Pharmathene (PIP)

PIP had a great day today, up 26%, to $3.04. This is the stock that I bought yesterday in the Port24 (and in a real money account).

I touched months ago on the topic of having watchlists of stocks, that should be reviewed daily to weekly. Once you have a feel for where the stock price tends to move (and of course, knowledge of the timing of upcoming events), you will get a feel for when a stock is simply insanely priced. It's worth reviewing Benjamin Graham's (and Warren Buffett's) continuing referral to Mr. Market: that silly little guy who shows up every day either manic or depressive, offering stocks for sale at wildly inflated prices because he's so rosy, or at crazily depressed prices because he's glum or convinced the sky is falling. The trick is that YOU DO NOT HAVE TO BUY AT ANY POINT - it is entirely up to you. You can agree with everyone that Apple makes the best listening or tablet devices, but until there is a shock to the stock price and it's offered at something you consider value, you don't have to buy it! Yesterday was simply a time when PIP was being offered at a price that was entirely "glum" Mr. Market.

Recall however that I also sold July $2.50 calls against the position I added yesterday (within the Port24). Although I've technically "lost" paper money on this trade, as opposed to simply buying the shares, I am not too sad. I entered the trade looking only at the one month objective of gaining the 12% (144% annualized!!!) return should PIP be at more than $2.50 on July 15th. I am quite firmly convinced it will, so I am not touching the trade at this point.

Please note there IS something I could (and may well) do at this point. I bought the stock at $2.42 and sold $2.50 calls for $0.30. I could buy back those same calls for $0.80 now, and then sell the stock for $3.04. I would lose $0.50 per share on the options, but gain $0.62 per share on the underlying shares. Of course, you have to factor commissions into the above, so it's not a full 12 cent gain per share... maybe more like ten on average.

That would be a 4% gain, obviously not nearly as nice as the 12% I stand to gain if left in place. On the other hand, this is a 4% gain in ONE DAY. That annualizes to 1,440%! Such comparisons are silly when you talk about a one or two day gain, but then I have that cash on hand for future trades, instead of locking it up for a month. Since this trade is about 8% of the entire Port, there is some interest in closing it out quickly if I can do so at a better than already-planned return.

Stay tuned!

Regards,
Trond

Options expiration fallout

The composition of the Port has changed dramatically from just a couple weeks ago.

We bid adieu to Seattle Genetics (SGEN) last Friday, as I had sold $17.50 calls and it closed at $19.50. Since I bought it 3 1/2 months ago at $15, and sold $1.25 worth of premium I can't complain too much with the 21% total return.

This morning I took advantage of the cash on hand, buying an old friend and a special situation.

The Port now owns Dendreon (DNDN) again, at $38.16. I did, however, sell July $40 calls, expecting a lift from the CMS coverage and the upcoming Seal Beach plant approval.

I also bought a second load of Pharmathene (PIP) (6,000 shares at $2.42) and sold 60 July calls at $2.50. Those calls, however, had a premium of $0.30!! That is a 12% premium for one month... and too much for me to resist in the Port.

Notably, I also bought some PIP for myself in my real money account this morning. I did not sell calls against these.

I'm down to $4,400 cash in the Port, so until I either sell more calls or liquidate some stock, I'll be holding the following:

Shares .. Ticker.. (calls sold)
1500 ARQL (0)
1200 BTX (0)
2600 CLDX (0)
9000 CLSN (0)
1600 DCTH (0)
300 DNDN (3)
1100 EXEL (0)
2000 MITI (0)
2000 NBIX (20)
7000 NNVC (0)
2500 PIP (0)
6000 PIP (60)
1600 SGMO (0)

Regards,
Trond

PZG sell

Paramount Gold & Silver had a modestly good PR today and I've decided to sell the 3,600 shares the Port24 holds (at $3.71). That gives me an 18% return over the five months I have held.

I still like PZG but will look to re-enter somewhat lower ... the next news is not expected for a few months and I suspect it will trail down again.
Others I'm considering for inclusion at today's prices are more SGMO or PIP. VHC and ZIOP are also contenders.

Regards,
Trond

Managing money and Port24 update

First, let's get the Port out of the way: I sold calls against the EXEL position today; 11 Jul $10s for $0.65 per share. Cash is up to $1,096.58, and the overall value to $151,963.58, a 16.9% annualized return, beating the S&P and Nasdaq by 18 and 12% respectively.

The big news in my personal life is that I will be hanging out a shingle to manage money and do financial planning. Getting going will take a couple months in between studying and passing the Series 65 exam, getting registered with the State of California as a Registered Investment Adviser, and starting an LLC.

