How would you like to be able to buy stock for no commissions?
What if you could buy $25 worth of an $80 stock at a time?
Wouldn’t it be nice to arrange for that $25 to automatically happen monthly?
What if that stock paid a dividend? Wouldn’t it be outrageously cool if that dividend were automatically re-invested as partial shares? And then it would compound and you’d be paid dividends on those partial shares?
You’ve probably guessed that these are not just rhetorical questions. It’s called a Dividend Re-Investment Program, or DRIP, for short. Even some companies that do not pay a dividend offer similar plans called Direct Stock Purchase Plans.
They are usually exceedingly simple – you either purchase a set number of shares that qualify you for the Plan or agree to purchase a specified dollar amount for a specified number of months. You have to actually enroll in the Plan, and depending on your state and/or tax status may need to sign a form and send it in too.
And it really is as cool as my rhetorical questions make it sound. The transfer agent for the plan takes your specific dollar amounts that you send in, adds it in with all other Plan contributions for the period, makes the purchase, and credits your account with the dollars invested divided by the share price (there are commissions, but they are spread across potentially thousands on dollars of contributions – netting out to fractions of cents). So if you contribute $50 and the stock happened to be purchased at $40 per share, you’d be credited with 1.25 shares. If that stock paid a $0.40 dividend, then you would be credited with an extra .01 shares – so your new total would be 1.26 shares. There are minimum amounts that you can contribute … some Plans are as low as $10 a month.
Companies such as Exxon-Mobile, Intel, and Johnson & Johnson have DRIPs, but it’s not limited to large corporations. Mid-caps and small-caps are represented; smaller local utilities offer them too. I grew up in central Maine, and Bangor Hydro-Electric offers one.
I think they are an ideal way for children to learn about the stock market. They get to see compounding work in front of them, and the long term buy-and-hold strategy is an excellent lesson in saving, investing, and patience.
Really, the only downside is taxes and cost-basis tracking. Uncle Sam wants what’s his… and just because the dividends were re-invested, please know they are still taxable. But until you’ve built up enough shares so that you’re getting hundreds of dollars a year, the real effect of them is nothing more than an extra item to add on your tax return. When you do sell, you need to know the purchase price of all those monthly or quarterly optional buys, plus all your quarterly dividend purchases. But really, a simple spreadsheet suffices – enter the date, dollar amount, and share price when you get your statements and you’re good to go.
Finally, even the last two items are not an issue if you happen to pick a stock that allows the plan as an IRA. There are even a couple plans that pay YOU to invest – send in optional purchases and they will credit you 105% in shares, for example.
There is a service that will handle the whole registration process for you – www.temperofthetimes.com is one that I have used (I’ve had DRIPS in BankOne (now JP Morgan), Corning, Intel, and Pfizer). You can do it yourself, but for me the $20 fee was worth avoiding the hassle. You can search their DRIP database at www.directinvesting.com/advanced_drip_search.cfm?from=search. You can also contact the companies or transfer agents yourself to learn more. Look at computershare.com for examples of the companies that offer Plans and their details, at www-us.computershare.com/Investor/Plans/PlansList.asp?cc=US&lang=en&bhjs=1&fla=1&exp=true&theme=cpu.
Finally, I’d be remiss if I did not mention that newer brokerage services such as ShareBuilder.com and others basically offer the same service (at least for purchasing partial shares), all without having to register with each separate company.
Feel free to Comment or email me at Trond24@gmail.com if you have questions about specific companies, or would like more details about DRIPs.
Regards,
Trond
Friday, February 6, 2009
Wednesday, February 4, 2009
Info on Madoff hearings
If you are curious about the guy who testified today regarding his warnings to the SEC from 2000 through 2008 about Bernard Madoff, you can see his full prepared testimony at the link below...
http://online.wsj.com/public/resources/documents/MarkopolosTestimony20090203.pdf
Regards,
Trond
http://online.wsj.com/public/resources/documents/MarkopolosTestimony20090203.pdf
Regards,
Trond
Great Expectations
First, a little background.
STOCK INVESTING IS NOT A GAME TO ME. I have a day job, two kids, and a wife who equates the stock market to a casino. Two years ago, I let myself accumulate just over 13,000 shares in a little biotech company called Dendreon. At a cost basis of about $4.50 a share, this $60K, spread between my IRA and brokerage account, was a SIGNIFICANT fraction of my assets – a much higher percentage than I, who pride myself on my personal finance knowledge, would ever recommend anyone investing in one risky stock.
Why did I do this? Lots of little reasons… but it boiled down to a couple reasons. I believed in the drug that was up for FDA approval, and it made me feel good to invest in something that has potential to save lives. (Provenge is an immunotherapeutic vaccine for prostate cancer)
Now, built into that “belief” was an enormous amount of due diligence. The final block of shares that I bought was after the FDA released the briefing docs that the Advisory Committee it had convened would be using to aid them in their discussion. Routinely negative and devoted to picking apart data, these briefing docs in Dendreon’s case were actually mildly approving in spots. My expectations were met when the AC voted at the end of the day 17-0 for safety and 13-4 for efficacy. The stock price went from $5ish to nearly $13 the next day, and over the next month hit $25.
And the drug was not even approved yet! The AC vote means nothing – it is simply advisory. But the FDA had never, in the case of a terminal illness with few options, overridden an AC recommendation with rejection. Given my research, the potential market indicated that future sales even discounted back to present value, should yield a share price of around $40 to $50 very soon. Imagine that! Dendreon, within my IRA, was already nearly a quarter of a million dollars. I was having visions of paying off my house within a year from my brokerage account.
My wife started asking, “So when are you going to sell some?” My answer: “After approval.”
The rude awakening came when the FDA did say no, in the form of a Complete Response (or “approvable”) Letter, where the answer was: “Complete the ongoing trial and show us MORE proof”. The stock tumbled back to $7, and then to $5, and has bounced around since then. Me? I mostly got out around $6, as that ongoing trial wasn’t going to end until 2010. My wife still says, “I told you so,” occasionally.
So why dredge this up now? Dendreon amended their agreement on that ongoing trial and final results are now expected by April of this year. I’ve been building my position back up, as I still believe in the drug. However, given the market’s performance in the last year, and my promise to my wife to never concentrate our holdings quite so much again, I don’t have as many shares now as I did then. And I am revisiting my reasons for holding, AND my projected reasons for selling.
I still believe in Provenge. At the “interim” look at the data, it showed a 20% reduction in risk of death compared to the placebo group. In the prior trials, it showed a similar benefit at a similar time point… and later on an increasing benefit over time. There are extremely few and mild side effects, especially compared to the chemo alternative. But recall my second reason for investing – it made me feel “good”. I CANNOT allow myself anymore to use that as a reason for investing – biotech investors in particular are advised to “never fall in love with a stock”. So now that we are getting close to potential approval again, I have to decide when I will sell what percentage of my stake, and at what prices. I need this decided BEFOREHAND, so there is no emotion involved at the time. Note: I am fine with the risks of non-approval with the amount that I hold now! This decision is only for if approved.
My decision? I will sell a quarter of my holdings at $30, and another quarter of what I have remaining at $40. After that, when the company releases pricing and manufacturing capability, I’ll have more data to use to decide where to go from there. But my limit orders to sell are set, and honestly? I slept much better last night.
STOCK INVESTING IS NOT A GAME TO ME. I have a day job, two kids, and a wife who equates the stock market to a casino. Two years ago, I let myself accumulate just over 13,000 shares in a little biotech company called Dendreon. At a cost basis of about $4.50 a share, this $60K, spread between my IRA and brokerage account, was a SIGNIFICANT fraction of my assets – a much higher percentage than I, who pride myself on my personal finance knowledge, would ever recommend anyone investing in one risky stock.
Why did I do this? Lots of little reasons… but it boiled down to a couple reasons. I believed in the drug that was up for FDA approval, and it made me feel good to invest in something that has potential to save lives. (Provenge is an immunotherapeutic vaccine for prostate cancer)
Now, built into that “belief” was an enormous amount of due diligence. The final block of shares that I bought was after the FDA released the briefing docs that the Advisory Committee it had convened would be using to aid them in their discussion. Routinely negative and devoted to picking apart data, these briefing docs in Dendreon’s case were actually mildly approving in spots. My expectations were met when the AC voted at the end of the day 17-0 for safety and 13-4 for efficacy. The stock price went from $5ish to nearly $13 the next day, and over the next month hit $25.
And the drug was not even approved yet! The AC vote means nothing – it is simply advisory. But the FDA had never, in the case of a terminal illness with few options, overridden an AC recommendation with rejection. Given my research, the potential market indicated that future sales even discounted back to present value, should yield a share price of around $40 to $50 very soon. Imagine that! Dendreon, within my IRA, was already nearly a quarter of a million dollars. I was having visions of paying off my house within a year from my brokerage account.
My wife started asking, “So when are you going to sell some?” My answer: “After approval.”
The rude awakening came when the FDA did say no, in the form of a Complete Response (or “approvable”) Letter, where the answer was: “Complete the ongoing trial and show us MORE proof”. The stock tumbled back to $7, and then to $5, and has bounced around since then. Me? I mostly got out around $6, as that ongoing trial wasn’t going to end until 2010. My wife still says, “I told you so,” occasionally.
So why dredge this up now? Dendreon amended their agreement on that ongoing trial and final results are now expected by April of this year. I’ve been building my position back up, as I still believe in the drug. However, given the market’s performance in the last year, and my promise to my wife to never concentrate our holdings quite so much again, I don’t have as many shares now as I did then. And I am revisiting my reasons for holding, AND my projected reasons for selling.
I still believe in Provenge. At the “interim” look at the data, it showed a 20% reduction in risk of death compared to the placebo group. In the prior trials, it showed a similar benefit at a similar time point… and later on an increasing benefit over time. There are extremely few and mild side effects, especially compared to the chemo alternative. But recall my second reason for investing – it made me feel “good”. I CANNOT allow myself anymore to use that as a reason for investing – biotech investors in particular are advised to “never fall in love with a stock”. So now that we are getting close to potential approval again, I have to decide when I will sell what percentage of my stake, and at what prices. I need this decided BEFOREHAND, so there is no emotion involved at the time. Note: I am fine with the risks of non-approval with the amount that I hold now! This decision is only for if approved.
My decision? I will sell a quarter of my holdings at $30, and another quarter of what I have remaining at $40. After that, when the company releases pricing and manufacturing capability, I’ll have more data to use to decide where to go from there. But my limit orders to sell are set, and honestly? I slept much better last night.
Friday, January 23, 2009
Rebalancing
I got my year end 401(k) statement this last week. Hoo boy! Was that ever depressing to look at – most of the stock mutual funds were down anywhere from 30 to 40 percent for the year. One fund alone, in which I have nearly ten percent of my holdings, was down 48%. FORTY EIGHT PERCENT! Just about cut in half, in twelve short months.
And yet, this is the time of opportunity. It is truly amazing to me how one’s fear or greed about the market makes one act almost exactly contrary to what one should actually do. Let’s give a real world example: I am buying a pair of tennis shoes. Lo and behold – my favorite brand is having a sale; if I buy two pairs, I get the second at half price. Now, my feet aren’t exactly going to change sizes anymore and I have no problems with having an extra shoe box in a closet for a half year or so. The same thing goes for groceries. If there is something you buy regularly on sale, you buy more of it. THIS IS SMART ECONOMIC BEHAVIOR. No one has to tell you the correct thing to do.
So let’s go back to this smart shopper when they open up this year’s IRA or 401(k) statements (if they open them at all). A quick scan shows the 30%, 40%, nearly 50% drop in their stock funds, and the first reaction is I NEED TO TRANSFER FROM STOCK TO BONDS, OR EVEN TO CASH. I have the exact opposite reaction. Stock funds are on sale!
Now, I am probably the lone voice in the wilderness when it comes to asset allocation within your 401(k). And if you are very close to retirement, or have to take a distribution within the next couple years, the following may not apply to you. But if you still have at least five years until you are going to start taking any money out, this will likely boost your eventual gains by a percentage point or two.
My preferred allocation would be 100% into stock. My lone bond fund is 15% and the remainder is spread between various stock funds (concentrated in small or mid caps, and international. If there are multiple choices of the same general type, I will go with the one with lower fees unless the 10 year returns differ significantly). And my 15% concession to bonds is precisely for times like these.
It is time to rebalance. For me, I do not need a precise recalibration where I move $2,197.31 from small cap X to mid cap Y and $948.28 from international A to high yield bond B so I end up, for one glorious day, with EXACTLY 7%, 8%, 10%, 10%, 15%, 15%, 15%, and 20% within my carefully selected list of funds. Come on – one day later those percentages will be off again.
Instead, I will take about half of my bond fund holdings and move it, about 25% each, into my small, mid, large, and international stock funds. Done! In about 6 months, if the market is still underperforming, then I will do the same thing again, with about 2/3 of whatever is in the bond fund at that time.
