base (~11-12% in the x3).
Though honestly, if we move up (down in the ETF, since this is bearish) I will probably sell the puts if they near a double. I'd hold on to the calls, as they will go up if we do get the correction I fear.

In the Port 24, I bought 2,600 Celldex (CLDX) this morning at $3.88 and sold the May $4 calls for $0.55 against the whole position. CLDX could well continue falling here, but May gives me a while to be right.

With this morning's prices, I'm currently at a 14.2 annualized return and still have $14,160 in cash to initiate another position.

In real money accounts, I'm very interested in PZG, DCTH and NBIX here.

Regards,
Trond

Port update - LXRX successful trial results

I sold all 7,000 shares of LXRX in the port this morning at $1.94. Also divested almost all of my real money shares too. Having bought exactly one month ago at $1.39, this is almost a 50% return.

PR shown below...

http://finance.yahoo.com/news/Lexicon-Announces-Positive-prnews-4130937110.html?x=0&.v=1

In real money, I am currently interested in DCTH, NBIX, and NNVC.

Regards,
Trond

Port24 update

I bought 2,000 NBIX just now for the Port, at $7.30. I am going to wait to sell calls here until it bounces back somewhat. The Feb $7.50s were attractive at $0.55, equivalent to a 7.5% return for 1.5 months, but I think I can do better.

I also bought back the CLDA calls to close, since the stock has dropped. As we approach the 1/22/11 PDUFA date I expect the price to rise back to where I bought it.

Port is now 11.1% annualized return, with $9,292 in cash still and the stocks (calls) shown below.

600 CLDA (0)
400 DNDN (4)
1600 ELN (16)
7000 LXRX (0)
2000 NBIX (0)
7000 NNVC (0)
7000 ONTY (70)
2500 SGMO (25)
1600 DCTH (10)

Port 24 addition

I bought 1600 Delcath (DCTH) for the Port this morning at $10.21. I turned around and sold 10 March 2011 $11 calls against them for $1 each. That leaves me 600 extra shares to sell calls later. I suspect once the FDA formally accepts their recent NDA the share price will tack on an extra $1 or two, and I will sell calls against those extra 600 shares at that time.

I still have $24,363.91 in cash so I'm still looking up and down the aisles right now. Although I have some stocks in mind nothing is terribly cheap in my mind right now, so I'll try to be patient.

Happy New Year!
Regards,
Trond

Port24 update and Happy Holidays!

December options expiration was last Friday, and based on the closing prices, I had ALTH and NBIX called away from me.

I now have something like $39K available to buy more stock – look for a post next week to utilize these funds.

Merry Christmas and happy holidays to all!

Regards,
Trond

Macro thoughts - Denninger on profit margins

Karl Denninger writes a blog called the Market Ticker. He is quite a bear recently on the economy as-a-whole, as well as a believer in "The Bezzle" - a theory where he says the government is basically lying its butt off regarding how bad off things are, in order to 1) keep peace and 2) keep things the way they are. Without delving too much in the bezzle, I'll simply say he pulls in some good data to support his positions; he's a muckraker in the style of ZeroHedge.

This post quite convincingly argues that profit margins in Q4 will NOT be as good as projected.


http://market-ticker.org/akcs-www?post=174922

...
The two "gotchas" in here are gasoline, which has had gross sales down even though gas prices are up, and dining and drinking, which were down despite the holiday season during the Black Friday weekend when they should have been up due to all the people shopping.

The problem remains cost-push. I've noted that restaurants have been sneakily-increasing prices. They're pulling add-ons into ala-carte (e.g. sides that used to be included with the main course) and ratcheting up prices a bit. Gasoline has been on a tear comparatively, yet gross spend on gasoline is down. This strongly implies that we've reached the point where price influences behavior.

