Baltbear on Finance markets are like marshmallows

i am increasingly reminded of the fact that people think “science” is a talking animal, that “says” and therefore has an oracular value to point to wealth.
as an 11k year running joke, it used to have great value.
here’s why not: ticker abcd:obb is developing a fail safe 1x vaccination that adds 5 years to life expectancy, and sells for $1 a dose.
let’s get semi real and price humasn life world wide at $4k a year. $20k times 7 bb people:
this is a >>>>$140 trillllllion<<<<< drug.  that’s what “the science” is worth.
in the course of moving from “development stage company” to fda approved product maker abcd.obb tranches out 2bb shares for $600mm, and……
it >>>succeeds<<<<.
the cog thru the factory is $0.60. the distro cost makes delivery a $5 purchase.
this gives a reasonable shot at 4 billion customers over the first 5 years, and an additional 2 billion over the patent life. (becuase outside of the g-7, lotttsa people will die before they have $5 to spend.)
7 billion over 17 years: $412mm in revenues per year.  $164mm a year to g&a of, let’s call it $30mm.
let’s add 400mm shares of options that strike @1,
while the puppy was trading 5/16…
on day of fda approval, abcd goes to 2, and keep rocketing, cause after all….”we all know” and 400mm shares option out to cash.
$133mm in revs to 2.4 billion in shares, w/ share price at 12x sales….. this puppy gets stable @ 21/32.
that’s what “the stock” is worth.
that’s all.
and it’s just that simple.
and the guys who trade into accumulation on the capitualtions and rallys along the line and have a basis of 1/16 on the day the “news” sends this puppy to 6 will make more $$ than the company ever will.
and those playing in the space between will be both agora and cramer, barron’s and ibd, and everybody in between.
and in the meantime, Fortuna? the wealth Goddess??
“She says, Hey babe
Take a walk on the wild side
I Said, Hey baby
Take a walk on the wild side
And the coloured girls go
Doo do doo do doo do do doo..

Posted under business

someone suggested that his “buy and hold” strategy..which he says has been getting hit the last 2 quarters is much more intelligent than channeling, rolling,…whatever somebody wants to call “buy relatively cheap, sell relatively high”
this issue is always what is “relative” …
buffet (the one with dairy queen..not krispy kreme) has opined that it’s better to pay a lot for a well run company than get a sheap buy on a badly run one..or words to that effect.
thus, i offer, as a simple corollary to some law of a baltbear, if a puppy has a record of book not converting to sales, then sales multiples cannot be tooo far above reality check time.
when looking at a story stock, xyz.pk, that has $15mm in book, and has turned the last $10mm in cash into <$1mm in gross sales, the valid multiplier for p/s = 0.
if xyz.pk was expected to be getting $10mm in gov’t paid deals, and the gov’t changes its mind, the p/s is now <8.
etcetcetcydydydyydaaa… so if xyz.pk has been rolling 4 - 6 based on people’s expectations of that gov’t welfare, then the changed policy changes the rolling range. if the book val converts to >>actual i/p $$<< like a patent lease for $1mm a year, instead  of an imagined $12mm for the possible maybe o please future value of patents, then book multiplier can be moved up, and xyz.pk will possibly roll in a higher channel.
without a firm grasp on such realities, puppys will become mangy flea carriers in the port.
somebody who complains about other people makiing $$ rolling and channeling, but who refuses to place limit orders more than 10 minutes away from one he expects a fill said,
:”. It is not easy and many times they will skip your order.”
yeah… and???
if it was easy it wouldn;t pay. the idea that anybody can learn charting, and charting is always meaningful, and yhoo gives it for free…yeah. a sucker’s game to suck money to yhoo…
some amateurs think (ok, william james would call them paranoid delusionals) that if they wait til 11:06 to place a limit order for 1k @ 5 1/16, it will get filled, because the specialist is waiting for their order and wants to mess with them, but will be distracted by the sudden order and….. yeah….

more often, the specialist fills orders in an orderly fashion, good ones for him, ok ones for his friends, the rest in order of entry…and when u decide to try for a fill @ 5 1/16, the guy who decided yesterday gets filled, and ur told to wait ur turn…which may never come,,especiallly when the speciualist went naked on 1k @ 7, and covers by buying that 1k @ 5 1/16 himself.

:”Think about it, if someone could pull that off, they would be trading a large Fund somewhere and would not be on yahoo”
one of a few metricks i use in provenancing the cred of random posters. actuallly, it gets pulled off every day, in part by those guys hiring people to cover yhoo boards–and others–with garbage posts,
because those guys >>>are the swings<<<<.