I am not a big advocate of rebalancing on any particular kind of schedule. But when there is the overall general fear and loathing of the stock market that we are experiencing today, it is time to buy some stock funds on sale. (And when, in four or five years, your grocery bagger is giving you a stock tip because EVERYONE is excited about the market going up forever, you may want to move 5% of your stock holdings into bonds)
And yet, this is the time of opportunity. It is truly amazing to me how one’s fear or greed about the market makes one act almost exactly contrary to what one should actually do. Let’s give a real world example: I am buying a pair of tennis shoes. Lo and behold – my favorite brand is having a sale; if I buy two pairs, I get the second at half price. Now, my feet aren’t exactly going to change sizes anymore and I have no problems with having an extra shoe box in a closet for a half year or so. The same thing goes for groceries. If there is something you buy regularly on sale, you buy more of it. THIS IS SMART ECONOMIC BEHAVIOR. No one has to tell you the correct thing to do.
So let’s go back to this smart shopper when they open up this year’s IRA or 401(k) statements (if they open them at all). A quick scan shows the 30%, 40%, nearly 50% drop in their stock funds, and the first reaction is I NEED TO TRANSFER FROM STOCK TO BONDS, OR EVEN TO CASH. I have the exact opposite reaction. Stock funds are on sale!
Now, I am probably the lone voice in the wilderness when it comes to asset allocation within your 401(k). And if you are very close to retirement, or have to take a distribution within the next couple years, the following may not apply to you. But if you still have at least five years until you are going to start taking any money out, this will likely boost your eventual gains by a percentage point or two.
My preferred allocation would be 100% into stock. My lone bond fund is 15% and the remainder is spread between various stock funds (concentrated in small or mid caps, and international. If there are multiple choices of the same general type, I will go with the one with lower fees unless the 10 year returns differ significantly). And my 15% concession to bonds is precisely for times like these.
It is time to rebalance. For me, I do not need a precise recalibration where I move $2,197.31 from small cap X to mid cap Y and $948.28 from international A to high yield bond B so I end up, for one glorious day, with EXACTLY 7%, 8%, 10%, 10%, 15%, 15%, 15%, and 20% within my carefully selected list of funds. Come on – one day later those percentages will be off again.
Instead, I will take about half of my bond fund holdings and move it, about 25% each, into my small, mid, large, and international stock funds. Done! In about 6 months, if the market is still underperforming, then I will do the same thing again, with about 2/3 of whatever is in the bond fund at that time.
I am not a big advocate of rebalancing on any particular kind of schedule. But when there is the overall general fear and loathing of the stock market that we are experiencing today, it is time to buy some stock funds on sale. (And when, in four or five years, your grocery bagger is giving you a stock tip because EVERYONE is excited about the market going up forever, you may want to move 5% of your stock holdings into bonds)
Tuesday, January 6, 2009
PLEASE do me a favor
... and vote for Deep Capture as the best business blog of 2008.
http://2008.weblogawards.org/polls/best-business-blog/
You can vote once a day until Friday.
The regular media has pretty much blacklisted Deep Capture mentions -- and yet .. each time we learn more about the stock market's failing, it seems a Deep Capture chapter has pointed it out a year or more in advance.
Thank you!
Trond
http://2008.weblogawards.org/polls/best-business-blog/
You can vote once a day until Friday.
The regular media has pretty much blacklisted Deep Capture mentions -- and yet .. each time we learn more about the stock market's failing, it seems a Deep Capture chapter has pointed it out a year or more in advance.
Thank you!
Trond
Short selling ban falls a little ... short
How interesting!
This makes the case that while the SEC “banned” short selling on 700+ financial institutions last fall, 7 BILLION shares were in fact sold short.
Hmmm… remind me again of what we're paying the SEC for? And chairman Cox now claims the ban was the lowlight of his career. I wonder how many millions he'll make lobbying for a hedge fund when he is replaced by the incoming Obama.
http://www.deepcapture.com/940-million-holes-in-the-wall-whither-short-sale-ban/
Regards,
Trond
This makes the case that while the SEC “banned” short selling on 700+ financial institutions last fall, 7 BILLION shares were in fact sold short.
Hmmm… remind me again of what we're paying the SEC for? And chairman Cox now claims the ban was the lowlight of his career. I wonder how many millions he'll make lobbying for a hedge fund when he is replaced by the incoming Obama.
http://www.deepcapture.com/940-million-holes-in-the-wall-whither-short-sale-ban/
Regards,
Trond
Monday, December 22, 2008
More SEC failings
Whew -- I need to learn how to consistently write for this blog!
Here is a quickie ... please follow the link below to read a short article about Gary Aguirre, who was fired from the SEC for daring to investigate a hedge fund's activity.
http://www.truthout.org/122208J
(in part):
" ... In the investigation that I conducted, which is now the subject of a Senate report, there was suspicious trading activity involving both a hedge fund involving an $18 million profit. They also detected a $150,000 profit by a low-level employee of General Electric (GE) and a Taiwanese kung fu instructor. SEC passed on the hedge fund case where the trading indicated millions in profit and SEC focused on the GE employee and the kung fu instructor. The SEC and the US attorney rigorously prosecuted the low-level GE employee, but both passed on any investigation of the major hedge fund.
This is not a rarity..."
... and the beat goes on. *sigh*
Regards,
Trond
Here is a quickie ... please follow the link below to read a short article about Gary Aguirre, who was fired from the SEC for daring to investigate a hedge fund's activity.
http://www.truthout.org/122208J
(in part):
" ... In the investigation that I conducted, which is now the subject of a Senate report, there was suspicious trading activity involving both a hedge fund involving an $18 million profit. They also detected a $150,000 profit by a low-level employee of General Electric (GE) and a Taiwanese kung fu instructor. SEC passed on the hedge fund case where the trading indicated millions in profit and SEC focused on the GE employee and the kung fu instructor. The SEC and the US attorney rigorously prosecuted the low-level GE employee, but both passed on any investigation of the major hedge fund.
This is not a rarity..."
... and the beat goes on. *sigh*
Regards,
Trond
Thursday, November 13, 2008
Auto Industry Bailout?
Tell me it ain't so. We're considering an auto bailout?
My objection to the proposed auto bailout is that the auto companies were the ones at fault -- not funding the pensions correctly in earlier, good years. It is not the auto industry per se that is being hurt -- the companies can simply go bankrupt and then the Pension Guarantee Board or whatever it is called will take over the pensions and the taxpayers are still liable.
It is the workers who are being hurt by not having the pension they were promised. Recall that their wages would have been higher, all else equal (which it admittedly never is) if the company hadn't been supposedly funding their pensions.
The companies are at fault here, totally. They should have funded the pensions, they didn't. In those time periods, the management and BODs were probably paid bonuses by seeming more profitable by NOT funding the liabilities as they should have. It is inconceivable that we bail out the COMPANIES.
If the auto industry is not making enough to survive, they either need to raise prices or fold. Ugly times are coming, folks.
Regards,
Trond
My objection to the proposed auto bailout is that the auto companies were the ones at fault -- not funding the pensions correctly in earlier, good years. It is not the auto industry per se that is being hurt -- the companies can simply go bankrupt and then the Pension Guarantee Board or whatever it is called will take over the pensions and the taxpayers are still liable.
It is the workers who are being hurt by not having the pension they were promised. Recall that their wages would have been higher, all else equal (which it admittedly never is) if the company hadn't been supposedly funding their pensions.
The companies are at fault here, totally. They should have funded the pensions, they didn't. In those time periods, the management and BODs were probably paid bonuses by seeming more profitable by NOT funding the liabilities as they should have. It is inconceivable that we bail out the COMPANIES.
If the auto industry is not making enough to survive, they either need to raise prices or fold. Ugly times are coming, folks.
Regards,
Trond
Wednesday, October 29, 2008
The ups and downs of Elan
Right on the heels of good Tysabri news comes another PML case.
A little background -- Tysabri was pulled from the market in 2005 after just a couple months. 3 patients from the clinical trials developed PML -- which is a usually fatal infection in the brain caused by the JC virus. Somewhere around 80%+ of us have the JC virus dormant in our system, yet our immune system usually prevents it from penetrating the blood-brain barrier.
Of those 3 patients, it was eventually determined that one probably had had MS misdiagnosed, and the other two were in Avonex/Tysabri combined trials. Further, the misdiagnosed patient and one of the two combo therapy patients had had prior doses of MS drugs which weaken the immune system dealing with the blood-brain barrier. (Further background -- Elan's marketing partner, Biogen, happened to be the maker of Avonex and pushed the combo therapy trials in the US).
Tysabri is about twice as effective as the next best therapy at keeping MS patients from having relapses. The patients basically stormed the FDA and made it clear they were willing to take the PML risk to keep Tysabri -- see some of the quotes at the end of this post!
In August of 2006 theFDA voted to allow Tysabri back on the market, with VERY stringent protocols (called the TOUCH system) designed to keep patients who had used certain immuno-suppressing drugs previously, off Tysabri until those drugs had been washed out of the system.
The label on Tysabri says that the risk of PML is 1 in 1000. As of June 2008, about 31,000 patients were on it in non-trial prescriptions. In July, 2008, 2 patients in Europe were disclosed to have PML. Elan promptly cratered from $21ish to around $9.
Those two patients, however, are still alive. One is doing quite well and is home; the other not so well and in the hospital still. That one, had had prior immuno-suppressing drugs also though -- Europe was not bound by the TOUCH protocols. There is a new therapy for PML called plasma exchange (plex) that strips the Tysabri out of the body very quickly, which allows the immune system to ramp up immediately against the JC virus.
So now we have a third post-re-entry case -- Elan fell in after hours trading from $7ish to $5.50.
It appears this patient was in monotherapy too -- which actually bodes well for recovery. We now have 5 MS patients who developed PML -- 2 on mono and 3 on combo. This is out of nearly 40,000 total users -- 35,500 after the 3rd quarter results and 4,000 in the prior trials and marketed in 2005. Unless another 30 people develop PML in the next quarter, the risk is MUCH lower than 1:1000 -- and PML is no longer a near-certain death sentence.
Tysabri, at the forward one-year run rate, JUST became a blockbuster ($1B in sales). This case may dampen some demand, but the growth of new patients is still happening. Both companies agree they will have 100K patients on therapy by 2010, even counting in PML risk and dropouts. If acheived, that would lead Elan to a share price of $18 - 25 within 2 years.
That allows for no potential in the rest of the pipeline - and you heard it here -- we have AAB-001 in Phase III that will affect a subpopulation of Alzheimer's patients better than Aricept. We should learn more about that late next year of 2010 also -- and THAT would be a game changer with sales potential in the tens of billions.
Reagrds,
Trond
Tysabri quotes
Quotes and snippets regarding MS patients about Tysabri. These come from editorials, a bulletin board from the National MS Foundation, and from online MS bulletin boards.
Some of the quotes are in bold. These are my emphasis. [Trond]
My sister has had MS for over 2 decades. She has slowly gotten to the point where she is 100% bed ridden and needs a catheter. She can't even sit in a wheelchair any longer.She took TY 3 times and it was a miracle. I witnessed her walking on her own out to her mail box some 75 yards from her house. She could cook, eat on her own, use the bathroom ALONE for the first time in years. She had regained her life, her dignity, her future.
Bartira Tibertius of Chicago … received Tysabri for a full 28 months as part of a clinical trial. "I was doing great. I even forgot that I was sick," Ms. Tibertius, a language teacher and translator, tells us. "But now I'm getting very, very scared. It's deteriorating and I know that," describing numbness and tingling in her hands, arms, feet and face. As for any possible risks from the drug, she says, "I'm more scared of not having Tysabri than having Tysabri. If you told me the Tysabri would shorten 10 years of my life I would do it. I want quality of life, not quantity.">>
Talked to my sister this AM about the Avonex story. Here's her reply & I quote; "How many relapses did I had when I took Avonex? I won't take that crap ever again. I want to go back on Tysabri." End of quote. Avonex is toast.
I was in my neurologist’s office for an appointment late last winter and there were these people there, laughing, acting, and looking as if there wasn’t a care in the world. I thought it was a little odd. Why were they there? There didn’t look sick. During my appointment, my doctor told me that they were in the Tysabri study and had come in for their treatment. I had to stop the interferon because of liver complications. I had to stop the chemotherapy because of heart complications. I now have to take daily injections of Copaxone, since we were out of choices, and the MS is progressing, my doctor suggested Tysabri. It WAS my only choice. I was waiting for our insurance company’s approval the morning I heard it was being suspended. I was looking forward to a monthly treatment instead of daily injections that have unpleasant and painful side effects. I was looking forward to something that might offer more promise in managing this disease. I was looking forward to a treatment that offered hope that I might be able to return to some type of gainful employment. I went on Social Security Disability a few months later. I ended up with worsening symptoms on top of having to manage daily injection site reactions. The MS may have progressed any way, but who knows, it might not have. I sure would have liked a shot at it!
I was diagnosed with MS on April 10, 1996 (our Anniversary). At that time I experienced numbness in both of my feet. After both an MRI and a spinal tap my neurologist was able to confirm my condition. This was not what we wanted to hear but I was prepared to fight with all that was within me. Since that time my condition has progressed. It has affected my vision, my mobility (I struggle to walk with a walker now), my thought process, my speech, I now am incontinent, and am very tired most of the time. My quality of life is not good. My numbness is to my knees in both legs and is affecting my hands. My struggle to walk and my frequent falling is affecting my back (I now have 3 bulging disks) causing me to be in constant pain. I also deal with muscle spasms in both legs daily which also causes me to fall frequently.My neurologist has tried many treatments along the way which include Avonex, Rebif( which was a terrible experience), steroids, and many other drugs for specific symptoms. With all of this help my MS continues to progress with more and more relapses occurring much more frequently now. In Feb. ’05 I was given my first and only infusion of Tysabri. This was the most positive response I had ever had!! My fatigue was nearly eliminated (I did not have to lie down during the day for a month or more), my walking improved, my muscle spasms were gone, the vision problems were resolving, my thought processes greatly improved, my speech returned to normal (even my singing voice returned), the incontinence problem was much improved and there was once again hope for a quality of life.
