I haven't been shy about patting myself on the back here when I've written a bullish opinion on a stock that then goes on to make substantial gains. I've had a number of successes.
The Bullish Calls
I first wrote about LAC.TO at $0.75 CDN and it is now trading for $1.06....I long ago took profits on that stock at lower prices than where its trading now, and when that happens I simply cry into the money I made.
http://www.avoidthebag.com/2016/04/lithium-americas-cup-and-handle-forming.html
EGT.V is one I wrote about at 14 Canadian pennies. I bailed on it after doubling my money but its still trading up around 25 cents.
http://www.avoidthebag.com/2016/05/the-lure-of-clean-energy-eguana.html
HMPR, which is now trading as XBKS after a merger is one I'm particularly happy about, and while I have taken profits by selling some shares its one I continue to like and have maintained a position in.
It was trading at a split adjusted price of $18.10 when I first wrote about it here, now its at $26.50 after pulling back from as high as $30.
http://www.avoidthebag.com/2016/05/hampton-roads-bankshares-hmpr-great.html
RVX.TO is a stock I first wrote about here when it was trading around $1.30 CDN, its currently at $1.75 after getting up around $2.50 in October and is one I still continue to both like and hold, however fully ackowledging that it is extremely high risk in my view.
http://www.avoidthebag.com/2016/06/resverlogix-phase-iii-clinical-trial.html
ACU.V written about at .16 cents now at .185 is one I doubled down on when it fell to 10 cents. I took some profits when I climbed up over 20 cents, but I still am maintaining a position and still think there's much more upside potential.
http://www.avoidthebag.com/2016/07/the-lure-of-green-energy-aurora-solar.html
In October I expressed a bullish opinion on RMHB when it was trading around .036 cents American. Now it has climbed to .092....it is another one where I'll have to cry into the money I made, bailing on it after a 50% profit.
http://www.avoidthebag.com/2016/10/hemp-infused-beverages-intriguing-idea.html
KUB.V has been a monster, I wrote about it in October as well when it was 2 cents...and now its settled in around 6 cents after trading as high as 7.5 pennies CDN. Its one I continue to hold, in fact I just added to the position I started at 2.5 cents by buying more at 6 cents.
http://www.avoidthebag.com/2016/10/an-intriguing-penny-play-kubv-ukranian.html
Not too bad at all, and I'm leaving out more recent gainers like Emblem Corp.
Of course not all my calls were long plays. I did express bearish views at times when I thought some stocks were bubbling up on nothing more than Promotion, News and Hype.
The Bearish Calls
I wrote a few bearish opinions on ZIOP starting last May when that stock was trading in and around $7 to $8 per share, now its sitting around $5.50
http://www.avoidthebag.com/2016/05/ziopharm-wall-street-sting.html
I did a couple posts on KTOV also in May when that stock was trading up around $6.60 per, now its fallen all the way to around $3.
http://www.avoidthebag.com/2016/05/ktov-what-just-happened.html
And then there's VUZI when it was up at $8.81 on its way to almost $10. Now its fallen all the way back to $6.40
http://www.avoidthebag.com/2016/09/vuzix-time-machine-back-to-tech-bubble.html
And finally my very recent bearish thoughts on NF.CN from November when it was up around 25 Canadian pennies and on its way to being promoted to over 30 cents. Its now trading for 11 or 12 cents and in my opinion on its way back to .02 cents eventually.
http://www.avoidthebag.com/2016/11/message-board-fun-and-games-with.html
But enough of the successful calls, I didn't get them all right last year and I am sure I will get some wrong in the future. Two opinions I expressed were particularily bad, one long idea and one short.
MYDX is a company I wrote about this past November and one I took a position out in. When I wrote about the PPS was trading for 2.2 cents, and I bought into at .0144 as revealed in the comments. Its most recent closing price was .0021 for a drop of over 80%. Ouch!!! Thankfully it was a small position, and I followed my own advice in that post and only risked money I could afford to lose.
http://www.avoidthebag.com/2016/11/mydx-another-way-to-play-marijuana-space.html
I will continue to hold MYDX (the symbol and company name are one and the same). The company is forecasting profitability in the near future, I'm not going to hold my breath however. A good recipe for going broke in my opinion is to believe the forward looking bullish outlooks on penny stocks. I've already booked some solid capital gains in 2017 and losses can come in handy at tax time, even if the dollar amount is small.
The bearish short opinion was expressed on NBEV, back when it was trading under the symbol ABRW. I wrote about that stock in June of last year when it was trading up around $1.75 cents after already made a huge jump from as low as .20 cents in February and March. Today its trading up around $4.20 and has been as high as $5.50
http://www.avoidthebag.com/2016/06/abrw-great-example-of-stock-promotion.html
My opinion on NBEV hasn't changed for the long term, but I have to admit I was wrong. The ultimate arbiter in the market is price, and I thought NBEV had been pumped up near its limits in June, so I was incredibly wrong on that one as well.
When I get it right I'm not shy about sharing my success, but that means I have to take ownership of those views and opinions I get wrong too. Some social media posters talk with extreme confidence when pumping and bashing stocks because they know sheep will follow strength, and admitting to past failures or the possibility that a call could be wrong, well that doesn't inspire confidence, and pumpers and bashers in my opinion (one that is often not humble) is that most are industry hacks.
Professional market players infest social media sites where stocks are discussed, that's opinion but for me its not up for debate. The way I see things they are manipulators and bullies, trying to dominate the herd so as to shepherd the sheep into the stocks they're dumping, or out of the ones they want to accumulate.
I'll end this post here and wish everyone luck. I will also once again cite those two maxims that I think are of critical importance to retail investors. Firstly that nobody has ever gone broke from taking profits, and secondly that if you sell a stock and then see it continue climbing even higher, before buying back in cry into the money you made and think again about that first maxim.
Cheers.