:”A sale at 6 could end up proving very dumb if the stock gets to 7,8,10 etc.”
nope. listening to people who have already turned down 4 baggers because they want 20 is dumb. why? becuase they are, in reality, only trying to infect you with 4 bagger fever.

an entry for the purpose of getting 20% apr is an exit @ 20% apr. anybody who enters the mkt saying “i’m gonna get rich buying this expotic puppy of a story” will get killed. disciplined speculators seek returns..not fortunes… u wanna fortune??? goto vegas. tell elvis i said hi, how’s the diet working out for ya…  fortunes are made by clear-headed use of previously unavailable resources. that’s why the word derives from the latin word for “luck”…not “betting.”

“coulda woulda shoulda” is a child’s game.. the prudent speculator who asks, “how can i make 18%, year after year, thereby doubling my $$ every 4 years..without losing it all??” notices that if he makes 18% in one month, he can be in cds the rest of the year.

of course this attitude is anathema to the promoters who need to find buyers. they will continually preach the idea of never leaving a dime on the table for the next guy–so they can sell you theirs when they know its past time to go. a historical example: what brought leh down?? not being able to find any suckers for their bad paper except themselves until their “profits” consisted of feeds from buying and selling to themselves. the “buy and hold” market –including the otherwise great ben stein–missed that one totallly. laws of a baltbear “always leave money on the table for the next guy.”

:”some who are not even in the stock, telling people what to do????????”
anyone telling anyone what to do without a loaded gun stuck in their mouth is a poser playing one or another sociallly acceptible sand box games.

those who like this puppy and want to trust management will trade for a basis like that of management.

there are dozens of varieties of stating that fact. but most of them are disguised to sound righteous, and noble…and lulling….into a deadly sleep . a variant is to declare a holding “an investment for the future” and thus..not something to be watched, cared for, bought and sold..that works for actual “investments”–that is, castings of bronze or gold. but since the book of Daniel, it has been notably stupid to over-value such investments.

let’s get specific: are “stem cells” the new “beanie babies” ????

if one does not run a continual check of that problem, yes.

is information emerging so that “stem cells” as source material can be bypassed??
yup.
steadily.
the question is..with what economic utility??

those who want to roll over for the posers and the self-righteous will pay attention to garbage of future predictions like “50″  for some dog and keep making donations to insiders, their running buddies and the cult members.

to a specific puppy, btim.amex …
the buy and hold types are saying:”I think smart money added anywhere in the 4’s and is holding this particular stock for much higher prices.

Trading BTIM will likely lead someone to a major opportunity cost down the road and they will miss more gains then any short term profits they banked. Short term profits are taxed more aggressively and incur commission expenses as well.”

to which i reply, consistently…
ok…lol..u keep telling ur clients that.

and i’ll tell mine what i tell them…and offering a few freebies about how to do the dd on the story, and how to avoid the sharks.

and  “10″   and “4 - 6 with spikes” will continue to define the space, with “8″ as a measuring rod.

fd: i have been both paid and thanked for keeping people out of btim.
fd: clients in a related puppy, isco.ob.

Posted under business

Brent Arends, writing for Market Watch–something he evidently may be doing more of now that the WSJ has closed its Boston office, (Murdoch@work)  asks s reasonably serious question:
:”Should you take advice from someone who writes for a living? ”
well, if it can be said that a medical doctor writes prescriptions for a living, then..yes.
a “doctor” of biology who writes press releases for a living…no.
a stock board poster trying on his own behalf or that of the dogs that pay him to create the illusion that a given ticker is going to double in a month…..definitely not.
ever.
did i mention “no way, no how”??
if not, i am remiss.
one of the first rules for real houses is that there is a chinese wall between the sell side and the buy side.
that is, those with the task of recommending to people what to buy from the house or the street are not to know what advantage there may be to the house in a price run-up, beyond normal common sense.
this is a condition that can never apply to the guy on abcd:amex who is telling you he bought last year, last month, last week, and will be buying more tomorrow, but he also wants you to compete with him in order flow. that statement by itself proves the lie.
prudent speculators, as noted in a previous column, will look for stock boards and see what intelligent information can be found–about the intelligence of the posters.
Arends is discussing the “plight” of o so poor writers, doomed to make $30 an hour thinking about what they want to think about–instead of making $75 an hour, like a plumber who wades around in slop that is not his own.
prudent speculators will be, if not wading, at least visiting the shore to see the investment profiles of those writing about a ticker. if the profile is pleas to others to buy, buy, buy, it may be time to step back.
people who want you to buy are people who want to sell. that’s understood at wmt, vzn, or mcd.
it needs to be understood as part of dd.