"If I have to I'll take her to Europe for Tysabri if they approve it before the f**king FDA gets off their ass."
A little background -- Tysabri was pulled from the market in 2005 after just a couple months. 3 patients from the clinical trials developed PML -- which is a usually fatal infection in the brain caused by the JC virus. Somewhere around 80%+ of us have the JC virus dormant in our system, yet our immune system usually prevents it from penetrating the blood-brain barrier.
Of those 3 patients, it was eventually determined that one probably had had MS misdiagnosed, and the other two were in Avonex/Tysabri combined trials. Further, the misdiagnosed patient and one of the two combo therapy patients had had prior doses of MS drugs which weaken the immune system dealing with the blood-brain barrier. (Further background -- Elan's marketing partner, Biogen, happened to be the maker of Avonex and pushed the combo therapy trials in the US).
Tysabri is about twice as effective as the next best therapy at keeping MS patients from having relapses. The patients basically stormed the FDA and made it clear they were willing to take the PML risk to keep Tysabri -- see some of the quotes at the end of this post!
In August of 2006 theFDA voted to allow Tysabri back on the market, with VERY stringent protocols (called the TOUCH system) designed to keep patients who had used certain immuno-suppressing drugs previously, off Tysabri until those drugs had been washed out of the system.
The label on Tysabri says that the risk of PML is 1 in 1000. As of June 2008, about 31,000 patients were on it in non-trial prescriptions. In July, 2008, 2 patients in Europe were disclosed to have PML. Elan promptly cratered from $21ish to around $9.
Those two patients, however, are still alive. One is doing quite well and is home; the other not so well and in the hospital still. That one, had had prior immuno-suppressing drugs also though -- Europe was not bound by the TOUCH protocols. There is a new therapy for PML called plasma exchange (plex) that strips the Tysabri out of the body very quickly, which allows the immune system to ramp up immediately against the JC virus.
So now we have a third post-re-entry case -- Elan fell in after hours trading from $7ish to $5.50.
It appears this patient was in monotherapy too -- which actually bodes well for recovery. We now have 5 MS patients who developed PML -- 2 on mono and 3 on combo. This is out of nearly 40,000 total users -- 35,500 after the 3rd quarter results and 4,000 in the prior trials and marketed in 2005. Unless another 30 people develop PML in the next quarter, the risk is MUCH lower than 1:1000 -- and PML is no longer a near-certain death sentence.
Tysabri, at the forward one-year run rate, JUST became a blockbuster ($1B in sales). This case may dampen some demand, but the growth of new patients is still happening. Both companies agree they will have 100K patients on therapy by 2010, even counting in PML risk and dropouts. If acheived, that would lead Elan to a share price of $18 - 25 within 2 years.
That allows for no potential in the rest of the pipeline - and you heard it here -- we have AAB-001 in Phase III that will affect a subpopulation of Alzheimer's patients better than Aricept. We should learn more about that late next year of 2010 also -- and THAT would be a game changer with sales potential in the tens of billions.
Reagrds,
Trond
Tysabri quotes
Quotes and snippets regarding MS patients about Tysabri. These come from editorials, a bulletin board from the National MS Foundation, and from online MS bulletin boards.
Some of the quotes are in bold. These are my emphasis. [Trond]
My sister has had MS for over 2 decades. She has slowly gotten to the point where she is 100% bed ridden and needs a catheter. She can't even sit in a wheelchair any longer.She took TY 3 times and it was a miracle. I witnessed her walking on her own out to her mail box some 75 yards from her house. She could cook, eat on her own, use the bathroom ALONE for the first time in years. She had regained her life, her dignity, her future.
Bartira Tibertius of Chicago … received Tysabri for a full 28 months as part of a clinical trial. "I was doing great. I even forgot that I was sick," Ms. Tibertius, a language teacher and translator, tells us. "But now I'm getting very, very scared. It's deteriorating and I know that," describing numbness and tingling in her hands, arms, feet and face. As for any possible risks from the drug, she says, "I'm more scared of not having Tysabri than having Tysabri. If you told me the Tysabri would shorten 10 years of my life I would do it. I want quality of life, not quantity.">>
Talked to my sister this AM about the Avonex story. Here's her reply & I quote; "How many relapses did I had when I took Avonex? I won't take that crap ever again. I want to go back on Tysabri." End of quote. Avonex is toast.
I was in my neurologist’s office for an appointment late last winter and there were these people there, laughing, acting, and looking as if there wasn’t a care in the world. I thought it was a little odd. Why were they there? There didn’t look sick. During my appointment, my doctor told me that they were in the Tysabri study and had come in for their treatment. I had to stop the interferon because of liver complications. I had to stop the chemotherapy because of heart complications. I now have to take daily injections of Copaxone, since we were out of choices, and the MS is progressing, my doctor suggested Tysabri. It WAS my only choice. I was waiting for our insurance company’s approval the morning I heard it was being suspended. I was looking forward to a monthly treatment instead of daily injections that have unpleasant and painful side effects. I was looking forward to something that might offer more promise in managing this disease. I was looking forward to a treatment that offered hope that I might be able to return to some type of gainful employment. I went on Social Security Disability a few months later. I ended up with worsening symptoms on top of having to manage daily injection site reactions. The MS may have progressed any way, but who knows, it might not have. I sure would have liked a shot at it!
I was diagnosed with MS on April 10, 1996 (our Anniversary). At that time I experienced numbness in both of my feet. After both an MRI and a spinal tap my neurologist was able to confirm my condition. This was not what we wanted to hear but I was prepared to fight with all that was within me. Since that time my condition has progressed. It has affected my vision, my mobility (I struggle to walk with a walker now), my thought process, my speech, I now am incontinent, and am very tired most of the time. My quality of life is not good. My numbness is to my knees in both legs and is affecting my hands. My struggle to walk and my frequent falling is affecting my back (I now have 3 bulging disks) causing me to be in constant pain. I also deal with muscle spasms in both legs daily which also causes me to fall frequently.My neurologist has tried many treatments along the way which include Avonex, Rebif( which was a terrible experience), steroids, and many other drugs for specific symptoms. With all of this help my MS continues to progress with more and more relapses occurring much more frequently now. In Feb. ’05 I was given my first and only infusion of Tysabri. This was the most positive response I had ever had!! My fatigue was nearly eliminated (I did not have to lie down during the day for a month or more), my walking improved, my muscle spasms were gone, the vision problems were resolving, my thought processes greatly improved, my speech returned to normal (even my singing voice returned), the incontinence problem was much improved and there was once again hope for a quality of life.
"If I have to I'll take her to Europe for Tysabri if they approve it before the f**king FDA gets off their ass."
Tuesday, October 21, 2008
Tysabri numbers
Color me happy.
Biogen presented their earnings today and part of that was Tysabri numbers.
Background: Biogen is Elan's marketing partner for Tysabri. In late July it was disclosed that 2 patients in Europe had developed PML -- which Tysabri has a black-box label warning for, estimated at 1 in a 1000 chances of contracting.
We went from 31,800 patients at the end of June to 35,500 patients at the end of September. (#s are totals-- 600 of those are in clinical trials). So we gained 11% patients, in a quarter where we lost over half the market cap due to PML fears.
As usual, most PR coverage was negative - even false. For example, Lisa LaMotta, a Forbes Online columnist, wrote the following (as of 10/21/08 at 9:40 PM it still says this -- I fully expect by tomorrow it will be "updated" / edited ... AFTER the immediate damage has been done.
http://www.forbes.com/2008/10/21/biogen-idec-biotech-markets-equity-cx_lal_1021markets24.html?partner=yahootix
Market Scan
Biogen Bitten By Tysabri
Lisa LaMotta, 10.21.08, 3:45 PM ET
"....Biogen Idec reported earnings that beat expectations mostly due to the sale of its two multiple sclerosis drugs, but investors were disappointed by a slight slowdown from the second quarter in the number of patients taking one of them...
...As of the end of September, more than 35,500 patients were on Tysabri,the mulitple sclerosis drug in question, down from 31,800 at the end of the second quarter...."
1) slight slowdown? The RATE OF GROWTH slowed down. but the number of patients increased!
2) use a spell checker if you are going to call yourself a Forbes journalist!!! (sorry, catty, I know)
3) First time I've heard of 35K being lower than 31K.
Almost sounds like she'd written the hit piece first -- intending simply to fill in the expected bad numbers, doesn't it?
Next -- PML risk; rated at 1:1000.
We have 35,000 on therapy now, and 3,000 from before 2006, with a total of 4 patients contracting PML. It sounds to me more like 1 : 10,000.
Elan is around $9 right now, and SO UNDERVALUED by Mr. Market that is scary. Tysabri sales are increasing and we officially hit blockbuster status -- sales of $1B (granted -- projecting forward revenues).
Before the PML scare in July just on Tysabri Elan was valued around $20. (don't get me started on the Alzheimer's drug AAB-001 and its potential -- a massive Phase III trial nearly a year already underway from it's first dosed patient and a statistically significant showing in a subgroup of gene carriers).
It will probably be one more quarter before the market shows Elan any love -- and coincidentally the next quarter which should show a large increase in quarter-over-quarter sales of Tysabri.
So I would not be surprised if Elan bounced between $8 and $11 over the next three months -- but by February of 2009 I fully expect to see Elan at about $14 - 17; a rather sweet return of 50% or so. If an interim look at AAB-001 comes in positive, then the rocketship ignites.
Regards,
Trond
Biogen presented their earnings today and part of that was Tysabri numbers.
Background: Biogen is Elan's marketing partner for Tysabri. In late July it was disclosed that 2 patients in Europe had developed PML -- which Tysabri has a black-box label warning for, estimated at 1 in a 1000 chances of contracting.
We went from 31,800 patients at the end of June to 35,500 patients at the end of September. (#s are totals-- 600 of those are in clinical trials). So we gained 11% patients, in a quarter where we lost over half the market cap due to PML fears.
As usual, most PR coverage was negative - even false. For example, Lisa LaMotta, a Forbes Online columnist, wrote the following (as of 10/21/08 at 9:40 PM it still says this -- I fully expect by tomorrow it will be "updated" / edited ... AFTER the immediate damage has been done.
http://www.forbes.com/2008/10/21/biogen-idec-biotech-markets-equity-cx_lal_1021markets24.html?partner=yahootix
Market Scan
Biogen Bitten By Tysabri
Lisa LaMotta, 10.21.08, 3:45 PM ET
"....Biogen Idec reported earnings that beat expectations mostly due to the sale of its two multiple sclerosis drugs, but investors were disappointed by a slight slowdown from the second quarter in the number of patients taking one of them...
...As of the end of September, more than 35,500 patients were on Tysabri,the mulitple sclerosis drug in question, down from 31,800 at the end of the second quarter...."
1) slight slowdown? The RATE OF GROWTH slowed down. but the number of patients increased!
2) use a spell checker if you are going to call yourself a Forbes journalist!!! (sorry, catty, I know)
3) First time I've heard of 35K being lower than 31K.
Almost sounds like she'd written the hit piece first -- intending simply to fill in the expected bad numbers, doesn't it?
Next -- PML risk; rated at 1:1000.
We have 35,000 on therapy now, and 3,000 from before 2006, with a total of 4 patients contracting PML. It sounds to me more like 1 : 10,000.
Elan is around $9 right now, and SO UNDERVALUED by Mr. Market that is scary. Tysabri sales are increasing and we officially hit blockbuster status -- sales of $1B (granted -- projecting forward revenues).
Before the PML scare in July just on Tysabri Elan was valued around $20. (don't get me started on the Alzheimer's drug AAB-001 and its potential -- a massive Phase III trial nearly a year already underway from it's first dosed patient and a statistically significant showing in a subgroup of gene carriers).
It will probably be one more quarter before the market shows Elan any love -- and coincidentally the next quarter which should show a large increase in quarter-over-quarter sales of Tysabri.
So I would not be surprised if Elan bounced between $8 and $11 over the next three months -- but by February of 2009 I fully expect to see Elan at about $14 - 17; a rather sweet return of 50% or so. If an interim look at AAB-001 comes in positive, then the rocketship ignites.
Regards,
Trond
Sunday, October 19, 2008
Closing up shop
I just have to pass this along...
-----
Andrew Lahde, manager of a small California hedge fund, Lahde Capital, burst into the spotlight last year after his one-year-old fund returned 866 percent betting against the subprime collapse.
Last month, he did the unthinkable -- he shut things down, claiming dealing with his bank counterparties had become too risky. Today, Lahde passed along his "goodbye" letter, a rollicking missive on everything from greed to economic philosophy.
-----
Today I write not to gloat. Given the pain that nearly everyone is experiencing, that would be entirely inappropriate. Nor am I writing to make further predictions, as most of my forecasts in previous letters have unfolded or are in the process of unfolding.