Showing posts with label Resverlogix. Show all posts
Showing posts with label Resverlogix. Show all posts
Friday, January 20, 2017
Monday, December 5, 2016
Short Interest update on (RVX.TO) (ACU.V) (KUB.V) And other thoughts
I have written often about the reasons I view short interest as an important part of my research. Short interest is of course fundamental data, but rather than being weeks or months old, with the Canadian listed stocks I hold I am able to get updates twice a month, and when the new numbers come out its only 3 days old.
I've shared these views before, but I believe they bear repeating.
In my younger days I viewed bears as an enemy to be defeated, I dreamed of short players being forced to cover off large positions resulting in a squeeze play that would send a stock sky rocketing. I long ago consigned that view to the trash bin. My older and wiser self knows that it is never wise to underestimate an opponent, that holds true on the battlefield, in a sporting arena and with the public equity markets.
Short selling comports huge risk. When going long the amount that can be lost is fixed, if you buy 10,000 shares of a stock trading for $1 the most you can lose is $10,000 because a stock cannot drop below $0.00.
But go short 10,000 shares on a stock trading for $1.00 and the potential for losses is theoretically limitless. Those 10,000 shares borrowed and sold into the market at $1.00 have to be bought back on the cover, unless the PPS goes to $0.00 in which case the short seller books $10,000 in profits less fees.
But if the stock climbs, then the potential for losses climbs. At $2.00 a short seller is down $10,000 at $3 he's down $20,000....and keep adding $10,000 for each dollar the PPS climbs. And if the stock keeps climbing, then the short seller must keep putting money into his margin account to protect his short position.
If the margin requirements are not met then he can be forced to cover. Can you imagine being short 10,000 shares at $1 on a stock that goes to $10? The short seller could be forced to buy back his short position for $100,000 when the short sale only netted $10,000.
It is because of this kind of risk that short sellers like Hedge Funds are notorious for going full tilt on their research and due diligence, with reports of some even combing through the trash of public companies to get the inside scoop. And it is because of this that I now stay away from investing in companies that have a significant number of shares shorted, say 10% of the outstanding or more.
Of course there are a couple other reasons for going short. One is fairly benign. Market Maker broker dealers (MMs for short) that are quoting a bid and ask have an essential function in the market, they provide liquidity. A lot of stocks out there are thinly traded, but because of MMs those looking to buy can always find a seller, and those looking to sell can always find a buyer. Because of this essential function MMs can end up short, not because they're bearish on a company but simply because they got hit with buy side interest when no sellers were available.
The other reason is less benign, its sometimes referred to as shaking the tree. A major player can work a stock up and down by using short selling when a stock hits the top of his buying range. This can increase volatility and cause some longs to bail out, allowing the big player to accumulate a large position, covering off his short sales and then adding to a position. In this way short selling can actually be seen as a positive.
Alright, that's enough preamble. Now onto the three stocks mentioned in the subject line: RVX, ACU and CUB all traded in Canada. I have written about all three before here at ATB, and both RVX and KUB are up significantly since I first profiled them here, while ACU is down a couple of cents.
Please note that I have long positions in all three of these stocks so my opinions are biased and should be viewed in that light.
Resverlogix: RVX.TO or RVXCF OTCBB
Up to November 30th 2016 shares shorted is listed at 107,542 which represents 0.10% of the 105 odd millions shares issued. You would have to go all the way back to July of 2015 to find a higher number. As recently as May of this year the number was just 1,500 and it has been climbing almost non stop ever since, but only incrementally, one tenth of one percent of the outstanding is hardly a massive number.
With RVX I consider it very possible that short selling is being used as a means to "shake the tree", to push the PPS around in other words in an effort by smart money players to accumulate on a long position.
The company just put out news today (Monday December 5th, 2016) announcing a second positive recommendation from the Data and Safety Monitoring Board (DSMB) for the continuation of the company's Phase III trial of Apabetalone called BETonMACE. The first patients were dosed over a year ago now and the DSMB noted no safety or efficacy concerns and recommended the trial continue without modifications.
BETonMACE is attempting to show that Apabetalone will reduce the incidence of Major Adverse Cardiac Events (MACE) in patients suffering from Diabetes Mellitus, which is a fancy way of saying full blown insulin dependent Diabetes.
Here's a link to that news:
Aurora Solar Technologies: ACU.V or AACTF OTCBB
Short interest for ACU is so low it might as well be 0, although the actual number is 2,000 current up to November 30th 2016. That's only 0.01% or one one hundredth of one percent of the roughly 39.6 million issued shares.
Trading in this stock has really thinned out, and there hasn't been any news of any consequence since October when the company announced a repeat order from one of their customers.
Cub Energy: KUB.V or TPNEF OTCBB
KUB on the other hand does have some short selling going on, like RVX not a huge amount by any stretch, but enough to be noteworthy in my opinion. Up to November 30th 2016 the number comes in at 146,400 which is 0.05% of the roughly 312 million issued.
Again, its not a lot, and as with RVX I consider it very possible that short selling is being used as a means to shake that proverbial tree in an effort by some smart money players to accumulate. Back in October the number climbed over 200,000 but then came down in subsequent periods to just 23,000 and then 16,000 before this most recent update took it back up to 146,000.
Cub Energy has basically no news, the last PR of any note was on November 16th when the company released its 3rd quarter numbers. And unlike RVX and ACU volumes for KUB are much more robust, it has traded at least 1 million shares per day over the past 4 sessions and traded over 14 million shares on November 17th, the day after they released their quarterly results. November 17th saw the PPS close at 3 cents, the most recent close was 5 cents and that is just .005 from the 52 week high.
Summary
Taking everything into account I think RVX presents the biggest possible upside if they succeed with their Ph III trial, but it could be a long wait and there is a big risk that their trial could ultimately fail.