The PPI was also out this morning and confirmed:

The Producer Price Index for Finished Goods rose 0.8 percent in November, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This increase followed a 0.4-percent advance in both October and September. At the earlier stages of processing, prices received by manufacturers of intermediate goods climbed 1.1 percent in November, and the crude goods index moved up 0.6 percent.

Great. More than 9% annualized. But there is no inflation, right?

And where is it? Food and energy, as I've been talking about.


...[graph]

That's nice. Now extend that 1% monthly change in foods out a year. More-importantly, look at the prices in energy - straight up since August. That's all about The Fed and it's BS QE2 games.
Worse is the crude goods price change less food and energy - core:


...[graph]

These changes are ridiculous on a 12-month basis. Ex-food and energy they're even worse, as there have been some substantial negative numbers there. I have discussed the problem with these input costs extensively - there is no pricing power to pass them through the chain of production, as is shown by the much lower escalation in intermediate goods.
This means margin collapse folks.

Betting that it won't show up in final profit numbers is flat-out insane.

These costs have to show up somewhere. If you can't pass through costs to the consumer then you have to eat it, and ultimately this results in margin - and profit - collapse.

Musical Chairs in your Portfolio

I think everyone should think long and hard about what they will do in their accounts if we do see a nasty market downturn. And keep in mind, it may not necessarily be "sell and wait it out" OR "hold everything and wait it out".

Remember that most of the stocks I'm into here are VERY high beta. That means whatever the "normal" market return is, my returns are at a higher multiple. If and when the markets are doing well, say a 1% return on the day, I may see a 1.5 to a 2% return. However, when the market goes down 15%, what is the Portfolio 24 going to do?

I personally have to really think about this because I do not have any new cash going into my accounts. When I want to buy something, I have to sell something else first. And when everything is "on sale" (i.e. going to crap) everything I want to sell has already gone down, too.

I am looking at the general market .... shrugging off everything from wars to state secret leaks, to Mastercard getting hacked and hedge funds liquidating, to tax breaks being maintained in the face of nearly unsurmountable deficits, to North Korea making waves, to Christmas spending being crazy in the light of our unemployment.... and ask "when the music is going to stop"?

Make sure you have a chair, is all I'm saying.

Regards,
Trond

Port 24 overhaul

Well, just like you need to monitor a mutual fund for "style drift", I am looking at the Port 24 with a hard eye today.

Not only have I drifted from my intended methodology (buy and sell covered calls for income) but I have neglected the actual portfolio quite shockingly in the last two years. I still have nearly a 10% annualized return (vs.4.3% on the Nasdaq and -3.3% on the S&P) but that is nowhere near what I intend.

So, I have sold CLSN, VICL, PZG, and MNKD today at 2.70, 1.80, 1.80, and 6.55 respectively. Either they are too low for decent covered call premium (VICL), or are too close or too far from their PDUFA dates (MNKD, CLSN), or don't offer options (PZG).

I bought 600 CLDA at $17.78 and sold 6 Jan11 $17.50s for $2.10 each.
Also, 2500 ALTH at $4, selling the December $4s for $0.20.
Bought 7000 each of NNVC and LXRX at $1.34 and $1.39 respectively. This is slightly a style drift in that they do not offer options, but at these values I want some, akin to my PZG buy, which worked out quite nicely.
I also sold options on the following:
DNDN, 4 Jan11 $41s at $1.01
ELN, 16 Jan 11 $6 at $0.25
20 NBIX Dec10 $8s at $0.20
25 SGMO Jan11 $6s at $0.30
and 70 ONTY, Jan11 $4 at $0.25.

This leads me to the following Port (still with $13,761.42 in cash)

2000 NBIX (20)
1600 ELN (16)
400 DNDN (4)
2500 SGMO (25)
600 CLDA (6)
7000 NNVC (0)
7000 LXRX (0)
2500 ALTH (25)
7000 ONTY (70)

With the cash raised from the covered calls, this brings me to a 30.5% return, or 11.9% annualized.

Regards,
Trond