Instead, I am writing to say goodbye. Recently, on the front page of Section C of the Wall Street Journal, a hedge fund manager who was also closing up shop (a $300 million fund), was quoted as saying, "What I have learned about the hedge fund business is that I hate it."
I could not agree more with that statement. I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government.
All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.
There are far too many people for me to sincerely thank for my success. However, I do not want to sound like a Hollywood actor accepting an award. The money was reward enough. Furthermore, the endless list those deserving thanks know who they are. I will no longer manage money for other people or institutions. I have enough of my own wealth to manage. Some people, who think they have arrived at a reasonable estimate of my net worth, might be surprised that I would call it quits with such a small war chest. That is fine; I am content with my rewards. Moreover, I will let others try to amass nine, ten or eleven figure net worths. Meanwhile, their lives suck. Appointments back to back, booked solid for the next three months, they look forward to their two week vacation in January during which they will likely be glued to their Blackberries or other such devices.
What is the point? They will all be forgotten in fifty years anyway. Steve Balmer, Steven Cohen, and Larry Ellison will all be forgotten. I do not understand the legacy thing. Nearly everyone will be forgotten. Give up on leaving your mark. Throw the Blackberry away and enjoy life.
So this is it. With all due respect, I am dropping out. Please do not expect any type of reply to emails or voicemails within normal time frames or at all. Andy Springer and his company will be handling the dissolution of the fund. And don't worry about my employees, they were always employed by Mr. Springer's company and only one (who has been well-rewarded) will lose his job. I have no interest in any deals in which anyone would like me to participate.
I truly do not have a strong opinion about any market right now, other than to say that things will continue to get worse for some time, probably years. I am content sitting on the sidelines and waiting. After all, sitting and waiting is how we made money from the subprime debacle. I now have time to repair my health, which was destroyed by the stress I layered onto myself over the past two years, as well as my entire life -- where I had to compete for spaces in universities and graduate schools, jobs and assets under management -- with those who had all the advantages (rich parents) that I did not. May meritocracy be part of a new form of government, which needs to be established.
On the issue of the U.S. Government, I would like to make a modest proposal.
First, I point out the obvious flaws, whereby legislation was repeatedly brought forth to Congress over the past eight years, which would have reigned in the predatory lending practices of now mostly defunct institutions. These institutions regularly filled the coffers of both parties in return for voting down all of this legislation designed to protect the common citizen. This is an outrage, yet no one seems to know or care about it. Since Thomas Jefferson and Adam Smith passed, I would argue that there has been a dearth of worthy philosophers in this country, at least ones focused on improving government.
Capitalism worked for two hundred years, but times change, and systems become corrupt. George Soros, a man of staggering wealth, has stated that he would like to be remembered as a philosopher. My suggestion is that this great man start and sponsor a forum for great minds to come together to create a new system of government that truly represents the common man's interest, while at the same time creating rewards great enough to attract the best and brightest minds to serve in government roles without having to rely on corruption to further their interests or lifestyles. This forum could be similar to the one used to create the operating system, Linux, which competes with Microsoft's near monopoly. I believe there is an answer, but for now the system is clearly broken.
Lastly, while I still have an audience, I would like to bring attention to an alternative food and energy source. You won't see it included in BP's, "Feel good. We are working on sustainable solutions," television commercials, nor is it mentioned in ADM's similar commercials. But hemp has been used for at least 5,000 years for cloth and food, as well as just about everything that is produced from petroleum products.
Hemp is not marijuana and vice versa. Hemp is the male plant and it grows like a weed, hence the slang term. The original American flag was made of hemp fiber and our Constitution was printed on paper made of hemp. It was used as recently as World War II by the U.S. Government, and then promptly made illegal after the war was won.
At a time when rhetoric is flying about becoming more self-sufficient in terms of energy, why is it illegal to grow this plant in this country? Ah, the female. The evil female plant -- marijuana. It gets you high, it makes you laugh, it does not produce a hangover. Unlike alcohol, it does not result in bar fights or wife beating. So, why is this innocuous plant illegal? Is it a gateway drug? No, that would be alcohol, which is so heavily advertised in this country.
My only conclusion as to why it is illegal, is that Corporate America, which owns Congress, would rather sell you Paxil, Zoloft, Xanax and other additive drugs, than allow you to grow a plant in your home without some of the profits going into their coffers. This policy is ludicrous. It has surely contributed to our dependency on foreign energy sources. Our policies have other countries literally laughing at our stupidity, most notably Canada, as well as several European nations (both Eastern and Western). You would not know this by paying attention to U.S. media sources though, as they tend not to elaborate on who is laughing at the United States this week. Please people, let's stop the rhetoric and start thinking about how we can truly become self-sufficient.
With that I say good-bye and good luck.
All the best,
Andrew Lahde
-----
Andrew Lahde, manager of a small California hedge fund, Lahde Capital, burst into the spotlight last year after his one-year-old fund returned 866 percent betting against the subprime collapse.
Last month, he did the unthinkable -- he shut things down, claiming dealing with his bank counterparties had become too risky. Today, Lahde passed along his "goodbye" letter, a rollicking missive on everything from greed to economic philosophy.
-----
Today I write not to gloat. Given the pain that nearly everyone is experiencing, that would be entirely inappropriate. Nor am I writing to make further predictions, as most of my forecasts in previous letters have unfolded or are in the process of unfolding.
Instead, I am writing to say goodbye. Recently, on the front page of Section C of the Wall Street Journal, a hedge fund manager who was also closing up shop (a $300 million fund), was quoted as saying, "What I have learned about the hedge fund business is that I hate it."
I could not agree more with that statement. I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government.
All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.
There are far too many people for me to sincerely thank for my success. However, I do not want to sound like a Hollywood actor accepting an award. The money was reward enough. Furthermore, the endless list those deserving thanks know who they are. I will no longer manage money for other people or institutions. I have enough of my own wealth to manage. Some people, who think they have arrived at a reasonable estimate of my net worth, might be surprised that I would call it quits with such a small war chest. That is fine; I am content with my rewards. Moreover, I will let others try to amass nine, ten or eleven figure net worths. Meanwhile, their lives suck. Appointments back to back, booked solid for the next three months, they look forward to their two week vacation in January during which they will likely be glued to their Blackberries or other such devices.
What is the point? They will all be forgotten in fifty years anyway. Steve Balmer, Steven Cohen, and Larry Ellison will all be forgotten. I do not understand the legacy thing. Nearly everyone will be forgotten. Give up on leaving your mark. Throw the Blackberry away and enjoy life.
So this is it. With all due respect, I am dropping out. Please do not expect any type of reply to emails or voicemails within normal time frames or at all. Andy Springer and his company will be handling the dissolution of the fund. And don't worry about my employees, they were always employed by Mr. Springer's company and only one (who has been well-rewarded) will lose his job. I have no interest in any deals in which anyone would like me to participate.
I truly do not have a strong opinion about any market right now, other than to say that things will continue to get worse for some time, probably years. I am content sitting on the sidelines and waiting. After all, sitting and waiting is how we made money from the subprime debacle. I now have time to repair my health, which was destroyed by the stress I layered onto myself over the past two years, as well as my entire life -- where I had to compete for spaces in universities and graduate schools, jobs and assets under management -- with those who had all the advantages (rich parents) that I did not. May meritocracy be part of a new form of government, which needs to be established.
On the issue of the U.S. Government, I would like to make a modest proposal.
First, I point out the obvious flaws, whereby legislation was repeatedly brought forth to Congress over the past eight years, which would have reigned in the predatory lending practices of now mostly defunct institutions. These institutions regularly filled the coffers of both parties in return for voting down all of this legislation designed to protect the common citizen. This is an outrage, yet no one seems to know or care about it. Since Thomas Jefferson and Adam Smith passed, I would argue that there has been a dearth of worthy philosophers in this country, at least ones focused on improving government.
Capitalism worked for two hundred years, but times change, and systems become corrupt. George Soros, a man of staggering wealth, has stated that he would like to be remembered as a philosopher. My suggestion is that this great man start and sponsor a forum for great minds to come together to create a new system of government that truly represents the common man's interest, while at the same time creating rewards great enough to attract the best and brightest minds to serve in government roles without having to rely on corruption to further their interests or lifestyles. This forum could be similar to the one used to create the operating system, Linux, which competes with Microsoft's near monopoly. I believe there is an answer, but for now the system is clearly broken.
Lastly, while I still have an audience, I would like to bring attention to an alternative food and energy source. You won't see it included in BP's, "Feel good. We are working on sustainable solutions," television commercials, nor is it mentioned in ADM's similar commercials. But hemp has been used for at least 5,000 years for cloth and food, as well as just about everything that is produced from petroleum products.
Hemp is not marijuana and vice versa. Hemp is the male plant and it grows like a weed, hence the slang term. The original American flag was made of hemp fiber and our Constitution was printed on paper made of hemp. It was used as recently as World War II by the U.S. Government, and then promptly made illegal after the war was won.
At a time when rhetoric is flying about becoming more self-sufficient in terms of energy, why is it illegal to grow this plant in this country? Ah, the female. The evil female plant -- marijuana. It gets you high, it makes you laugh, it does not produce a hangover. Unlike alcohol, it does not result in bar fights or wife beating. So, why is this innocuous plant illegal? Is it a gateway drug? No, that would be alcohol, which is so heavily advertised in this country.
My only conclusion as to why it is illegal, is that Corporate America, which owns Congress, would rather sell you Paxil, Zoloft, Xanax and other additive drugs, than allow you to grow a plant in your home without some of the profits going into their coffers. This policy is ludicrous. It has surely contributed to our dependency on foreign energy sources. Our policies have other countries literally laughing at our stupidity, most notably Canada, as well as several European nations (both Eastern and Western). You would not know this by paying attention to U.S. media sources though, as they tend not to elaborate on who is laughing at the United States this week. Please people, let's stop the rhetoric and start thinking about how we can truly become self-sufficient.
With that I say good-bye and good luck.
All the best,
Andrew Lahde
California Propositions
Well, we're getting close to Election Day. Are you registered? Do you know where your polling station is?
Let me start by saying that I do not think one should vote on a particular issue if you do not know anything about it, nor do you care. This is not a test where you might get something right by filling in every question. A casual yes or no will rob someone else of their vote that has purpose behind it.
Now, please do not take that to mean only vote when you have a burning need. If you know about an issue and have ANY interest in the outcome, vote and be counted! If you really want a particular person in office, or DO NOT want someone else in office, vote for or against. But voting is not only a right but a responsibility -- exercise it well.
Let's recap the first three...
Proposition 1 has been replaced by 1A. I do not see any real differences and still say NO.
Proposition 2 I said YES, but regard as a pretty lightweight issue. I may end up not voting at all on this issue, as per my rant above.
Proposition 3 I said NO.
Proposition 4 is the Waiting Period and Parent Notification law.
This is a tough issue because it deals with abortion, which already splits the electorate. As a parent, albeit of boys, I have considerable sympathy for the pro side. The possibility of my sons having surgery with my wife or I not being notified makes me cringe.
But -- I have to look at the possible consequences, and I realize that not all families are exactly a functional, cohesive unit. My wife has worked with troubled teens who come from bad home situations -- and some girls would honestly and literally fear for their lives if they has to tell their parents they were pregnant.
Now, let's be clear, Prop 4 has language saying that there are alternatively -- telling a different family member or getting a waiver from a court. But let's try and live in the real world -- what girls are going to be able to navigate through the court system? If they have a bad family situation, are they going to trust an aunt or grandmother?
I say NO.
Proposition 5 is the parole and rehab issue.
There is a LOT of language behind this law. I come away fairly impressed.
To those who do not know me, let me be clear -- I am a big fan of consequences for one's actions. Jailtime has to be an option for determent to work. Yet, drug offenses are in a different baliwick. When someone is addicted, I think we have to consider some alternatives. Californian's spend so much on incarceration as it is, and our jails are so crowded, that we have to go a different direction.
This bill seems to be specific enough to a range of behaviors that it will not be mis-used, and it leaves real determent as a last option, or for repeat offenders.
I say YES.
Proposition 6 is the Police funding and Criminal penalties law.
I don't feel this is necessary to spend a lot of time on. For me, the item that sways me is codifying a number of gang related offenses. I feel this gives the court system additional weapons by allowing more and specific charges. Plea bargaining seems to be the way defendants manage to lessen their consequences; so the more specific charges that can be leveled against them, the better from the rule of law.
I say YES.
Proposition 7 is the Renewable Energy bill.
To my great surprise, I am in favor of this bill. Normally, I would look for protections for the consumer (none) and real audits for the monies to be spent (some, but not great).
Here's my position: every election cycle we bitch about how we want alternative energy solutions. And yet no bill or law seems perfect because we want it all: we want to force those nasty coal and gas companies to invest more in green energy, we want consumers to do what is right, even if it's more expensive, we want government to run leaner and yet to promote renewable energy.
WE CAN'T HAVE IT ALL. And thus we have to make a decision at some point that it's worth some higher prices, some annoyances, and some additional government cost. A major debating point for the presidential candidates has been alternative energy and both are for it. But is anyone under the illusion that it will be free?