ACU appears to be a stock that is drifting right now. Its a stock that has seen significant volumes taking place in quick bursts every two to three months, the last one being in late October. If the pattern holds it would be January or February before the next one. However I have to wonder if the election of Donald Trump hasn't taken some of the wind out of the sails in the New Energy space.
KUB I believe presents the best prospects in the very near term, that is based on the chart, on the fact there is precious little news, no hype and zero promotion that I can find. Should those elements come into play I think there's a great narrative here given that Cub Energy is focused on the Natural Gas market in Ukraine, and with the conflict in that region subsiding I very much like the chances of KUB.V returning to the levels it was trading at back in 2013, that is in the 20 to 30 cent area.
Comments are always welcome, just keep the language polite.
Thursday, November 10, 2016
Resverlogix - Shareholders waiting to see what's in the box
Resverlogix (RVX.TO in Canada or RVXCF in the U.S.) is reminding me of a Christmas present wrapped and under the tree, or perhaps an episode of the game show 'Let's Make a Deal'.
Back on August 22nd the company announced that its Annual General Meeting (AGM) of October 5th 2016 had been cancelled, with no date for rescheduling at that time,and no reasons given. Message board participants reported communications with the company's IR representative as saying no explanation could be given due to disclosure rules, I myself received such an email.
Then on October 6th the company put out a PR announcing the Annual and Special Meeting of shareholders will be held on December 15th 2016.
The company hasn't been sitting on its hands in the interim. They just did a presentation in Cologne at BIO Europe. Here is a link to the slide presentation from that event:
Notable in that presentation is yet another mention of a second licensing/development deal to be announced in 2016, the first being the deal in 2015 with Shenzen Hepalink. When that deal was announced RVX.TO had made a big move and was trading up around $3 CDN after starting 2015 at less than $0.60 cents.
Which brings me back to the first line of this blog posting, the references to the Christmas present under the tree or an episode of "Let's Make a Deal".
In the PR of October 6th linked above the company stated that the matters to be considered at the December 15th meeting will be delivered to shareholders and filed on SEDAR no later than November 15th 2016. I am expecting that information will give at least an indication, (if not the outright reason) as to why the Oct. 5 AGM was cancelled.
Is it simply the licensing/development deal? If so is it significant enough to send RVX soaring like it did in early 2015? Is it perhaps something else more significant? Could it be something negative?
Back this past August and early September RVX was trading down around $1.20 per share. After spiking briefly up near $2.50 the PPS has settled in and around $1.80 to $1.90 with occasional gusts up around $2. So what's in the box? Did Uncle Resverlogix get us that gaming system all the kids are wanting? Or socks and underwear? We can take $1.80 or so per share now, or wait to see what's behind the curtain.
I am holding out to see what's behind that curtain. The phase III BETonMACE trial for diabetes patients has now been enrolled for a full year and the company recently announced that there have been no safety or efficacy issues or concerns.
The market game is never easy, and that's is as it has to be. It is my belief that there has been a manipulative foot holding the PPS down. Yes $1.80 or so is much better than the $1.20 it was at, but I think there is much more upside to come, and that good news on or before November 15th could send the PPS on another ride like it had in early 2015 when the price soared from less than 60 Canadian pennies to up around $3. The difference now being that if a similar run starts it will be from a substantially higher launching pad.
Good luck.....read the disclaimer at the very bottom. My views are biased as I am a shareholder.
Tuesday, October 4, 2016
(RVX.TO) Golden Cross - Will history repeat?
For those unfamiliar the term Golden Cross, (GC) refers to a technical event involving the 50 Day Moving Average, (DMA) crossing over the 200 DMA. Here's what it says at Nasdaq.com:
That is certainly what happened the last time RVX had a GC with the PPS exploding from less than $1 at the start of March 2015 to up around $1.80 by the middle of that same month. Whether you're looking for short term momentum or long term appreciation, gains in excess of 80% are hard to ignore. Here's a chart showing RVX's trading at that time.
Now of course RVX is not trading for less than $1 CDN. The current Golden Cross happened with RVX trading at $2.05 CDN. If it were to go on and make similar 80% gains in the coming weeks that would put the PPS up around $3.60 CDN.
Here's the current chart showing the Golden Cross which just occured:
Are there any anticipated catalysts that could reasonably be expected to lead to these type of gains? I believe there are. Firstly the company is scheduled to do two investor presentations, one next week in NYC at the Yale Club and the second a week later in London. There was a PR about it on Tuesday:
And beyond that the company's CEO has stated that the company will be announcing a second licensing/partnership deal "soon". The first such deal was announced last year and was likely responsible at least in part for the climbing share price in early 2015.
American readers take note, Resverlogix trades on Canada's big board TSX and is fully reporting, In the United States it trades on the OTCQX market. Not all OTC stocks are created equal, the OTCQX includes many fully reporting companies that are listed on foreign exchanges.
Full disclosure, I am a shareholder in RVX so my opinions should be considered as heavily biased, in fact I added to my position today (Tuesday Oct 3, 2016) and hold what I consider to be a substantial (for me) position.
Cheers and good luck
Tuesday, September 27, 2016
Price prediction for RVX.TO - $3.00+ by year's end...
Please understand that I am offering up an opinion here on a stock that I have, (what I consider to be) a significant position in. I eat my own cooking in other words, but with that being said it is obvious that my opinions are extremely biased.
I typically don't offer up predictions for a stock price, so much can happen. I prefer referring to market capitalization because dilution can come into play, especially with speculative companies like Resverlogix. The reason I'm putting a price target prediction out now on RVX.TO is because of the technical picture, and I actually think $3 by the end of 2016 may prove to be incredibly conservative, and I sincerely hope it is.
RVX.TO is setting up for a golden cross. Strictly speaking a golden cross happens whenever a faster moving average moves over a slower moving one. The 200 DMA moves slower than the 100, the 100 moves slower than the 50 and the 50 moves slower than the 20. So a golden cross can involve the 20 DMA moving over the 50, 100 or 200 DMAs.