Besides looking at people's finances and finding ways to improve their moeny situation, I will be offering a couple "funds" - a growth and a growth/income option. More information will be forthcoming! I think I will be using the construction of this business as a blog series, so if interested in the creation of an entrepreneur, please stay tuned! My blog portfolio will stay a fixture, but I'll also use quite a bit of the analysis I'll be using on my company funds to do an even better job managing the Port.

I would ask the readers to please take a moment to hit the 'Post a Comment" link and let me know what it would take to make you call a financial planner, and utilize their services. Thanks!

Regards,
Trond

Exelixis

I bought 1100 shares of Exelixis (EXEL) at $8.78 in the Port today. They presented great data at ASCO and Mr. Market seems to have overstated the side effect dangers.

I will have more to say later on, but I wanted to post disclosure ASAP.

Regards,
Trond

Neurocrine calls

NBIX had a nice run this week and it is time to sell some $8 calls. The June's do not have enough premium to make them worthwhile, so we'll be selling the July $8s for $0.25 a share. With today's price $7.76 (and the purchase price in January at $7.30 and a total of $0.70 of option premium gained now) we'll have made about 14% in six months (assuming a close in July above $7.50). If exercised, we'll have a 19% gain.

I still have $10K in cash to buy something else; I would say right now Celsion would be a buy if I did not already have a stake. Other possibilities are Sangamo, ArQule, and Micromet - but I already have positions in those too. I will sit on my hands until something extraordinary comes along.

Regards,
Trond

Port 24 update

With the cash from the recent exercise of ONTY burning a hole in my pocket, I had some decisions to make.

NBIX is trading at a good price for a buy, but I already have nearly 10% there.
I was tempted by some more DNDN but I think this summer will see a better buying opportunity.
CLSN is a recurring temptation too, but I have the largest position there (and in my real money accounts) so I'm avoiding that too.
LXRX was also a possibility, but they are not optionable, and I also own NNVC in the Port that does not trade options.

So I decided to buy 2500 PIP and 1500 ARQL.

PIP is embroiled in a lawsuit against SIGA for licensing rights to a drug. From my readings it appears they have a very reasonable chance to win here - at $3.70 this is going to either be cut by a quarter or nearly triple. Much riskier than I typically would want for the Port, but I like the odds and also own this in real money accounts. You can research recent articles by James Altucher about this stock.

This is the second appearance by ARQL in the Port24. In September of 2008 we bought it at $2.91 and then eight months later said adieu to it at $4.43. Now I'm buying again at 6.70, in the expectation of a decent runup through the fall for trial results next year.

Surprisingly, I am not selling any calls right now. The premiums just are not there - we actually are wanting some shakeups in the market - volatility will move the premiums up.

Still have $9,599.35 in cash, and the positions listed below. I've dropped to a 17.5% annualized return, but at least against a negative 0.6% comparable to the S&P and a 5.6% against the Nasdaq.

2600 CLDX (0)
1200 BTX (0)
2000 NBIX (0)
7000 NNVC (0)
1500 ARQL (0)
1600 DCTH (0)
3600 PZG (0)
9000 CLSN (0)
2000 MITI (0)
800 SGEN (8)
2500 PIP (0)
1600 SGMO (0)

May options expiration

There were certainly some surprises this last month in the Port24. I had sold covered calls against CLDX, ONTY, NBIX, DCTH, and MITI.

All expired harmlessly except for ONTY - it has been rising sharply and were exercised a good 25% above my $4 strike. It hurts to lose the extra amount I might have made, except for two things:
1) would I have actually sold at this price, or would I have sold earlier, or waited and had it go down again?
2) I bought these about a year ago with an average price of $3.46, and sold $0.70 cents of premium along the way... so my net return here has been around 35%.

CLDX just did a secondary offering which knocked it down from exercisable range to the present price. I expect it to be nudging $4 again within a couple months.
NBIX has dropped recently but with Phase 3 trials starting late summer, it should be climbing nicely over the next few months.

Celsion (CLSN) enrollment in the HEAT trial continues to be something I look forward to, over the next two months. They should have hit the 190th PFS event easily by this time and so we'll get to know the results of an interim calculation by the end of Q3 at the latest.

The Port has an annualized return of 17.1% with just over three years. That compares nicely to the S&P being flat over the same period and the Nasdaq gain of 7%.