By forcing demand higher for alternative energy sources, companies will slowly start allocating more resources towards finding better solutions. As more of these solutions come into the markets, costs will come down and at some point match and compete with the costs for electricity produces through coal.
We will face higher costs, as consumers. But this is one case where the end justifies the means. I say YES.
Proposition 8 eliminates gay marriage by codifying marriage in the State Constitution as being between one man and one woman.
I, a straight man, am married to a straight woman. Oddly enough, my marriage is just as strong now as it was prior to May 16, when the state Supreme Court overturned the ban on gay marriages.
So I am a little non-plussed when Prop 8 supporters say they are protecting, defending, and strengthening MY marriage.
Now, California does have a domestic partnership law, but that does not cover contingencies that spouses take for granted.
The line of attack I am frankly surprised that supporters have not used is that if we allow two people of the same sex to get married, why should not more of any sex? (bigamy, polygamy)
That might be opening the floodgates!
Regardless, beyond being what I consider an abuse of amending the Constitution, I fail to see how this "protects" marriage for anything but discrimination.
I say NO.
Prop 9 is the Victim's Right Act -- I say YES.
Again, this issue is not something that will be debated on it's merits; you will feel it is good or not. Even the Con arguments in the Voter Information Guide acknowledge it is "well-meaning" and only feel situations covered by this are already covered by Prop 8 in 1982.
I have not compared the two word for word -- but going solely by the wording of this Act, I approve.
Proposition 10 is the Alternative Fuel Vehicles law.
I have to come down on the nay side. This bill appears to be aimed at non-hybrid (gasoline/electric) types of vehicles. Although perhaps good in the long range view, I think this gives too much to that spectrum of vehicles that the market is already discounting. I would prefer to see the subsidies and benefits to hybrids -- which have already made some inroads on consumer choices. I say NO.
Prop 11 is the Redistricting Act.
Finally! I truly enjoy the squawking that both parties are doing against this law.
This would create a commission that mandates inclusion of Democrats, Republicans, AND independant/non-affiliated voters. They could not have been political candidates, a lobbyist, or large political donor within the last ten years.
They would be charged with drawing the congressional districts every ten years. No more gerrymandering!
I say, wholeheartedly, YES.
Proposition 12 is the Veterans' Bond Act.
This allows up to 3600 veterans the opportunity to receive loans for home purchases. Since 1921, this program, when funded, has been totally self-supporting.
The only anti-12 argument presented is that we should limit it to veterans who served in combat, instead of all veterans.
I say YES.
And there you have it. VOTE!
Regards,
Trond
Let me start by saying that I do not think one should vote on a particular issue if you do not know anything about it, nor do you care. This is not a test where you might get something right by filling in every question. A casual yes or no will rob someone else of their vote that has purpose behind it.
Now, please do not take that to mean only vote when you have a burning need. If you know about an issue and have ANY interest in the outcome, vote and be counted! If you really want a particular person in office, or DO NOT want someone else in office, vote for or against. But voting is not only a right but a responsibility -- exercise it well.
Let's recap the first three...
Proposition 1 has been replaced by 1A. I do not see any real differences and still say NO.
Proposition 2 I said YES, but regard as a pretty lightweight issue. I may end up not voting at all on this issue, as per my rant above.
Proposition 3 I said NO.
Proposition 4 is the Waiting Period and Parent Notification law.
This is a tough issue because it deals with abortion, which already splits the electorate. As a parent, albeit of boys, I have considerable sympathy for the pro side. The possibility of my sons having surgery with my wife or I not being notified makes me cringe.
But -- I have to look at the possible consequences, and I realize that not all families are exactly a functional, cohesive unit. My wife has worked with troubled teens who come from bad home situations -- and some girls would honestly and literally fear for their lives if they has to tell their parents they were pregnant.
Now, let's be clear, Prop 4 has language saying that there are alternatively -- telling a different family member or getting a waiver from a court. But let's try and live in the real world -- what girls are going to be able to navigate through the court system? If they have a bad family situation, are they going to trust an aunt or grandmother?
I say NO.
Proposition 5 is the parole and rehab issue.
There is a LOT of language behind this law. I come away fairly impressed.
To those who do not know me, let me be clear -- I am a big fan of consequences for one's actions. Jailtime has to be an option for determent to work. Yet, drug offenses are in a different baliwick. When someone is addicted, I think we have to consider some alternatives. Californian's spend so much on incarceration as it is, and our jails are so crowded, that we have to go a different direction.
This bill seems to be specific enough to a range of behaviors that it will not be mis-used, and it leaves real determent as a last option, or for repeat offenders.
I say YES.
Proposition 6 is the Police funding and Criminal penalties law.
I don't feel this is necessary to spend a lot of time on. For me, the item that sways me is codifying a number of gang related offenses. I feel this gives the court system additional weapons by allowing more and specific charges. Plea bargaining seems to be the way defendants manage to lessen their consequences; so the more specific charges that can be leveled against them, the better from the rule of law.
I say YES.
Proposition 7 is the Renewable Energy bill.
To my great surprise, I am in favor of this bill. Normally, I would look for protections for the consumer (none) and real audits for the monies to be spent (some, but not great).
Here's my position: every election cycle we bitch about how we want alternative energy solutions. And yet no bill or law seems perfect because we want it all: we want to force those nasty coal and gas companies to invest more in green energy, we want consumers to do what is right, even if it's more expensive, we want government to run leaner and yet to promote renewable energy.
WE CAN'T HAVE IT ALL. And thus we have to make a decision at some point that it's worth some higher prices, some annoyances, and some additional government cost. A major debating point for the presidential candidates has been alternative energy and both are for it. But is anyone under the illusion that it will be free?
By forcing demand higher for alternative energy sources, companies will slowly start allocating more resources towards finding better solutions. As more of these solutions come into the markets, costs will come down and at some point match and compete with the costs for electricity produces through coal.
We will face higher costs, as consumers. But this is one case where the end justifies the means. I say YES.
Proposition 8 eliminates gay marriage by codifying marriage in the State Constitution as being between one man and one woman.
I, a straight man, am married to a straight woman. Oddly enough, my marriage is just as strong now as it was prior to May 16, when the state Supreme Court overturned the ban on gay marriages.
So I am a little non-plussed when Prop 8 supporters say they are protecting, defending, and strengthening MY marriage.
Now, California does have a domestic partnership law, but that does not cover contingencies that spouses take for granted.
The line of attack I am frankly surprised that supporters have not used is that if we allow two people of the same sex to get married, why should not more of any sex? (bigamy, polygamy)
That might be opening the floodgates!
Regardless, beyond being what I consider an abuse of amending the Constitution, I fail to see how this "protects" marriage for anything but discrimination.
I say NO.
Prop 9 is the Victim's Right Act -- I say YES.
Again, this issue is not something that will be debated on it's merits; you will feel it is good or not. Even the Con arguments in the Voter Information Guide acknowledge it is "well-meaning" and only feel situations covered by this are already covered by Prop 8 in 1982.
I have not compared the two word for word -- but going solely by the wording of this Act, I approve.
Proposition 10 is the Alternative Fuel Vehicles law.
I have to come down on the nay side. This bill appears to be aimed at non-hybrid (gasoline/electric) types of vehicles. Although perhaps good in the long range view, I think this gives too much to that spectrum of vehicles that the market is already discounting. I would prefer to see the subsidies and benefits to hybrids -- which have already made some inroads on consumer choices. I say NO.
Prop 11 is the Redistricting Act.
Finally! I truly enjoy the squawking that both parties are doing against this law.
This would create a commission that mandates inclusion of Democrats, Republicans, AND independant/non-affiliated voters. They could not have been political candidates, a lobbyist, or large political donor within the last ten years.
They would be charged with drawing the congressional districts every ten years. No more gerrymandering!
I say, wholeheartedly, YES.
Proposition 12 is the Veterans' Bond Act.
This allows up to 3600 veterans the opportunity to receive loans for home purchases. Since 1921, this program, when funded, has been totally self-supporting.
The only anti-12 argument presented is that we should limit it to veterans who served in combat, instead of all veterans.
I say YES.
And there you have it. VOTE!
Regards,
Trond
Friday, October 17, 2008
Dendreon -- a sell?
Ming asked about my thoughts regarding an analyst who initiated coverage on Dendreon (DNDN) at a Sell.
Mike Huckman from CNBC wrote about it here: http://www.cnbc.com/id/27216583/site/14081545?__source=yahoo%7Cheadline%7Cquote%7Ctext%7C&par=yahoo
First, Huckman does a decent job of describing the situation. Let me be quite clear here – the only reason I bring up Huckman is that he references the report, which I have not seen directly.
The analyst, Joe Pantginis from the firm Merriman Curhan Ford, makes several statements that are either false, misleading, or simply humorous.
Let’s start with funny. Here’s a quote I especially loved:
“"We believe a positive...outcome could significantly drive the stock forward. (But) we believe this singular event does not warrant owning the shares (except for very short-term oriented investors who want to bear the risk)."
Why in the world is any investor considering biotech stocks unless they are able to bear risks? And if he believes a positive outcome would be a “significant “ driver, why doesn’t that warrant owning shares?
Let’s review the interim results: They found a 20% reduction in risk of death by taking Provenge. Prior trials had similar results at similar timepoints.
And with a positive result, share price would advance.
And that timepoint is less than a year away.
… And yet, he recommends not only holding, but selling. Yikes.
Elsewhere, Pantginis advises there is potential competition from Cell Genesys (CEGE), a different immunotherapeutic vaccine called GVAX. Too bad just yesterday, CEGE announced they would be abandoning their Phase III trial with GVAX (http://www.cnbc.com/id/27214656/?for=cnbc).
He also advised that the price would be prohibitive, and threw out $75,000 for the course of treatment. Now, I cannot state what the cost would be – the company has NEVER addressed this question. But to be in line with Taxotere (chemo – really the only other choice for patients at this time) the price would be closer to $30 - $45 thousand instead. Add in the clear efficaciousness over Taxotere and I think price is not really an issue, anyway.
Too, he complains that Dendreon would have a hard time partnering ex-US. Let’s see – in April Takeda paid $50M upfront for Rest-Of-World rights to GVAX, with $270M in milestone payments – plus royalties on sales. Schering Plough paid Novacea $65M upfront and $350 in milestones + royalties for Asentar.
Hmmmm… both Asentar and GVAX are dead in the water now.
Provenge is THE ONLY immunotherapeutic left in Phase III trials for late stage prostate cancer – and yet partnering is hard? Big pharma is DYING to find compounds to acquire right now.
Here’s another quote, "We believe the stock has been too emotionally charged from both an investor and political standpoint and we would avoid the shares at this time."
Here’s a newsflash to Pantginis. Drugs don’t care if people love them or hate them. They work or don’t work. And if Provenge does work, then the stock will take off.
The really amusing thing is that Pantginis evidently admits that the IMPACT trial has a 50/50 shot at success. On failure, he says the stock would trade down 60-70%, and does not say what success would do to the share price. I think anyone looking at the price history pre-FDA 2007 would admit the stock will immediately hit the $20s if the final is statistically significant. I would say a $5 stock, at a literal 50/50 chance where the downside brings you to $2 and the upside is at $20+, deserves a modest investment. And that is even before you consider his estimate is pretty conservative.
Regards,
Trond
Mike Huckman from CNBC wrote about it here: http://www.cnbc.com/id/27216583/site/14081545?__source=yahoo%7Cheadline%7Cquote%7Ctext%7C&par=yahoo
First, Huckman does a decent job of describing the situation. Let me be quite clear here – the only reason I bring up Huckman is that he references the report, which I have not seen directly.
The analyst, Joe Pantginis from the firm Merriman Curhan Ford, makes several statements that are either false, misleading, or simply humorous.
Let’s start with funny. Here’s a quote I especially loved:
“"We believe a positive...outcome could significantly drive the stock forward. (But) we believe this singular event does not warrant owning the shares (except for very short-term oriented investors who want to bear the risk)."
Why in the world is any investor considering biotech stocks unless they are able to bear risks? And if he believes a positive outcome would be a “significant “ driver, why doesn’t that warrant owning shares?
Let’s review the interim results: They found a 20% reduction in risk of death by taking Provenge. Prior trials had similar results at similar timepoints.
And with a positive result, share price would advance.
And that timepoint is less than a year away.
… And yet, he recommends not only holding, but selling. Yikes.
Elsewhere, Pantginis advises there is potential competition from Cell Genesys (CEGE), a different immunotherapeutic vaccine called GVAX. Too bad just yesterday, CEGE announced they would be abandoning their Phase III trial with GVAX (http://www.cnbc.com/id/27214656/?for=cnbc).
He also advised that the price would be prohibitive, and threw out $75,000 for the course of treatment. Now, I cannot state what the cost would be – the company has NEVER addressed this question. But to be in line with Taxotere (chemo – really the only other choice for patients at this time) the price would be closer to $30 - $45 thousand instead. Add in the clear efficaciousness over Taxotere and I think price is not really an issue, anyway.
Too, he complains that Dendreon would have a hard time partnering ex-US. Let’s see – in April Takeda paid $50M upfront for Rest-Of-World rights to GVAX, with $270M in milestone payments – plus royalties on sales. Schering Plough paid Novacea $65M upfront and $350 in milestones + royalties for Asentar.
Hmmmm… both Asentar and GVAX are dead in the water now.