But the goldenest (if that's a word) of golden crosses occurs when the 50 DMA crosses over the 200, especially if the 200 DMA is also moving higher when the cross happens. And that's what setting up for RVX.TO right now (and for RVXCF as well). The 50 DMA for RVX.TO is currently at $1.32 and moving higher and the 200 is at $1.39 and has also started to climb slightly.
The last time RVX.TO saw a 50/200 Golden Cross was in March of 2015, and all you have to do is look at the chart to see how the PPS reacted just before and after than technical event.
The difference this time is in the starting point. Back in early 2015 when that Golden Cross was setting up in late January and early February the PPS was less than a single dollar Canadian. Now the PPS is around $1.70 after recently trading over $2. Take note that back in 2015 when RVX ran from less than a dollar to up around $3 that it wasn't a straight line. There were periods where the PPS retraced significantly before resuming the upward climb, just as RVX.TO has seen the past three trading sessions.
The golden cross in 2015 happened prior to the company announcing a licensing and equity agreement with China based Shenzhen Hepalink Pharmaceutical. Resverlogix's CEO reaffirmed that the company will be announcing a second such deal on September 13th just passed. It is my opinion that expectation surrounding this second deal, that it is driving the current move we've seen with RVX.TO climbing off the $1.20 - $1.30 trading range it had been in for the past several months.
Last year's climb to $3 was followed by a slow steady decline. Is there reason to expect, that if it does, once again, get back $3 and perhaps even higher, that it will be followed by another long period of decline? While I think that is certainly possible, I also think things are much different as we head into the end of 2016 and the start of 2017. The biggest difference is in terms of the phase III BETonMACE trial seeking to prove that Apabetalone will reduce the incidence of Major Adverse Cardiac Events (MACE) in patients suffering from Diabetes Mellitus.
Back in March of 2015 the BETonMACE trial was still over 6 months from starting, now heading into October of 2016 that trial has been running almost one full year. And the company just recently received a positive recommendation from the independent Data Safety Monitoring Board for the continuation of the trial.
There are no potential rewards without the potential for big risks. Biotechs are almost akin to firecrackers. They can give off a spectacular bang, such as when a buyout is announced, or they can fizzle, such as when a trial is halted.
The comment field as always is open, but it is moderated so please keep it polite.
Sunday, September 25, 2016
Sunday thoughts - Who exactly is 'smart money'?
Its Sunday, and unlike last week I made it to Church today. The readings were from Timothy and Luke. The first being the passage about the love of money being the root of all evil and the second was about Lazarus lying at the foot of a rich man's door with dogs licking his open sores...yes, there wasn't just one Lazarus in the Bible. Lazarus goes to heaven and the rich man is sent to Hades, crying out to the God of Abraham but he gets no consolation, he had the good life when he was alive.
Hardly the backdrop for a blog about the stock market, where most (and probably all, myself included) invest and trade with the goal of getting rich, or richer as the case may be.
Our Pastor's sermon was about doing good, its not money that is evil but the love of money. The rich man who left poor Lazarus outside his door to feed off the crumbs of his table, he could have shown him some kindness, invited him in...and now that the rich man is dead its too late. The message was ''do good'' don't wait, don't make an excuse.
Ahhh to be rich, to have the money at one's disposal for whatever one wishes. The markets almost worship wealth, and some investors will choose to put money into a stock because they're following a billionaire. If social media is any indication many ZIOP investors stormed into that equity based on the involvement of billionaire R.J. Kirk, I myself took a flyer on another biotech based on Mr. Kirk's involvement, TBIO.
Sometimes following a billionaire doesn't work out. Investors who based the decision to buy Sandridge Energy based on the activist position of Leon Cooperman know that all too well, myself included among them. Resverlogix, a stock I've written about here several times has the backing of billionaire Kenneth Dart, as does another biotech PPHM.
It would seem that having a big player as a backer is no assurance of success, even billionaires get it wrong from time to time. So should we perhaps not include deep pocketed players in our definition of ''smart money''? I will suggest that no....we should not. ''Smart Money'' players don't have to be billionaires or even millionaires by my definition.
So what is my definition then of a ''Smart Money'' player?
I will offer up what I consider a prime example, and although it is fictitious and from a movie I do believe instances like this occur.
Younger readers might not be familiar with the movie 'Trading Places' starting Eddie Murphy and Dan Ackroyd which was made in 1983. I won't bore you with a plot summary, rather I will include a scene available on YouTube.
In this scene two old gentlemen, the Duke brothers, believe they have in their possession an early copy of a report on the orange harvest. Their report tells them that the orange crop has been severely damaged by a harsh winter. Looking to capitalize on this information they instruct their trader to start buying right at the opening bell and to keep on buying. ''Don't worry if the prices starts climbing, just keep buying''.
What the Dukes don't know is that their copy of the report is doctored, and that the harsh winter didn't damage the orange crop. Billy Rae and Lewis (Murphy and Ackroyd) are the reason the Dukes have a doctored report and instead of the Dukes getting rich they are financially destroyed.
So what's the point? The manner in which the Dukes act is the way I think ''smart money'' acts, with bold confidence. And just like the two traders who see the Dukes open their window on the trading floor and watch them eyeing their trader in the OJC trading pit....I think it can be possible to discern this ''smart money'' buying activity. Not from the trading floor, (which has now been replaced by automated trading) but rather from the chart.
Take note however, the Dukes didn't issue a PR announcing to the world they were going to boldly buy up OJC futures, that would not be smart. In today's world, if you were 100% confident that you had the inside track would you announce it to the world, spreading messages all over the internet and sending out emails? No....I don't think so either. If you did everyone would be buying with hardly any selling and your chances at profits would disappear.