With ONTY being exercised, I have $28,913.35 in cash and the following holdings:

Shares (calls sold)
2600 CLDX (0)
1200 BTX (0)
2000 NBIX (0)
7000 NNVC (0)
1600 DCTH (0)
3600 PZG (0)
9000 CLSN (0)
2000 MITI (0)
800 SGEN (8)
1600 SGMO (0)

CLSN news, VHC, and Port24 add (SGMO)

I bought 1600 SGMO for the Port at $6.14 this morning. No calls sold yet... this is the second time Sangamo has appeared in the Port24!

Celsion had their conference call for Q1 last Friday. The primary news is that they are about 37 patients away from full enrollment in the HEAT trial. That should be accomplished by mid July so now we have a pretty much fixed timeframe. I expect a runup to occur anywhere from a few days to a month; unfortunately this may coincide with a general market slump and so the effect may be slightly muted. Nevertheless, this is my best opportunity seen in the next couple months.

While I normally look at biotech, I have to mention VirnetX (VHC). I've held it in my real money accounts since $6.50 last June and it is now $23. While of course I wish I'd highlighted it here earlier, I am more confident in it now; while near term it may certainly go lower (high teens, perhaps?) if you hold through the end of the year I think we may see the $30s or $40s. I may explore this further in a future post, but there is some great info out there on the InvestorVillage.com website for VHC.

Regards,
Trond

Money Show - Las Vegas

Vegas, baby! The Money Show is hitting Vegas next week, and I'll be there. While mostly an exhibition for trading systems and newsletter writers, there are also lots of seminars that are worthwhile attending.

Should be fun, and educational.

Regards,
Trond

Celsion and Micromet

Celsion has had a great week or so. From my 4/20 post at $2.30 advising that it was close to "fish-or-cut-bait" time, we hit $3.50 and are trading around $3.10 today.

I sold 20 May11 $7.50 MITI calls today in the Port24 - only for $0.10 each but that is 1.4% return for two-and-a-half weeks. I have quite a few calls expiring in May so the composition of the Port could well change dramatically within a month or so.

Regards,
Trond

Omaha bound!

In one week, I'll be in Omaha. The "Woodstock of Capitalism", Berkshire Hathaway's annual shareholder meeting, is next Saturday and I'll be attending.

This has been on my "bucket list" of things to do. I can't wait for next week - Warren Buffett, here I come!

Regards,
Trond

Celsion (CLSN)

It has been a long time coming, but Celsion should be taking the big step forward within the next couple weeks. I have been screaming from the rooftop for weeks now that if you want a position, you need to fish or cut bait pretty quickly.

Presently around $2.30, by the end of June I am forecasting a price in the $5s or $6s. As soon as they complete enrollment in the HEAT trial, several cool things occur.

First, and most importantly, HEAT then gets a "shot on goal" - an interim calculation of how the trial is going. While interim looks typically are very low likelihood of showing statistical significance (and thereby stopping the trial while they apply for approval) from various simulations I believe we may have as high as 25-30% chance of such happening! But even if this does not occur, the final calculation will then be 8-12 months away - locked into a for-real timeline for final results. Funds and institutions tend to shy away from companies depending on interim calcs, but with a less-than-one-year deadline they would be more willing to invest.

Secondly, once HEAT is enrolled, they will immediately start enrollment in the next trial. Combined with the joint venture with Royal Phillips (HIFU guided Thermodox) they will then have three trials up and running in 2011.

Companies with a trial under an SPA, in a huge, unmet medical need like later stage liver cancer, nearing an interim calc should be trading around a $150M to 450M market cap. With Celsion currently listed as around $33M market cap, we'll be looking at a 3x to 10x increase in the few months leading up to full enrollment in HEAT.

Finally, once Japan's PMDA (FDA-equivalent) agrees to allow enrollment to restart in Japan, a couple more events occur. (enrollment was halted at a pre-agreed 18 patients for an extensive safety review - which is not yet complete)
Obviously, having Japan involved in enrollment again gets us to enrollment of 600 more quickly.
Forgotten by some is the fact that our Japanese partner Yakult pays us $2M at this milestone.

While holding through the interim calculation certainly gives the chance for a 20 bagger or more, an investmnet now, holding only into the near-certain runup into the summer should repay us with a double or more.

Regards,
Trond

Buying BTX

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

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

Regards,
Trond

Port 24 update

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

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

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

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

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

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

Regards,
Trond

More covered calls & Port24 update

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

Another covered call sale

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

Portfolio strategies and March options expiration

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

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

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

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

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

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

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

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

Regards,
Trond

CSLN and DNDN

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

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

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

Regards,
Trond

Port24 update - SGEN

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

Regards,
Trond