Provenge is THE ONLY immunotherapeutic left in Phase III trials for late stage prostate cancer – and yet partnering is hard? Big pharma is DYING to find compounds to acquire right now.
Here’s another quote, "We believe the stock has been too emotionally charged from both an investor and political standpoint and we would avoid the shares at this time."
Here’s a newsflash to Pantginis. Drugs don’t care if people love them or hate them. They work or don’t work. And if Provenge does work, then the stock will take off.
The really amusing thing is that Pantginis evidently admits that the IMPACT trial has a 50/50 shot at success. On failure, he says the stock would trade down 60-70%, and does not say what success would do to the share price. I think anyone looking at the price history pre-FDA 2007 would admit the stock will immediately hit the $20s if the final is statistically significant. I would say a $5 stock, at a literal 50/50 chance where the downside brings you to $2 and the upside is at $20+, deserves a modest investment. And that is even before you consider his estimate is pretty conservative.
Regards,
Trond
Friday, October 10, 2008
California Propositions 1 - 3
Well,
I have read through the Information Guide for Props 1 through 3 so far.
Proposition 1: High Speed Rail
$9.95B for a network of high speed electric trains.
First -- can I say it is highly annoying to read the arguments FOR any bond measure that is paid back through the General Fund that shout "WITHOUT RAISING TAXES". While it is true that a specific amount is not listed to be taxed on any particular group, to pay the P&I installments on the bond either something else must be cut OR additional revenue needs to be raised. And the only way of raising revenue for the General Fund is really to raise taxes.
I like the idea of the bond overall -- and I think this will need to be done at some point within 10 to 15 years. The additional money spent would mostly go to construction and engineering firms, which would provide jobs.
But -- we need local INTRACITY options for commuters before we need INTERCITY options. The amounts raised are not enough to actually fully do what they want to do. And we simply can't afford more expensive projects like this in a bad economy and in a time of spiraling state deficits.
I say NO.
Prop 2: Farm Animal Cruelty
Lukewarm -- not much analysis here. I am not in general a tree-hugger or worry too much about animals I intend on eating. This pretty much will fall under where you stand on animals.
Yet -- I see potential for healthier animals with this in the Code. The price of eggs may rise by about $.01 per egg, and I'm okoay with that. I find it disingenuous for the AGAINST crowd to argue that there would be a higher risk of disease.
I say YES.
Prop 3: Children's Hospital Bond
$980M for construction, expansion, and equipping of children's hospitals.
Again, as with Prop 1, my overall argument against this is that we simply cannot spend more at the moment. Most bond issues have good intentions, yet if we really want a balanced budget and cut spending, we have to say NO sometimes.
There are some great points to make for this issue -- and adding capacity for hospitals is definitely needed. But again, it is a question of what we can afford right now.
I say NO.
I'll cover more Propositions in the next few days...
Regards,
Trond
I have read through the Information Guide for Props 1 through 3 so far.
Proposition 1: High Speed Rail
$9.95B for a network of high speed electric trains.
First -- can I say it is highly annoying to read the arguments FOR any bond measure that is paid back through the General Fund that shout "WITHOUT RAISING TAXES". While it is true that a specific amount is not listed to be taxed on any particular group, to pay the P&I installments on the bond either something else must be cut OR additional revenue needs to be raised. And the only way of raising revenue for the General Fund is really to raise taxes.
I like the idea of the bond overall -- and I think this will need to be done at some point within 10 to 15 years. The additional money spent would mostly go to construction and engineering firms, which would provide jobs.
But -- we need local INTRACITY options for commuters before we need INTERCITY options. The amounts raised are not enough to actually fully do what they want to do. And we simply can't afford more expensive projects like this in a bad economy and in a time of spiraling state deficits.
I say NO.
Prop 2: Farm Animal Cruelty
Lukewarm -- not much analysis here. I am not in general a tree-hugger or worry too much about animals I intend on eating. This pretty much will fall under where you stand on animals.
Yet -- I see potential for healthier animals with this in the Code. The price of eggs may rise by about $.01 per egg, and I'm okoay with that. I find it disingenuous for the AGAINST crowd to argue that there would be a higher risk of disease.
I say YES.
Prop 3: Children's Hospital Bond
$980M for construction, expansion, and equipping of children's hospitals.
Again, as with Prop 1, my overall argument against this is that we simply cannot spend more at the moment. Most bond issues have good intentions, yet if we really want a balanced budget and cut spending, we have to say NO sometimes.
There are some great points to make for this issue -- and adding capacity for hospitals is definitely needed. But again, it is a question of what we can afford right now.
I say NO.
I'll cover more Propositions in the next few days...
Regards,
Trond
Wednesday, October 8, 2008
Upcoming topics and Dendreon interim news
Good morning,
Here's a quick list of topics I want to address in the next few days to weeks:
Californian Propositions that are on the ballot in Nov.
Market makers
Short selling
Presidential candidate claims
Elan (earnings call in late Oct.)
Stocks I like right now
Budgets (personal finance, not the boondoggle we call the federal budget!)
Please - if you want a particular topic addressed, leave a comment or email me at Trond24@gmail.com. Thanks to Ming for the CA Prop question.
On to Dendreon!
On Monday morning (10/6/08) I listened to the conference call CEO Mitchell Gold gave, regarding the interim results on the Provenge trial (called IMPACT).
The independent data monitoring committee (IDMC) recommended that the trial be continued, noting it did NOT meet the criteria to end the trial early, yet also advising a couple things that are extremely important.
First, there are NO safety concerns. This is important for two reasons.
A competitor, Cell Genesys, had a trial halted early for their prostate cancer vaccine GVAX in late August. The IDMC for that trial found more deaths in the drug arm of the trial than the placebo arm! The two drugs have different methods of action in the particulars, but since they are both immunotherapeutic vaccines, any kind of safety profile issues would be fodder for naysayers.
Second, this group of patients are end-stage, terminal prostate cancer victims. They tend to be older, with compromised immune systems anyway. The only drug approved for this stage of cancer is Taxotere, which is a chemo drug with side-effects so harsh that nearly 50% of patients elect NOT to go through the regimen.
This safety profile, by the way, mirrors prior trials -- following infusions some patients develop mild flu-like symptoms for a 2 or 3 day period.
The second finding by the IDMC was something that they did not have to release, but I am glad they did. They reported that the treatment arm had a 20% reduction of risk of death over the placebo arm. This also mirrors prior trial results for this time period, and, as Gold would later say, prior trials also saw the treatment effect increase over time.
Now, in allowing the company to have an interim look at the data, they take a minor penalty against statistical significance in the final look. Instead of 95% confidence, they may have to hit 96% (numbers are total WAGs, by the way). Plus, the interim confidence level has a MUCH higher bar -- might need 99.1% for example. Gold said that to meet success in the final, the treatment arm would have to have a 22% reduction of risk of death.
Now, most people would say, "Wow, only going from 20% to 22% -- what a slam dunk!" However, keep two things in mind. It may "only" be 2%, but that is a 10% change from 20 to 22%. Also, the final numbers INCLUDE the numbers that got us to 20%. So the later deaths have to be much more powerful statistically to get us over the hurdle.
That said, again: prior trials also saw the treatment effect increase over time! IMPACT is consistent with those prior trials, Gold added several times.
And finally, my goodness! TWENTY PERCENT MORE OF POVENGE USERS WERE ALIVE THAN PLACEBO. And -- the placebo group included Taxotere users -- the standard of care right now. We beat out the only competitor around, by 20%.
The share price bounced between 6 and 9 most of the day -- and although Tuesday gave back most of the gains, I do not see going back below $4.50 or so anytime prior to the final.
The final is now projected to be "mid 2009", changed from prior guidance of simply "second half of 2009." So I would guess the final event to be hit somewhere in June/July and real data by August/September. Less than one year to go! Short term, we look to see their trp-p8 small molecule in human trials before year end, and although remote, possibly a partnership agreement for ex-US rights to Provenge given the strong Provenge interim results.
Regards,
Trond
Here's a quick list of topics I want to address in the next few days to weeks:
Californian Propositions that are on the ballot in Nov.
Market makers
Short selling
Presidential candidate claims
Elan (earnings call in late Oct.)
Stocks I like right now
Budgets (personal finance, not the boondoggle we call the federal budget!)
Please - if you want a particular topic addressed, leave a comment or email me at Trond24@gmail.com. Thanks to Ming for the CA Prop question.
On to Dendreon!
On Monday morning (10/6/08) I listened to the conference call CEO Mitchell Gold gave, regarding the interim results on the Provenge trial (called IMPACT).
The independent data monitoring committee (IDMC) recommended that the trial be continued, noting it did NOT meet the criteria to end the trial early, yet also advising a couple things that are extremely important.
First, there are NO safety concerns. This is important for two reasons.
A competitor, Cell Genesys, had a trial halted early for their prostate cancer vaccine GVAX in late August. The IDMC for that trial found more deaths in the drug arm of the trial than the placebo arm! The two drugs have different methods of action in the particulars, but since they are both immunotherapeutic vaccines, any kind of safety profile issues would be fodder for naysayers.
Second, this group of patients are end-stage, terminal prostate cancer victims. They tend to be older, with compromised immune systems anyway. The only drug approved for this stage of cancer is Taxotere, which is a chemo drug with side-effects so harsh that nearly 50% of patients elect NOT to go through the regimen.
This safety profile, by the way, mirrors prior trials -- following infusions some patients develop mild flu-like symptoms for a 2 or 3 day period.
The second finding by the IDMC was something that they did not have to release, but I am glad they did. They reported that the treatment arm had a 20% reduction of risk of death over the placebo arm. This also mirrors prior trial results for this time period, and, as Gold would later say, prior trials also saw the treatment effect increase over time.
Now, in allowing the company to have an interim look at the data, they take a minor penalty against statistical significance in the final look. Instead of 95% confidence, they may have to hit 96% (numbers are total WAGs, by the way). Plus, the interim confidence level has a MUCH higher bar -- might need 99.1% for example. Gold said that to meet success in the final, the treatment arm would have to have a 22% reduction of risk of death.
Now, most people would say, "Wow, only going from 20% to 22% -- what a slam dunk!" However, keep two things in mind. It may "only" be 2%, but that is a 10% change from 20 to 22%. Also, the final numbers INCLUDE the numbers that got us to 20%. So the later deaths have to be much more powerful statistically to get us over the hurdle.
That said, again: prior trials also saw the treatment effect increase over time! IMPACT is consistent with those prior trials, Gold added several times.
And finally, my goodness! TWENTY PERCENT MORE OF POVENGE USERS WERE ALIVE THAN PLACEBO. And -- the placebo group included Taxotere users -- the standard of care right now. We beat out the only competitor around, by 20%.
The share price bounced between 6 and 9 most of the day -- and although Tuesday gave back most of the gains, I do not see going back below $4.50 or so anytime prior to the final.
The final is now projected to be "mid 2009", changed from prior guidance of simply "second half of 2009." So I would guess the final event to be hit somewhere in June/July and real data by August/September. Less than one year to go! Short term, we look to see their trp-p8 small molecule in human trials before year end, and although remote, possibly a partnership agreement for ex-US rights to Provenge given the strong Provenge interim results.
Regards,
Trond
Wednesday, October 1, 2008
And more on the bailout...
Whew -- lot to talk about today.
First -- more comments. Ming says, "How much faith can one have in a government that encourages recklessness and irresponsibility... There are banks that are out there that are doing fine in this "crisis", why? because they weren't reckless and minimized their risk. As long as some of the banks are able to survive, the remaining ones need to go, even it wipes out the stockholders. (Sorry stocks are a gamble, always have been, always will be)"
You know what? I agree for the most part. The government is very much guilty of encouraging reckless behaviour. The tax code gives free reign to hedge funds, entitlements are out of control, pork is out of control*1, and Congresspeople actually left Washington on Monday after killing the first bill so they could go home and campaign, instead of staying around to fix the "worst crisis since the Great Depression". The FED and SEC and FDA are all
bureaucracies that put their own agendas before the public's.
Also correct is that some banks should certainly go under if they cannot compete -- that is absolutely the risk stockholder face.
(I do NOT agree that stocks are a gamble. The market can act like a casino, especially to short timers who go "all in" or misuse options. But I don't think ANYONE would say Warren Buffet is a gambler. *grin*)
I actually think the worst offenders are WE the people ourselves (in the overall sense, not you, or me, personally, of course). As Ming put it in an email, the sheer chuztpah of the folks who took mortgages they either did not understand the terms of OR couldn't repay, OR both! And to compound their sin, they then used their homes as an ATM -- buying cars and material goods on the soaring equity -- only to see it crash and walk away, leaving $750K mortgages on homes now worth $300K. And elected officials wouldn't keep enlarging entitlement programs if we didn't have our hands out. We need to look in the mirror and realize the present is a direct reflection of our past behaviour.
That said, I am seeing more and more clearly that a bailout/rescue is needed. Yes, it would be healthy for the economy in some respects to have a severe correction; some corporations ought to be bought out by others. But the staggering loss of jobs, mass foreclosures that would blight neighborhoods, and human cost argue to me that something is needed on the federal level.
Ming -- is it "fair"**2 to those who kept their debts reasonable, and lived within their means, to see those who did not saved? Of course not! But at some point fairness goes out the window to prevent a national disaster.