I know in the movie the crop report the Dukes have is wrong....but that's Hollywood. The guy they paid for it had it stolen and was then dressed up as a gorilla. As the Dukes are going bankrupt their spy is being sent to Africa to be introduced into the wild gorilla population.
I've belabored this point long enough. The smart money (no matter whether they're uber wealthy or not) buys with extreme confidence, and that confidence shows up in price and volume movements in a chart. But note that if those price volume movements come in tandem with lots of Promotion, News and Hype....well then its almost certainly not smart money players but the dumb herd moving in.
Now to tie this in with my Pastor's sermon today....If you make some money in the markets, pay it forward, do some good, we're only here for a short time. Money is not the root of all evil, the love of money is. Money can do a lot to ease pain and suffering that exist in our own back yards.
Disclosure, I have long positions in TBIO, RVX and PPHM. With ZIOP I have placed my bet on the short side.
Good luck
Wednesday, September 21, 2016
Resverlogix - A good problem to have (RVX.TO - RVXCF)
Life is full of choices and oftentimes there is no good choice. Kind of like the Presidential election in the United States right now if you restrict your choices to Donald or Hillary, most U.S. voters are trying to decide between two types of poison in my opinion.
But wait, this isn't a blog about politics.
Sometimes problems are good, like trying to decide whether or not to take profits on a stock that has made big gains in a short period of time. That's a problem being presented to Resverlogix shareholders right now, and I'm not going to suggest anything. I will however invoke my favourite little bromide which I repeat over and over here at Avoid The Bag.
Nobody has ever gone broke by taking profits.
But that doesn't mean taking profits is easy..it can be very hard, I just wrote about it this past Sunday: Sunday thoughts on when to sell. The difficulty comes from fear over selling too soon. Nobody wants to sell something for $2 and then look back in a few days or weeks and see it at $5, $10 or $20. That might sound insane, but in the biotech space things can and do happen very quickly, both good and bad.
Pharma watchers probably already know about Tobira (TBRA) which shot up from less that $5 to around $40 on M&A news that came out September 20th. On the flip side Novavax (NVAX) recently went from over $8 to less than $2 after reporting missed endpoints in a phase III trial. Big risks and big rewards, if you're familiar with the biotech space then this is old news.
Resverlogix hasn't achieved anything like the gains experienced by TBRA, not yet anyway. But still the chart is eye popping.
From the $1.20 to $1.30 area when I first started writing about RVX here at ATB, to a close of $2.02 today (Wednesday Sept. 20th). The question is...what is driving the sudden surge in volume and price? And the simple answer is, I have no idea. What I do know is that buyers have been storming in and that the price has exploded higher.
Volume
Wednesday's Canadian volume of just over 400,000 might seem light, however it represents the largest single day of trading in the past 12 months. On the US side under the symbol RVXCF there was less than 90,000 trading. Again, not a lot...but exponentially higher than the average daily volume of the past three months which is just 5,084 shares.
Trading is still light, but exponentially higher than what we've been seeing of late. In fact during this month of September RVX had two days at the start of the month with less than 5,000 shares trading hands. Strange to think that 400,000 shares trading is huge, but compared to recent norms it is.
News
The company has issued news twice so far in September. The first was on September 12th announcing participation is some upcoming conferences, and the second came out September 14th notifying the firm's most recent quarterly filing. Prior to those PRs the biggest news item was probably the one from August 11th when they announced a positive recommendation from the Data Safety Monitoring Board for the ongoing phase III BETonMACE trial.
Whatever is driving RVX's recent move, I don't believe its news. Resverlogix is very active in participating in scientific conferences and investor presentation shows like Rodman & Renshaw, and there were no surprise announcements that came out recently as far as I'm aware. The CEO did mention that a second licensing/partnership deal will be announced soon during his recent R&R presentation, but that "news" was already out there.
Promotion
Zacks SCR put out an updated report on Resverlogix on September 19th, however it seems to be pretty much the same as the last one. Zacks and other "analysts" shops of this type are what they are. Small cap companies like Resverlogix engage firms like this to provide shareholders and prospective investors with something to review when researching a company. I don't like it but its part and parcel of the industry.
Bottom Line Opinion
Getting straight down to brass tacks, I have always seen the potential for Resverlogix to attain a valuation in the billions of dollars. If Apabetalone is successful in treating all the indications the company is targeting I wouldn't even hazard a guess as I think even $10 billion could prove conservative. Call that pumping if you wish, but it is a genuine opinion, and it is predicated entirely on Apabetalone succeeding in clinical trials like the on-going phase III BETonMACE trial for patients with Diabetes Mellitus.
The reason I think the valuation is as low as it has been, and still is currently is because I do not believe that I am alone in having this opinion. Both of my regular readers know my views on Pump and Dumps. Pumps happen all the time, you see share prices explode higher, volumes go insane...millions and millions of shares trading every day as the smart money players unload on excited retail investors.
I think the opposite has been happening here, I think there are smart money players who have been accumulating RVX for the past 2 to 3 years. Yes there are over 100 million shares issued and outstanding but roughly half of those are already in the hands of major shareholders like billionaire Kenneth Dart via his investment arm Eastern Capital. That only leaves 50 odd million left, and I'm certain that I am not the only bleacher bum retail player who has bought in here.
The reason I think RVX has been drifting for so long.....is because that's the game. Retail investors are often loathe to part with their shares when a stock is climbing higher and higher. There are tools available to the big operators and the biggest tool in their box is short selling. If you're sufficiently intrigued by this line of reasoning I will invite you to read this Business Insider article on exactly what I'm talking about. And I think that the bigger the potential rewards, the longer accumulation can take.
Bottom Bottom Line
The reason I think RVX's price has been moving as it has since about Sept 9th, I think its because something is close....very close. In my opinion something is coming down soon and there's no more time to play games, the real players who move the market are getting ready to send RVX higher I believe, much higher.
