Sunday, May 13, 2012

Now what?

So VVUS and ARNA have done well for investors and the road looks clear. We're still keeping an eye on FTR and NVTL. We can wait, as the stocks are ridiculously cheap. Some of our other MP picks have stalled a bit, but that's a result of the market being firmly in the hands of traders at the moment. When things get sortted out in Europe and China kicks things in to gear, fundamentals will drive the market more.

I noticed ARNA on the Regsho list. So shorts haven't given up yet, which is crazy. At times like this, you have to ask yourself, are there easier places to make money and what is the risk adjusted expected return. Shorts in ARNA should be asking themselves that. Even an old name from a year ago, SQNM, is showing signs of life.

On the lookout for some other interesting stocks.

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Monday, May 7, 2012

A couple of items, ARNA and FTR

The situation with FTR has reached a crazy point. The short selling is routinely around 50% of the volume, assuming shortanalytics is correct. I thought the quarter was a decent one and the stock was actually up early. The company needs to continue to expand their product offering and grow the business. It wouldn't hurt if they did something about all the shares outstanding. One thing is certain, the options have finally gotten cheap.I hope and think time will cure the situation.

The Advisory Committee briefing docs on ARNA will be out tomorrow (Tuesday). Be prepared for an assault on the stock, as no matter what it says, the talking heads will go to work with the negative spin. Until the FDA rules on this and VVUS, just expect the short side to continue with the usual tactics. We'll see how things go this week. I'm hoping for good news. By the way, in case you never leave the home or are visually impaired, about 1/3 of Americans are overweight or obese and by 2030 about 1/2 of Americans will be. If it takes a pill to help slow the pace, then let's get a pill or two on the market.

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Thursday, May 3, 2012

Which horror show is scarier, NVTL or FTR?

Novatel (NASDAQ: NVTL) had a very troubling day today, and Frontier (NASDAQ: FTR) has looked bad for weeks now. While FTR is under full attack by short sellers, NVTL is about as big a mystery as I've seen in some time. NVTL market cap is $68 million on a company with over $400 in sales, no real debt, sales growth in the deep double digits, and gross margins are actually improved. In addition, when you remove the goodwill item, which is a non cash item, then overall I'm pleased. I admit to being surprised at how long the stock has remained under pressure and at these depression lows. Granted, the company is not as well run as SWIR, but I have to believe at these levels it's worth buying. Yes, I doubled down.

As far as FTR, under $4 just looks real cheap. We know the shorts have gone after it with everything. It's one of the most shorted stocks on the NASDAQ behind INTC. The company reports next week and they better have good news, as we need to see the light at the end of this dark tunnel. I hope to hear more about how the non land line businesses are going. Management has come through in the past and I still believe the company will be around years from now, but without signs of progress, the shorts won't leave it alone.

Both stocks are looking pretty bad right now, but we're holding the course. If I thought they were going out of business or there was some big change in the competitive landscape up ahead, I'd be willing to throw in the towel, but even though the stock prices of both NVTL and FTR seem to be detached from fundamentals, I still believe this will pass.

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The Vix

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Where we rant and rave about the market and of course give our opinions on stocks we love or hate. We're not advisors and urge you to conduct your own due diligence.

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