Wednesday, June 27, 2012

ARNA came through for us, but hold on

It ain't over. The stock is still severely undervalued and I can think of several reasons to hold on. More options expire on Friday 29 Jun and that is always a source of volatility. The institutions sold those options to retail investors just this month knowing most would expire worthless or for less than people paid. Next week the stock should move up again. Don't forget we have the Euro decision in the Fall. Expect good news. We have the VVUS decision and I believe it will most likely be approved, but with restrictions, as it is the least safest of the weight loss drugs out there, but that's where the institutions put their money - classic.

I would not use stops, as another raid is a possibility. Stay tuned, the saga continues...

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Tuesday, June 26, 2012

Count down to decision ARNA

So here we are waiting. I said about two years ago that I believed that one or both (ARNA or VVUS) would be approved. I'm banking more on ARNA, as it is the safest, a new drug, and more effective than the critics say. Also, just as I thought, the short interest on 15 Jun was huge, 45 million. That's why we got the crash on the Friday after, so they could cover and reverse their positions. Probably not much else to write about before the decision, but I'm heavily invested. The stock will be halted as usual, but I expect tricks when it begins to trade.

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Monday, June 25, 2012

ARNA status update, 2 days and counting

Here we are, just a couple of days until the saga reaches it's pinnacle. We've been in it for over 2 years and I feel a little like my youngest child is leaving for college. They say the hype is bigger than any previous hype, but as usual, 'they' lie. It was this bad for DNDN - remember. They pulled similar tricks - remember. At the end of the day, DNDN went through the roof, but then couldn't deliver on the execution side.

I was really hoping to check the 15 Jun short interest, but it won't be out until after the close on Tuesday. Wouldn't you know it. I'm sure it was still high then.

According to ShortAnalytics, there was almost no shorting on Friday during the ARNA flash crash. As expected, it was covering and taking up new long positions. Oh well, expect no help from regulators. We're on our own. The stars are aligned. Wednesday/Thursday we march on the big city, torches and pitch forks in hand and demand our fair share (if we get approval!).

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Saturday, June 23, 2012

ARNA: Glad they finally made their move, I'm not impressed

If you've followed PaperGains for a while, then you know what happened today in ARNA was expected. So what, the losers took 15% out of the stock that was under 2 just 6 months ago. This always happens with stocks that get this much hype and have this many shorts. This is one reason why I was curious about the new short interest as of 15 Jun. I think most of the 40 million shorts were still in there as of that date.

Don't believe the cover story about this SA article. Yes SA authors work for hedge funds, but this article didn't cause the drop in the stock. I watched it drop 5 minutes after the open like a rock. That wasn't retail, but professionals working together. I have a question. I thought stocks were to be halted if they fall 10% within 5 minutes. I'm a little fuzzy on the rule, but I thought it was all stocks now?

Take comfort in this. About 80,000 calls were purchased expiring in July with strikes between 7 and 17. If you add up all the puts expiring in July for all strikes, it doesn't even come to half of that. That says plenty. Shorts were able to hedge their positions by buying cheap calls, and they did get cheap for a few seconds. They were also able to take up new long positions in those calls and in the stock. About 25 million shares traded in about 5 minutes. Crazy. That's not retail. The number of options that traded in such a short amount of time at those low prices tells you it's professionals. Only they move that fast.

For those people who got stopped out, you should know better. Stops are for stocks like GE and VZ, not stocks like ARNA or DNDN. Our markets are no longer transparent or efficient. It's the new reality. Adapt and prosper, or buy bonds! Next week should be interesting.

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Wednesday, June 20, 2012

One week and counting to decision ARNA

As expected, ARNA has taken off and I expect we will see more. I'm waiting to see the latest short interest numbers because judging from the price action around 10, there may still be alot of shorts which is crazy. I'm still holding and may buy some puts on Friday for a little insurance. I'm thinking about some 3s expiring in July. It's been a long wait, but we're coming down the home stretch.

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Sunday, June 17, 2012

Natural resources

I know everyone is down on natural resources - coal, metals, and ore, but being the contrarian I am, I can't help but start to pile in. ACI, ANR, JRCC, FCX, VALE, and CLF are the names I like. I know the first three are coal, but it's a good way to hedge. Also, the last three have nice dividends (that hopefully won't be cut!) They have earnings that easily cover the dividends.

I'm happy to buy now, creating a portfolio within my overall portfolio and wait this one out, as prices are so depressed the potential returns are huge. Also, the 2014 LEAPS on ACI and ANR look tempting.

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Count down to decision ARNA

The next week and a half should be interesting. With options expiring on Friday and everything silent from the company and FDA, it looks promising. I really expect the stock to move up from here and I would be surprised if it didn't breach 10. I will try to post on the subject more often leading up to the big day.

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Sunday, June 3, 2012

The latest news

So we're in full wait mode on ARNA and VVUS. The market is also in the dumps, again. The only good thing about being in the dumps is we get to buy some stocks at good prices.

Now here's what I've been doing the past couple of weeks. Buying more ACI, VALE, and ANR. Coal stocks and other natural resource stocks are priced like we're in a coal depression. I'll wait this one out. I also like some of the LEAPS, but I would proceed with caution when dealing in options.

Finally, I sold VVUS at about 24 1/2 this past week. Had to take the profits. Besides, I think ARNA is the better option at this point. One more bit of housekeeping, I sold half of my SOL and put it into some ACI and ANR. The situation with solar is going to take a while to sort out. Short sellers are relentless. You know one way to tell when speculators have over run a stock. On really bad down days in the market if a stock trades up or even for no reason, or if stocks in an entire industry do the same, that's the sign that speculators are being forced to cover the margin on their shorts because their long positions are being hit. It's happened often on FTR, SOL, NVTL, and many coal stocks. Time will right the situation in many stocks.

BTW, there's a reason most hedge funds lose over time, because they have no original ideas. They all do the same thing, time and time again.

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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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