What exactly? I do not know...a nod from the FDA, a partnership or buyout, a blockbuster regional licensing deal? Again, I don't know...but the trading of late suggest to me something is in the works.
Of course, again, its just an opinion and it could be wrong.
Sunday, September 18, 2016
Sunday thoughts on when to sell....
Its Sunday again, time to sit back and relax and consider those things in the market that daze and amaze, astound and confound. The things that both thrill and send chills down the spines of retail investors. Today I'm going to write about selling, not just any selling though....about selling after you've made profits.
I've put forth some long ideas here at Avoid The Bag that have made some nice gains:
Lithium Americas at $0.75 cents CDN now trading over $0.90 with gusts up north of a dollar.
Eguana Tech when it was $0.15 CDN now trading around $0.30
Xenith Bankshares (pre-merger when it was HMPR) at $1.81 now trading for $2.26.
Resverlogix at $1.25 CDN now trading at $1.53
I also wrote about Aurora Solar at $0.15 CDN and it is currently trading for 10 northern coppers: http://www.avoidthebag.com/2016/07/the-lure-of-green-energy-aurora-solar.html
Four out of those five stocks that I've written bullish opinions about are green, which means there is the potential for profits. Not bad....gains are good, but until those gains are crystalized by selling, there is no profit.
My legion of loyal fans (all three of them) have probably come across someone who's owned a stock that dropped in value and heard them say something like: "Its not a loss until I sell". And that is true, but it also works when a stock climbs. There's no profit made until the shares are unloaded. Paper gains and paper losses are notional and only become real once a stock is sold.
But selling is hard, and I will suggest it can be even harder after big gains than after a stock has dropped. Why? Psychology, and the triumvirate of emotions that seasoned market players know oh so well: Fear, Uncertainty and Doubt....or FUD for short.
FUD doesn't just rear its head when a company's stocks falls, it also pops up after a stock has climbed. You've bought my favorite hypothetical stock ABCD at $1.00 per share when things were quiet and volumes were light. You've read all the filings, the PRs, all the industry stories related to ABCD, you even know the histories of the CEO and other board members.
Then ABCD starts attracting attention, volumes pick up....it getting mentioned in social media. The PPS starts climbing, to $2 then $3....before you know it ABCD is trading at $5 per share and you're sitting on a 500% paper gain. Its not a capital gain though because you haven't sold.
And here's where FUD kicks in. Let's say you bought 5,000 shares for an initial investment of $5,0000....and now those same 5,000 shares are worth $25,000 for a paper gain of $20,000 if you sell. But things are obviously going well now, better than they were when you bought shares at $1. Maybe there's analyst coverage, or a newsletter has picked up ABCD and is touting it to its readers. Those storming into ABCD are all over social media with predictions of $10 and $20 valuations to come.
What if they're right? What if ABCD does go to $10...or even $20. Those 5,000 shares could be worth $50,000 or maybe even $100,000 for monster gains in other words. A new car, a bigger and better house....that dream vacation. Sure $20,000 profit is incredible, but damn! Won't you be kicking yourself if you take $20,000 when you could have had $95,000 in profit?
Time to take a deep breath. A lot of people start investing with the goal of making huge "life changing" returns. The stock market is the epitome of the Dream Factory. And people do fall in love with their stocks, digesting every tidbit of news and opinion that hits the internet. Whether its something from a respected analyst, a Seeking Alpha or Motley Fool author, or some moron like me with a blog.
I will suggest that you consider, when a stock has made big gains, whether or not its a profitable company. Of the five stocks I mentioned at the beginning, four of them are not....
Lithium Americas is a junior mining company developing a Lithium mine in Argentina, Eguana makes inverters for battery storage power systems, Resverlogix is trying to develop a drug that will reduce major adverse cardiac events and Aurora is in the solar panel space. None of these four companies is profitable. Only Xenith Bankshares has actually achieved positive earnings.
Next I will suggest you look at recent volumes. Has trading in the stock exploded or is the PPS climbing higher and higher on light volume? I have a rule of thumb, if between 5 and 10% of the float trades in a day, I start thinking about looking for the exit. And that is doubly true if higher than historic volume happens in tandem with lots of Promotion, News and Hype. Especially when its a company with a history of using shares to fund operations, pay salaries and keep the lights on.
My ultimate goal with this blog is to help retail investors understand the forces at play. And I will suggest that these forces are most active when a stock has made big gains. The goal of the industry players, in my opinion, is to get retailers buying when stocks are high while the true professionals sell. And if a retail player is lucky enough to have bought in early and is sitting on big gains, to keep that retailer holding tight.....to fall in love.
I'll end with my favorite piece of market wisdom: Nobody ever went broke taking profits. And if the stock you sold at a profit keeps climbing, and you miss out on even bigger gains? Then cry into the money you made.
Good luck
Thursday, September 15, 2016
Resverlogix - Up over 25% in 6 days (RVX.TO)
RVX which I last wrote about on September 10th has been on a tear over the past 6 trading sessions.
On September 7th the PPS closed at $1.20 on the Canadian TSX, and after 6 consecutive positive days it closed Thursday Sept. 15th at $1.54 for a gain over over 25% over that short span. On the US side where Resverlogix trades OTC Foreign with the symbol RVXCF the shares have gone from $0.94 at the close on Sept. 7th to a close of $1.17 currently for a jump of almost 20%.
And the volumes have picked up considerably....on the Canadian side volumes for Sept 15th hit 113,368 with 55,100 reported trading on the U.S. side. That compares to 3 month daily average volume of around 25,000 and 3,000 respectively.
Big gains over a short period of time on what is still thin trading, but still substantially higher volume than normal So what gives?
Obviously its impossible to say for sure, buyers don't put out PRs saying: "We're buying RVX today because...". But I think there's a good chance that their presentation at the Rodman & Renshaw Global Investment Conference in NYC on September 13th may have something to do with it.