We should take this time however, to really look at what led us here and how to prevent similar situations in the future. It sounds like the mark-to-market rule is being suspended temporarily. The SEC supposedly is extending the no-short-selling ban on the financial companies***3 until Oct 17. We need plenty more of these kinds of actions -- I strongly encourage people to let their congresspeople know exactly what they want NOW -- they actually seem to be listening, for the moment.
The VP debates are tomorrow at 6 PDT. Watch them and learn more about the views of whoever is to be our future vice-president!
Regards,
Trond
---
* The current bailout bill passed tonight by the Senate used to be 3 pages. Now it is something like 456 pages, and 200 pages of that is pure pork, as an incentive to get votes. Among other things, THEY ARE REVOKING A $.39 TAX ON CHILDRENS' BOW AND ARROW, ARROW SHAFTS. Which Senator's kid uses arrows in bulk? This one move loses $200K in estimated revenue a year. Obama and McCain****4 both voted for the bailout.
** I don't think it "fair" that my tax dollars go to subsidize Ted Turner's peanut farm, for example.
*** And why the HELL is it limited to 700 odd "financial" companies (of which IBM and GE now qualify!!)?? If the SEC is now FINALLY acknowledging that short selling is harmful (thank you Patrick Byrne!) then the Equal Protection clause, and well as "fairness" demands all companies should be similarly protected.
**** There goes his argument that he never votes for pork. :-)
First -- more comments. Ming says, "How much faith can one have in a government that encourages recklessness and irresponsibility... There are banks that are out there that are doing fine in this "crisis", why? because they weren't reckless and minimized their risk. As long as some of the banks are able to survive, the remaining ones need to go, even it wipes out the stockholders. (Sorry stocks are a gamble, always have been, always will be)"
You know what? I agree for the most part. The government is very much guilty of encouraging reckless behaviour. The tax code gives free reign to hedge funds, entitlements are out of control, pork is out of control*1, and Congresspeople actually left Washington on Monday after killing the first bill so they could go home and campaign, instead of staying around to fix the "worst crisis since the Great Depression". The FED and SEC and FDA are all
bureaucracies that put their own agendas before the public's.
Also correct is that some banks should certainly go under if they cannot compete -- that is absolutely the risk stockholder face.
(I do NOT agree that stocks are a gamble. The market can act like a casino, especially to short timers who go "all in" or misuse options. But I don't think ANYONE would say Warren Buffet is a gambler. *grin*)
I actually think the worst offenders are WE the people ourselves (in the overall sense, not you, or me, personally, of course). As Ming put it in an email, the sheer chuztpah of the folks who took mortgages they either did not understand the terms of OR couldn't repay, OR both! And to compound their sin, they then used their homes as an ATM -- buying cars and material goods on the soaring equity -- only to see it crash and walk away, leaving $750K mortgages on homes now worth $300K. And elected officials wouldn't keep enlarging entitlement programs if we didn't have our hands out. We need to look in the mirror and realize the present is a direct reflection of our past behaviour.
That said, I am seeing more and more clearly that a bailout/rescue is needed. Yes, it would be healthy for the economy in some respects to have a severe correction; some corporations ought to be bought out by others. But the staggering loss of jobs, mass foreclosures that would blight neighborhoods, and human cost argue to me that something is needed on the federal level.
Ming -- is it "fair"**2 to those who kept their debts reasonable, and lived within their means, to see those who did not saved? Of course not! But at some point fairness goes out the window to prevent a national disaster.
We should take this time however, to really look at what led us here and how to prevent similar situations in the future. It sounds like the mark-to-market rule is being suspended temporarily. The SEC supposedly is extending the no-short-selling ban on the financial companies***3 until Oct 17. We need plenty more of these kinds of actions -- I strongly encourage people to let their congresspeople know exactly what they want NOW -- they actually seem to be listening, for the moment.
The VP debates are tomorrow at 6 PDT. Watch them and learn more about the views of whoever is to be our future vice-president!
Regards,
Trond
---
* The current bailout bill passed tonight by the Senate used to be 3 pages. Now it is something like 456 pages, and 200 pages of that is pure pork, as an incentive to get votes. Among other things, THEY ARE REVOKING A $.39 TAX ON CHILDRENS' BOW AND ARROW, ARROW SHAFTS. Which Senator's kid uses arrows in bulk? This one move loses $200K in estimated revenue a year. Obama and McCain****4 both voted for the bailout.
** I don't think it "fair" that my tax dollars go to subsidize Ted Turner's peanut farm, for example.
*** And why the HELL is it limited to 700 odd "financial" companies (of which IBM and GE now qualify!!)?? If the SEC is now FINALLY acknowledging that short selling is harmful (thank you Patrick Byrne!) then the Equal Protection clause, and well as "fairness" demands all companies should be similarly protected.
**** There goes his argument that he never votes for pork. :-)
Tuesday, September 30, 2008
Bailout II and certain responses...
Ming asked in comments about the bailout, inflation, and about my proposed mortgage bailout.
I still think the bailout as originally posed was a bad idea. I have not had a chance to read the whole 110-odd pages of it, but there was not enough oversight -- it seemed to give SecTreas almost omnipotent powers and nothing to actually help the people who are in danger of foreclosure.
Do not get me wrong, I think we need something. The short form is (and thanks to a poster on the IV Dendreon message board for putting it so simply):
Widget-maker Mr. Factory needs a loan to add to his production capability. Bank X cannot make the loan because of bad mortgages forcing them writedowns due to the mark-to-market (mtm) rule. Bank Y cannot lend the money to Bank X, even though THEY have the capability due to better loan vetting. Bank Y can't do this because Bank X is high risk paper because of the disclosures forced from mtm. Thus, Mr. Factory cannot expand, and add jobs.
In a nutshell, stagnant production, even in the face of higher demand, and a credit freeze.
WAY OVERSIMPLIFIED. But hopefully you get the picture.
So -- yes, taxpayers get a raw deal, but I think we need an economic show of force -- the economy runs on faith (as does our currency) and the credit freeze has to end. The question is how to do this in a fashion that still gives the taxpayer a chance to not see the money invested as a total loss, and to get the economy stronger.
The inflation question ties right into this. A stronger dollar (gee, maybe even tying the dollar to something real again) would ease commodity price increases. Ending stock shorting and stringent controls on commodity trades would ease prices more, and get people feeling better about the stock market and their retirement accounts. Heating oil season is almost upon us, and while I have no answer specifically of how to moderate that -- I'm sure some bright minds can fnd a way to prevent that from being the next shock on the public.
I personally am a fan of nuclear energy. We need to improve the infrastructure of our energy grid -- we lose too much energy simply creating and transferring it. Solar power may not be feasible everywhere but here in southern California it is criminal NOT to have whatever tax breaks necessary to get people developing and using it.
Overall, I agree with Ming's comments on my mortage plan. My plan as proposed would need EXTENSIVE overhauls -- it was (*blush*) a little bit off the top of my head.
However, some tweaks might get it back in shape. The largest and most deserved criticism is that it rewards people who took equity $ out and raised their mortgage. So we need some sort of limitation on what amount over their original mortgage can be refinanced. Perhaps the higher of what they originally bought it for OR the current appraisal. Remember, the whole point of MY bailout is not to reward the companies who packaged and underwrote the CDOs, but to simply allow real homeowners a way to keep their home and avoid foreclosure. The amount over what is refinanced up to wht is owed would be eaten by the taxpayer -- but with some of those bad loans off the books, the credit freeze would thaw more quickly. It is not perfect, but no bailout CAN be perfect. I do see much pain ahead if there is not an answer to some of these issues soon.
On a totally different topic, Elan announced their earnings call will be in late October. We will get to see how the two PML cases afftected Tysabri sales and uptake. My conjecture, from hearing from several practicing neurologists, is that there was VERY LITTLE drop-outs and we will actually still see a new gain of patients. My present-value discounted share price of Elan, just from Tysabri sales projected through 2011, indicate a price of somewhere around $18 to $20 today. Seeing as we are at $10ish, I think it is a screaming buy.
Sometime in October we will also find out if Dendreon's Provenge passed the interim look successfully or not. As a reminder, the interim peek must meet an extremely high statistical significance barrier. This is a good thing -- you don't want companies able to halt trials and start marketing drugs until thoroughly vetted. But with Provenge, we already have two completed Phase III trials, one with startlingly significant results. Analysts seem to be pretty much disregarding any chance of an interim success -- but I think there are better than 60% odds of a successful interim. I say this because the company got the FDA to agree to amend the SPA for the trial, increasing the interim death events and lowering the final number. They admitted this lowered the power of the final, if it is needed. I don't think they would have pushed for something that lowered (even slightly) the chances of the final unless it truly has a decent chance at the interim.
Vexingly, that means there is a 40% chance of a failure at the interim and we may see sub $3 if that happens. I good tactic might be to buy the shares at $5.70 and sell the $10 or $15 May 2009 calls. You will make 20% or so for 8-9 months on the calls and by mid next year the stock should recover should the interim fail. If successful, you get the premium and get called away next May at the $10 or $15 mark -- doubling or tripling your money. A 2 or 3 bagger at best and hardly any downside risk at worst.
The other good news? Dendreon announced at a presentation that they intend to file an Investigational New Drug (IND) application for their TRP-P8 small-molecule by year end. It is intended to treat prostate, breast, ovarian cancers and melanoma. Totally different method of action from their active cellular immunotherapies such as Provenge, so they are not a "one-trick pony" anymore.
Regards,
Trond
I still think the bailout as originally posed was a bad idea. I have not had a chance to read the whole 110-odd pages of it, but there was not enough oversight -- it seemed to give SecTreas almost omnipotent powers and nothing to actually help the people who are in danger of foreclosure.
Do not get me wrong, I think we need something. The short form is (and thanks to a poster on the IV Dendreon message board for putting it so simply):
Widget-maker Mr. Factory needs a loan to add to his production capability. Bank X cannot make the loan because of bad mortgages forcing them writedowns due to the mark-to-market (mtm) rule. Bank Y cannot lend the money to Bank X, even though THEY have the capability due to better loan vetting. Bank Y can't do this because Bank X is high risk paper because of the disclosures forced from mtm. Thus, Mr. Factory cannot expand, and add jobs.
In a nutshell, stagnant production, even in the face of higher demand, and a credit freeze.
WAY OVERSIMPLIFIED. But hopefully you get the picture.
So -- yes, taxpayers get a raw deal, but I think we need an economic show of force -- the economy runs on faith (as does our currency) and the credit freeze has to end. The question is how to do this in a fashion that still gives the taxpayer a chance to not see the money invested as a total loss, and to get the economy stronger.
The inflation question ties right into this. A stronger dollar (gee, maybe even tying the dollar to something real again) would ease commodity price increases. Ending stock shorting and stringent controls on commodity trades would ease prices more, and get people feeling better about the stock market and their retirement accounts. Heating oil season is almost upon us, and while I have no answer specifically of how to moderate that -- I'm sure some bright minds can fnd a way to prevent that from being the next shock on the public.
I personally am a fan of nuclear energy. We need to improve the infrastructure of our energy grid -- we lose too much energy simply creating and transferring it. Solar power may not be feasible everywhere but here in southern California it is criminal NOT to have whatever tax breaks necessary to get people developing and using it.
Overall, I agree with Ming's comments on my mortage plan. My plan as proposed would need EXTENSIVE overhauls -- it was (*blush*) a little bit off the top of my head.
However, some tweaks might get it back in shape. The largest and most deserved criticism is that it rewards people who took equity $ out and raised their mortgage. So we need some sort of limitation on what amount over their original mortgage can be refinanced. Perhaps the higher of what they originally bought it for OR the current appraisal. Remember, the whole point of MY bailout is not to reward the companies who packaged and underwrote the CDOs, but to simply allow real homeowners a way to keep their home and avoid foreclosure. The amount over what is refinanced up to wht is owed would be eaten by the taxpayer -- but with some of those bad loans off the books, the credit freeze would thaw more quickly. It is not perfect, but no bailout CAN be perfect. I do see much pain ahead if there is not an answer to some of these issues soon.
On a totally different topic, Elan announced their earnings call will be in late October. We will get to see how the two PML cases afftected Tysabri sales and uptake. My conjecture, from hearing from several practicing neurologists, is that there was VERY LITTLE drop-outs and we will actually still see a new gain of patients. My present-value discounted share price of Elan, just from Tysabri sales projected through 2011, indicate a price of somewhere around $18 to $20 today. Seeing as we are at $10ish, I think it is a screaming buy.
Sometime in October we will also find out if Dendreon's Provenge passed the interim look successfully or not. As a reminder, the interim peek must meet an extremely high statistical significance barrier. This is a good thing -- you don't want companies able to halt trials and start marketing drugs until thoroughly vetted. But with Provenge, we already have two completed Phase III trials, one with startlingly significant results. Analysts seem to be pretty much disregarding any chance of an interim success -- but I think there are better than 60% odds of a successful interim. I say this because the company got the FDA to agree to amend the SPA for the trial, increasing the interim death events and lowering the final number. They admitted this lowered the power of the final, if it is needed. I don't think they would have pushed for something that lowered (even slightly) the chances of the final unless it truly has a decent chance at the interim.
