common cents investment group monday february 24 th biotechnology & trading the news
TRANSCRIPT
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Common Cents Investment GroupMonday February 24th
Biotechnology & Trading the News
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AgendaMarket UpdatesCCIG Leadership ElectionsBitCoin Update - WeiyiTrading the News - LindseyBiotechnology - Max
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Market Update
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Investopedia Simulator GameWill end March 31st, 2014Top 3 winners will receive book(s)
on investing
2014U.S. Equity Markets +2%Random Equity Picks +5%
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Leadership ElectionsApply for 2014-2015 school yearApplications due March 17th (right
before Spring Break)Great resume boosterLearn more about investing
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BitCoin Update
Weiyi Xie
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Old News on BitCoins “Chase-ing Bitcoin: Is JPM Preparing To Unveil Its Own
Electronic Currency?”http://www.zerohedge.com/news/2013-12-10/chasing-bitcoin-jpm-preparing-unveil-its-own-electronic-currency
News: 7/11 Convenience Store in Mexico decided to accept BitCoin. (But some of us are still talking about whether bitcoin is ponzi ...)
http://www.cryptocoinsnews.com/2014/02/01/bitcoin-accepted-7-eleven-mexico/
Wall Street's first ever Bitcoin report (December 2013) from Bank of America Merrill Lynch
http://cryptome.org/2013/12/boa-bitcoin.pdf
About BitCoin Investment Funds, earning 700% within 2013 http://
finance.yahoo.com/news/secondmarket-ceo-wall-street-put-203000747.html
“Recession-Plagued Nation Demands New Bubble To Invest In”
http://www.theonion.com/articles/recessionplagued-nation-demands-new-bubble-to-inve,2486/
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Debates on Risks of BitCoinWhat if the government doesn’t
accept it?Ideology: Do you trust the
centralization / centralized government or not?
Risk on BitCoin: 51% attackRisk on bitcoins: price variability
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Valuation of bitcoin
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Functions of BitCoinThree Directions:1. Inflation protection2. e-business (PayPal, Visa, MasterCard, American Express)3. International money transfer(Western Union, MoneyGram, SWIFT, ACH)
Black Market?Regulation?
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Trading on News
Lindsey Kathmann
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Trading on the NewsAll is speculative
◦How much of a risk are you willing to take Make money on people reacting to bad
newsBetter for short term trades
◦Buy before estimated positive earning: speculative increase
◦Buy after bad earnings: “Sick puppy”Pay attention to:
◦Stocks near 52 week low◦Potential Earnings◦Up and coming industries/stocks
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Where to look
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Groupon (GRPN)Went down 22% in 1 dayWHY?
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GRPN Coupon business deteriorating, so focusing on
physical goods Reorganizing the business can hurt their profit for an
extended period of time Groupon experienced high growth in 2013
◦ Investors question whether reorganization of the business will be successful
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American Apparel (AAP)
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Honda (HMC) News: Reported near 52 week low Why?
◦ Ford has become more competitive◦ Anti-Japanese sentiments in China
Why is it a good time to buy?◦ December 2013: able to grow its sales in China by 60%
Show acceptance of Honda globally
◦ Honda was in the negative column for January Only down 2% vs 7% industry average CR-V had a 2.4% sales increase
◦ Introduced an Accord in all electric and gas-electric hybrid model for 2015
◦ Priced at 91% book value
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Potentially Massive Moving Stocks this Week
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SandRidge Energy (SD)SandRidge Energy, an Oklahoma-based oil
and gas company. Some disappointment over the past year
◦ Paid to acquire land in the Gulf of Mexico Determined there wasn't enough available in the region
to continue drilling
SandRidge is now focusing intensely on its operations in the mid-continent: Mississippi, Kansas, Oklahoma, and North Dakota
Many believe this is where the real organic growth can come from for the company
2 Key Variables to make or break stock prices:◦ Underlying price of the commodities-
SandRidge is selling: gas and oil◦ How well the company did in predicting is
validated reserves
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Biotechnology & Pharmaceuticals
Max Layman
iShares Nasdaq Biotechnology [IBB]: 88% (1-yr)
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CharacteristicsHuge advances in medical
technology in recent yearsObama Care High Risk – High Reward IndustryFew companies are profitable319 Biotech companies143 Pharmaceutical companies
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Size MattersSmall Companies
◦Make it or break it◦Operate without profit◦May issue shares to raise capital◦Acquisition target
Big Companies◦Not gaining FDA approval doesn’t
destroy company
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3 Investment StrategiesFDA approval
◦Trade in anticipation of drug approval
Possible Acquisition Targets◦Invest in small company with
proven drug
Fundamental Investment◦Invest in large company with large
portfolio of drugs
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Approval ProcessPhase I
◦Test on humans◦Determine if side effects are serious
Phase II◦Effectiveness at predetermined
dosesPhase III
◦Compared to existing drugs◦Blind tests◦Is it effective, safe, and better than
current treatments?
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What Type of Drug is it?Cancer?Gastro-Intestinal?Headaches?Diabetes?Heart Disease?Ruconest for hereditary
angioedema?
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FDA Drug Approval Decision CalendarMarch 21st 2014
◦Celgene (CELG) - Apremilast for psoriatic arthritis
April 15th 2014◦Mankind (MNKD) - Afrezza for Type 1 and
2 diabetes ◦Glaxo Smith Kline (GSK) - Abiglutide for
diabetesMay 5th 2014
◦AstraZeneca (AZN) - Epanova for hypercholesterolemia
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Example 1 of Approval
Approval
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Example 2 of Approval
ApprovalPre-Decision Run
Up
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Approval Not Given
No Approval
Pre-Decision Run
Up
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Oxygen Biotherapeutics [OXBT]
FDA granted fast track for Levosimendan ◦Drug reduces morbidity in patients
who have undergone cardiac surgery◦Already approved in 50 countries
Phase III trials start in June 2014◦Single successful trial needed for
apporoval◦Market Cap $65M
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Oxygen Biotherapeutics [OXBT]
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Acquisition TargetsSmall Cap companiesAlready have drug approval
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Acquisition Targets – Example 1Galena Biopharma [GALE]◦FDA approved pain medicine ◦Partnership with Teva Pharmaceuticals ◦Pipeline of drugs
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Acquisition Targets – Example 2Zogenix [ZGNX]◦FDA approved pain medicine
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Looking for Good FundamentalsReturn on Assets > 0Return on Equity > 0Return on Investment > 0Debt/Equity <1Operating Margin > 15%Price/Earnings > 0Performance [ttm] > 0
Results
CELG – JAZZ – PRGO – QCOR – UTHR
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Looking For Good Fundamentals