During their presentation the company said they will be announcing a second licensing/partnership development deal. The first such deal was announced last April involving Chinese based Shenzhen Hepalink Pharmaceutical. In the weeks and months leading up to that announcement shares of RVX went on an absolute tear, climbing from less than $0.60 CDN to over $3.00.
If similar gains are in store, then RVX is starting its run from $1.20 CDN instead of 50 odd Canadian pennies.
For those who want to listen to the presentation its available on line here:
That presentation requires registration. For those who just want to see the PDF presentation it can be accessed here:
Now please note, RVX has traded higher for six consecutive sessions and obviously at some point there will have to be at least a pause, if not a pull back. After the close Nasdaq listed Novavax Inc. announced a trial failure causing its share price to absolutely crater by around 80% in after hours trading. NVAX trades over 5 million shares on average per day, so obviously it has a very large following. On StockTwits NVAX has over 8,000 "watchers", RVX by contrast only has 63 currently.
I consider it possible that NVAX could have a domino effect on other speculative biotechs. We shall see. Regardless, if Resverlogix succeeds with their currently running Phase III BETonMACE trial I think a valuation in the billions is very possible given all the potential indications Apabetalone could impact.
Comments are welcome, do note I am a shareholder so my opinions should be considered extremely biased.
Saturday, September 10, 2016
Resverlogix (RVX.TO RVXCF) Trying to assign a price target
I am an active participant on the site StockTwits with the user name growacet.
Its basically Twitter for stocks, but instead of # hashtags stocks are discussed using the ticker symbol with a $ dollar sign in front. I have about 175 followers, and likely a similar number of ignores. I'm sure a lot of $ZIOP bulls blocked me because they didn't appreciate my bearish opinions when that stock was trading at $13+ and I wasn't buying into the bullish predictions of $20+.
I was recently asked on that site for a one year price target on $RVX.CA
Personally I find trying to assign a future price target on a speculative stock to be something of a mug's game, but I did offer up the opinion that I could see RVX attaining a market capitlization of $1 billion USD if the company's phase III BETonMACE trial passes the halfway point futility analysis. To give that some context the current MC is just under $100 million USD.
Why do I consider assigning a target price to be a mug's game?
With speculative stocks there are so many variables, and with development stage biotech, ultimately the biggest variable is success or failure. At least in Resverlogix's case the finish line is within sight given that they've reached a phase III trial for their lead compound Apalbetalone also known as RVX-208. But still, setting a price target is fraught with uncertainties and unknowns.
But targets are put out all the time, and I assume the reason is because that's what investors want. If a stock is trading for $1, $5, $10 or whatever....investors want an "expert" to offer up an opinion on whether that price is low or high. Why buy an $8 stock if the target price is also $8? Better to buy a stock that's trading for $8 but that is projected to go $20...maybe.
Resverlogix also has analysts offering opinions and price targets:
- Stonegate Capital Partners put out a report in November of 2015 with a target range of $3.54 to $9.34
- Van Leeuwenhoeck Research provided their last update in May of 2016 with a new NPV of $8.50 CAD up from their previous $5.85 opinion:
- Zacks put out the most recent report with a $5.00 CAD valuation target:
- http://www.stonegateinc.com/reports/RVX_NOV_2015.pdf
- http://nebula.wsimg.com/2e68712bb20de1e4d82f91da58ab0b9f?AccessKeyId=F1B3D293B900048B2E3E&disposition=0&alloworigin=1
- http://s1.q4cdn.com/460208960/files/News/2016/July-29-2016_T.RVX_Vandermosten.pdf
My own opinion is predicated on Resverlogix succeeding with its phase III trial, the goal of which is to prove that Apalbetalone can provide Relative Risk Reduction (RRR) for the incidence of Major Adverse Cardiac Events (or MACE defined as heart attack, stroke or death) in patients with Diabetes Mellitus.
The phase III trial is called BETonMACE and it has been running for almost a full year now, however there isn't a specific end date because its an "events based" trial. The results will be evaluated after 250 MAC events with a futility analysis to come after 125 events. A futility analysis is used to determine whether or not a clinical trial should continue or not.
If MAC events are occurring equally in both the Placebo and Apalbetalone arms of the study, then the trial will likely be determined to be futile and stopped. If the treatment is outperforming the placebo, then the trial should reasonably be expected to continue.
The company is blinded to the safety and efficacy results, however a recent PR put out by the company announced that the independent Data Safety Monitoring Board had given a positive recommendation for continuing the trial with no modifications after a completed safety review.
Of course the most obvious question, and one that is perfectly legitimate is this;
If Resverlogix has so much awesome potential, then why is it trading at such a depressed level with a market capitlization of less than $100 million USD?
The answer in my opinion is as obvious as the question, its because of profile, or rather a lack of it. RVX is not a stock on a lot of radar screens. And this pathetic and miserable little blog will do very little to change that. Yes there are some analyst outfits covering the company, but they're small boutique shops that companies pay for exposure. Nobody is ever going to confuse Zacks with BMO or JP Morgan.
Daily volume for RVX.TO trading in Canada is only about 20,000 over the past three months and on the US side where it trades OTC with the symbol RVXCF the trading is even lighter with only about 3,000 shares changing hands on average.
The big boys like the aforementioned JP Morgans and BMO, I highly doubt they have brokers talking up an investment in Resverlogix, and looking at things logically....Why would they? There are plenty of development stage companies engaging investment bankers all the time to underwrite initial and secondary offerings. The major outfits underwriting those offerings and ponying up hundreds of millions, perhaps billions of dollars....those are the stocks that are going to get the buzz, the ones that will be put "in play".
But if the phase III BETonMACE trial succeeds, then I don't think that will matter. In my opinion the market potential for Apalbetalone would be explosive with indications in major diseases like Diabetes, Kidney Disease, Cardio Vascular and Alzheimers. All those conditions are impacted by bad cholesterol which Apalbetalone may alleviate.