Vexingly, that means there is a 40% chance of a failure at the interim and we may see sub $3 if that happens. I good tactic might be to buy the shares at $5.70 and sell the $10 or $15 May 2009 calls. You will make 20% or so for 8-9 months on the calls and by mid next year the stock should recover should the interim fail. If successful, you get the premium and get called away next May at the $10 or $15 mark -- doubling or tripling your money. A 2 or 3 bagger at best and hardly any downside risk at worst.
The other good news? Dendreon announced at a presentation that they intend to file an Investigational New Drug (IND) application for their TRP-P8 small-molecule by year end. It is intended to treat prostate, breast, ovarian cancers and melanoma. Totally different method of action from their active cellular immunotherapies such as Provenge, so they are not a "one-trick pony" anymore.
Regards,
Trond
Thursday, September 25, 2008
Bailout and mark-to-market
Here’s the reason all these institutions are failing. Recent changes in the way that financial companies have to account for the loans on their books require them to value their debt at a “mark-to-market.”
This is a fancy way to say that whatever the market value of the debt is, that is what they have to say its worth. Now that the housing market is on the skids, a high risk, non-performing loan a bank made for $600,000 might only be sold for $400,000. Thus, that “loses” a third of its worth.
Remember that these are not really individual loans that we are talking here, but the CDOs that were packaged together and sold as asset-backed securities. But most people can more easily picture it in individual terms.
I do not support the government directly bailing out public companies. However, to prevent massive foreclosures and the resulting REAL pain from homeowners (yes, even silly ones who took on much more debt than they can repay), here’s an idea.
Until June 30, 2009, allow the government to refinance any home loan at today’s market value. The terms are really simple: 6% interest for ANY credit score, at 30 years, plus allowing up to 12 payments to be interest-only (pushing the loan out as many months).
We as taxpayers would eat a large chunk of change immediately; the loan mentioned above would cost $600,000 and we would only make P&I back slowly. But the taxpayers would recoup some costs over time and may even make money. With amount of bad debt of their backs, banks would not experience the credit freeze that they see now.
Part and parcel of this would be to change the mark-to-market rule. And hey, let’s throw in SEC rules to prevent ANY short selling while we’re at it.
Regards,
Trond
This is a fancy way to say that whatever the market value of the debt is, that is what they have to say its worth. Now that the housing market is on the skids, a high risk, non-performing loan a bank made for $600,000 might only be sold for $400,000. Thus, that “loses” a third of its worth.
Remember that these are not really individual loans that we are talking here, but the CDOs that were packaged together and sold as asset-backed securities. But most people can more easily picture it in individual terms.
I do not support the government directly bailing out public companies. However, to prevent massive foreclosures and the resulting REAL pain from homeowners (yes, even silly ones who took on much more debt than they can repay), here’s an idea.
Until June 30, 2009, allow the government to refinance any home loan at today’s market value. The terms are really simple: 6% interest for ANY credit score, at 30 years, plus allowing up to 12 payments to be interest-only (pushing the loan out as many months).
We as taxpayers would eat a large chunk of change immediately; the loan mentioned above would cost $600,000 and we would only make P&I back slowly. But the taxpayers would recoup some costs over time and may even make money. With amount of bad debt of their backs, banks would not experience the credit freeze that they see now.
Part and parcel of this would be to change the mark-to-market rule. And hey, let’s throw in SEC rules to prevent ANY short selling while we’re at it.
Regards,
Trond
Byrne on the bailout
Patrick Byrne, President of Overstock and one of the first to publicly talk about the dangers of naked short selling (3+ years ago!!) commented last night about the proposed bailout. There is a link at the end to sign an e-petition if these are things you agree with.
Please take 1 minute to sign! You will get an email that you have to respond to, to confirm your signature. Thanks!
-Trond
SALT LAKE CITY, Sept. 24 /PRNewswire-FirstCall/ -- Overstock.com, Inc. (Nasdaq: OSTK) chairman and CEO Patrick M. Byrne comments on President Bush's September 24, 2008 speech outlining the President's market rescue plan.
Dr. Byrne commented: "This bailout is necessary to save the bacchanal that is our US financial system. However, at the core of the administration's plan is the assumption that Wall Street is worth saving. It is not. For years Wall Street has bossed Washington, DC around like they're hired flunkies, while preying on Main Street businesses and investors.
The federal government should use this opportunity to extract from Wall Street concessions that could never be extracted were Washington in its customary subordinate position. "If American taxpayers are to bailout the Power Elite, they should attach conditions. Taxpayers should share in any upside, and gaping flaws in the current system should be fixed. Towards that end, I believe that any bailout legislation should include at least the following protections:
1. Taxpayers need to share in the upside if the bailout works, to compensate them for the risk that the administration is forcing them to take. This could be accomplished through warrants on shares in the firms being bailed out, such as those Mr. Buffett extracted from Goldman Sachs.
2. The government should impose a tax on those that benefit most from bailout -- Wall Street itself. Perhaps a 0.25% transaction tax on all securities trades is in order? Such a tax would be insignificant to investors, while be largely borne by those that are merely speculators - including those that churn trades in an attempt to manipulate the markets.
3. Bailout or none, the government must fix underlying problems in our capital market. The fixes includes:
a. Reforming our stock settlement system so that trades actually settle promptly, precisely as Congress stipulated in 1934. This can be accomplished by putting in place a market-wide mandatory pre-borrow requirement (like the SEC did in the 30-day July 15, 2008 emergency order that protected the 19 financial institutions);
b. Creating the obligation that if a naked short seller fails to deliver a share, the broker-dealer must force a mandatory buy-in (as is done in civilized countries, such as Canada);
c. Tracking trades cradle-to-grave (rather than net blocks of trades against each other), so that it is obvious who the naked short sellers are and the total amounts they are stealing;
d. Providing regular, timely disclosure of when and how many shares have failed to deliver;
e. Enforcing the rules, including significant monetary penalties and jail time.
"Keynes said that an ocean of productivity can support a bubble of speculation, but an ocean of speculation cannot support a bubble of productivity. Washington has been captured by speculators at the expense of producers.
I have long been talking about systemic risk and potential financial crisis (see http://www.youtube.com/watch?v=SIHw7C73s3E for a three- minute video from as early as October 2005). I am proposing specific steps to fix the system. For those that agree with these fixes which protect Main Street Americans, I ask you to sign the electronic petition at http://mainstreetamericans.info."
Please take 1 minute to sign! You will get an email that you have to respond to, to confirm your signature. Thanks!
-Trond
SALT LAKE CITY, Sept. 24 /PRNewswire-FirstCall/ -- Overstock.com, Inc. (Nasdaq: OSTK) chairman and CEO Patrick M. Byrne comments on President Bush's September 24, 2008 speech outlining the President's market rescue plan.
Dr. Byrne commented: "This bailout is necessary to save the bacchanal that is our US financial system. However, at the core of the administration's plan is the assumption that Wall Street is worth saving. It is not. For years Wall Street has bossed Washington, DC around like they're hired flunkies, while preying on Main Street businesses and investors.
The federal government should use this opportunity to extract from Wall Street concessions that could never be extracted were Washington in its customary subordinate position. "If American taxpayers are to bailout the Power Elite, they should attach conditions. Taxpayers should share in any upside, and gaping flaws in the current system should be fixed. Towards that end, I believe that any bailout legislation should include at least the following protections:
1. Taxpayers need to share in the upside if the bailout works, to compensate them for the risk that the administration is forcing them to take. This could be accomplished through warrants on shares in the firms being bailed out, such as those Mr. Buffett extracted from Goldman Sachs.
2. The government should impose a tax on those that benefit most from bailout -- Wall Street itself. Perhaps a 0.25% transaction tax on all securities trades is in order? Such a tax would be insignificant to investors, while be largely borne by those that are merely speculators - including those that churn trades in an attempt to manipulate the markets.
3. Bailout or none, the government must fix underlying problems in our capital market. The fixes includes:
a. Reforming our stock settlement system so that trades actually settle promptly, precisely as Congress stipulated in 1934. This can be accomplished by putting in place a market-wide mandatory pre-borrow requirement (like the SEC did in the 30-day July 15, 2008 emergency order that protected the 19 financial institutions);
b. Creating the obligation that if a naked short seller fails to deliver a share, the broker-dealer must force a mandatory buy-in (as is done in civilized countries, such as Canada);
c. Tracking trades cradle-to-grave (rather than net blocks of trades against each other), so that it is obvious who the naked short sellers are and the total amounts they are stealing;
d. Providing regular, timely disclosure of when and how many shares have failed to deliver;
e. Enforcing the rules, including significant monetary penalties and jail time.
"Keynes said that an ocean of productivity can support a bubble of speculation, but an ocean of speculation cannot support a bubble of productivity. Washington has been captured by speculators at the expense of producers.
I have long been talking about systemic risk and potential financial crisis (see http://www.youtube.com/watch?v=SIHw7C73s3E for a three- minute video from as early as October 2005). I am proposing specific steps to fix the system. For those that agree with these fixes which protect Main Street Americans, I ask you to sign the electronic petition at http://mainstreetamericans.info."
Wednesday, September 17, 2008
Trond's World returns!
Hi there all,
Long time no post – I am swamped at work and a little weary of the overall market slump. When the overall market is against you and you are a perma-bull, then you do three things.
First, double check your stocks to ensure nothing has changed. If there are still the compelling reasons to own them as when you bought them in the first place, then you’re okay.
Now, IF you own them in a taxable account and you truly feel it may be quite some time before they come around, then you may want to sell some shares, take the tax loss, and wait 31 days to repurchase them. (31 days will maneuver you around the IRS “wash sale” rules)
Second, simply be patient. In my experience, it is nearly exactly when everyone gives up, that the market rebounds. You only have money in the stock market that is long term anyways, right? *grin*
Finally, when something you have your eyes on has dropped and dropped, and you still feel it is compelling enough, BUY. You can wait forever, trying to get the exact bottom and then when things do turn around, you put off buying because you perversely WANT it to go down again so you can buy near the low point.
Warren Buffett has famously said, “Be fearful when others are greedy, and greedy when others are fearful.” Fear runs rampant right now – so it may be time to cast around for bargains.
Note: I would still stay away from real estate, financials, and insurance stocks right now – I think there is still some pain left to come.
I’m glad the SEC has finally (sort of) cracked down on naked short selling today, but there is still some business to take care of. I’d like to see the uptick rule replaced – heck – I’d like to see ALL short selling disallowed. It creates artificial liquidity (= supply) which by nature dampens stock prices. But it’s a step in the right direction.
Finally, it has been too long since I’ve done anything with the Port24. Everything is depressed enough that I dislike selling calls – to get any premium, I risk getting called away at a price far below what I paid. I will hold what I have for a recovery, and actually engaged in my #3 point above – I bought some more today!
600 Elan at $10.32, 1500 Sangamo at $6.36, and 3000 ArQule at $2.91.
My cash is around $3470 and my portfolio is down a whopping 30% at this point.
I see a modest rebound for Elan, and shortly – there is an MS convention starting today and we should see some news on the recent PML cases from Europe. From everything I’ve heard and read, patients are NOT running away from Tysabri. Oct/Nov news of patient counts will probably come as a surprise to most analysts.
Regards,
Trond
Long time no post – I am swamped at work and a little weary of the overall market slump. When the overall market is against you and you are a perma-bull, then you do three things.
First, double check your stocks to ensure nothing has changed. If there are still the compelling reasons to own them as when you bought them in the first place, then you’re okay.
Now, IF you own them in a taxable account and you truly feel it may be quite some time before they come around, then you may want to sell some shares, take the tax loss, and wait 31 days to repurchase them. (31 days will maneuver you around the IRS “wash sale” rules)
Second, simply be patient. In my experience, it is nearly exactly when everyone gives up, that the market rebounds. You only have money in the stock market that is long term anyways, right? *grin*
Finally, when something you have your eyes on has dropped and dropped, and you still feel it is compelling enough, BUY. You can wait forever, trying to get the exact bottom and then when things do turn around, you put off buying because you perversely WANT it to go down again so you can buy near the low point.
Warren Buffett has famously said, “Be fearful when others are greedy, and greedy when others are fearful.” Fear runs rampant right now – so it may be time to cast around for bargains.
Note: I would still stay away from real estate, financials, and insurance stocks right now – I think there is still some pain left to come.
I’m glad the SEC has finally (sort of) cracked down on naked short selling today, but there is still some business to take care of. I’d like to see the uptick rule replaced – heck – I’d like to see ALL short selling disallowed. It creates artificial liquidity (= supply) which by nature dampens stock prices. But it’s a step in the right direction.
Finally, it has been too long since I’ve done anything with the Port24. Everything is depressed enough that I dislike selling calls – to get any premium, I risk getting called away at a price far below what I paid. I will hold what I have for a recovery, and actually engaged in my #3 point above – I bought some more today!
600 Elan at $10.32, 1500 Sangamo at $6.36, and 3000 ArQule at $2.91.
My cash is around $3470 and my portfolio is down a whopping 30% at this point.
I see a modest rebound for Elan, and shortly – there is an MS convention starting today and we should see some news on the recent PML cases from Europe. From everything I’ve heard and read, patients are NOT running away from Tysabri. Oct/Nov news of patient counts will probably come as a surprise to most analysts.
Regards,
Trond
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