It is my view that a successful futility analysis with the company being given the green light to continue through to completion of the trial, that this would be the catalyst that could vault Resverlogix to a market capitlization of at least $1 billion USD, and even that is extremely conservative in my view.
Ultimately though, if the trial succeeds, I don't see Resverlogix taking Apalbetalone to market, I would expect them to be bought out by Big Pharma, as happened recently with Relypsa which sent it from around $14 as recently as May to $32 on the Nasdaq where it traded under the symbol RLYP.
Recent Developments
Resverlogix recently cancelled their Annual General Meeting (AGM) which was scheduled for October 5th, notifying the market via a SEDAR filing. No reason was given for the cancellation so I emailed the company's Investor Relations VP to ask why. A reply came back saying that the meeting date had in fact been "changed", but that no reason could be given because that information is not in the public domain. Here's the text of the email I received:
- Unfortunately, we can not advise to the reason for the change in meeting date as this would be information not in the public domain. When the business to be addressed at the annual meeting has been finalized a Notice of Meeting will be filed with the regulators (www.sedar.com) and ultimately the company will issue a press release regarding the details of the meeting closer to the event date
So obviously something is going on that warranted cancelling the AGM and I am hoping its something positive like another regional deal or a buyout by Big Pharma, but ultimately its all speculation at this point. And even if there is a big deal being worked on that doesn't mean it will be finalized, lots of deals die in the negotiation stage.
But getting back to a stock's valuation, ultimately its about supply and demand. I made lots of Ziopharm shareholders mad last year when I offered up the opinion that the $1 billion + valuation the company had was merely the result of retail investors being herded into the stock by a lot of fluffy news, cheeseball promotion and social media hype.
Its that old line about selling the sizzle not the steak. And there is nothing wrong with frying up a juicy T-Bone and enticing diners with the sound of the meat sizzling. But if they come and sit down and instead of a T-Bone they find a minute steak or hamburger, well they're not gonna stick around too long.
At the end of the day it all comes out in the wash and if a company succeeds then the market will recognize it at some point. If a company doesn't succeed, or if they over promise and under deliver....well the market recognizes that as well which is why you see a lot of high flying heavily pumped stocks get pummelled downward.
If BETonMACE succeeds, in my view the sky is the limit given the diseases being targeted and the potential market. But before that happens they will have to have a successful futility analysis, and with a positive report on that I can see Resverlogix attaining a market cap of $1 billion USD at least while waiting for the full trial completion.
Sizzle is nice, it can get the mouth watering. But you can't eat sizzle.
Thursday, August 25, 2016
A tale of two Canadian stocks - RVX.TO & LAC.TO
Resverlogix (RVX.TO) is a development stage biotech and Lithium Americas (LAC.TO) is a junior lithium mining company. At first glance you might think the two have absolutely nothing in common, but dig a little deeper and I can see some definite similarities.
I view both of them as miners. LAC is the more obvious, seeking to mine lithium to meet exploding demand at a time of limited supply. Resverlogix is also mining, but in a more metaphorical sense. This development stage Canadian biotech is ''mining'' for a treatment of cardio vascular disease (CVD) for patients with diseases like diabetes.
I engaged in a little trading today (Thursday Aug 25, 2016), taking some profits on LAC with some of the proceeds being used to increase my position in RVX. Both (sic) of my regular readers are well aware of my favourite bromide, ''you'll never go broke taking profits''. I sometimes need to remind myself of that when I'm sitting on significant gains, which was the case with my LAC holdings. I didn't sell out my entire position, a little over one third.
I still like Lithium Americas, a lot. But the junior lithium mining space has become very crowded with a number of recent entries engaging in heavy promotion to attract investment. LAC has seen its PPS falter meanwhile after spending a few weeks over $1.00 in June and July.
Meanwhile there are a few newly minted Lithium juniors making jumps despite a lack of feasibility studies, construction permits or partnerships with established players. But that's life with high risk speculative penny stocks. The dust will settle and there will be big winners and big losers. Many will find the stock that they saw being touted by an email blast or from a flashy ad that showed up on a sidebar....that it wasn't the pot of gold they thought it was.
SQM has been getting some press of late, and given the 50/50 joint venture they have with LAC I still like the chances for their Argentinian mine to enter production and for LAC to really catch fire. But it could be a while before that happens, and there are always risks....it might not happen at all. So taking some profits made sense to me.
Resverlogix is another matter, I view RVX as being incredibly undervalued right now. And there have been some recent developments that have caused me to raise an eyebrow. The first thing that caught my attention was the cancellation of the Annual General Meeting (AGM) which was slated for Oct. 5th. The cancellation was announced without a PR, instead a filing on SEDAR was issued.
There has been nothing further from the company, however some message board participants have reported receiving word from the company that the AGM has been rescheduled, but that the details are not going to be released until the agenda is finalized. I take message board chatter with a big grain of salt and sent a message to the company myself yesterday that hasn't yet been answered, I sent another today.
Then today at 1:05 PM I saw some trading activity that caught my eye. A firm by the name of AltaCorp engaged in 14 trades by my count on the buy side. I tabulated it at 10,500 shares with the buys starting at $1.20 and ending at $1.24. I'd never seen or heard of this AltaCorp before and it turns out, like Resverlogix itself, they are based in Alberta....hence the Alta part of their name I assume, a common short form for Alberta.
In looking over AltaCorp's website in the about section, I didn't find anything about them providing brokerage services to individual investors, They seem more focused on the investment banking side with M&A and equity financing type activities. The sudden appearance of AltaCorp on the day's reported trading along with the cancelled AGM led me to speculate that maybe something was and is brewing.
That combined with a check of the chart pushed me to take some profits on LAC and to use some of the proceeds to increase my RVX position.
Its all mining in my view, whether its to find lithium or an effective treatment for Diabetes patients....here's hoping they both strike pay dirt.
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