Posted under business

somebody asked me, on a random stock board
what books ti read to get better at reading an sec filing, and doing actual fundamnetal analysis.
using a case in point, i replied,

sec.gov.
reading filings.
on f/a..grahame&dodd…… sigh.
which will tell u to not get near btim, et al..so does not apply.
as i have said before, this is a “story stock”..and the dd is thence all about the story.

u are telling one to urself about future earnings. i am looking for a basis for such that can be measured (in f/a terms) plus some insane multiple to allow for hype.
(peter lynch tells the story of in the late 80’s going to japan over and over, looking to invest there..and always seeing evvvvverything overpriced.. and still going up… but then, one fine day, or 1/4…
http://finance.yahoo.com/q/bc?s=%5EN225&…
whatever u can find by lynch will be eminently readable. and whatever u can find by either adam smith, or that matter, das kapital (u probly want the translation…:-) ).
within those contexts:
1: why does btim keep frontloading filings? (giving data for periods after the reporting period).
2. why does btim not state, transparently, terms of financing?
3. why does btim keeeeep using warrants?
4. why is the patent estate not identified in filings?
5. how many units of cells must be sold to meet g&a, and cog? (i’m ignoring r&d)
what is the present mkt for such?
what is a reaonable growth rate in that mkt? 40% y/over/y? 60%
how come?
who are the cmpetitors?
can they indercut the price?
what >unique< advantage does btim have?
what s mangemtn’s track record at creating value for shareholders?
what is the track record of failures??
(failure is not a problem by itself…annny “story” stock will have plenty.
what do the >filings< ..not the press, say about that?
this entry is not about btim:ob.
it is about how to think about what you hear.
right now, i am sitting sipping some “expensive” coffee–that is, expensive in comparison to the rancid garbage from a folger’s can. this stuff retails for $27 a pound. how does it do that? by having desirable qualities that other coffees do not. it has a niche, which has grown, and can be supplied consistently.
any stock you are told about, no matter what the sector, intends to fill a market in a definable niche, in a better, more cost effective, or more widely distributable way.
if the filings and the company history do not show growth towads defined goals faster than the price is growing, it’s overvalued.
it might be a whore stock to trade. you might get affectionate about it, and want t take some home.
before u do, check for crabs. “crabs” in this case include terms like “about to” “beginning” “development stage” and most important…”debt.”
as the events of the last year show, debt does not go away.
debt/equity swaps are great…if u are on th low sde of the basis in your own postion. nothing to be afraid of. it showsthe financers still beleive in the ticker.
ever heard of rand mcnally? sure you have. for about 1/2 a century it was traded on the pink sheets. thus, if a ceo says a biz plan goal is to get onto a major exchange–be wary.
if the stock can’t get above 4 based on revenue potential seen by a broad market, what is the ceo going to do??
hehe…you don’t wanna know…or actually, you do, since u will either be able to trade the media game, or get traduced by it.
sec filings are in plain english. if they don;t seem like it, be careful.

Posted under business

here are the highlights of the 10k–which came out amazingly “early”. of course that can have nothing to do with my woofing about the biotime habit of waiting til the last minute.
The number of common shares outstanding as of February 26, 2009 was 25,213,569
that’s a 3 million share increase.
“As of March 10, 2009, there were 6,676 holders of the common shares”
was that increase in authorised discussed at the last annual meeting?
when was the last annual meeting?
“We intend to submit that amendment to our shareholders for approval at our next annual meeting.”
:” Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.”
lolol…
for thoughts on accounting and filing with the sec, see
http://baltbear-on-finance.com/stock-market-speculating-is-a-hold-up-shoot-them-with-x-barrels

and  lookie lookie…some amusing info about “big al’s basis”. wunderbar:
:”We paid Greenbelt $90,000 in cash and issued 200,000 common shares for services rendered for the twelve months ending March 31, 2007.  Greenbelt permitted us to defer until October 2007 paying certain cash fees that otherwise would have been payable earlier in the year.  In return for allowing the deferral, we issued Greenbelt an additional 60,000 common shares.  For the 2008 calendar year, we agreed to pay Greenbelt $135,000 in cash and to issue 300,000 common shares.  Greenbelt permitted us to defer paying the entire $135,000 cash fee until January 2009.  In return for allowing the deferral, we issued Greenbelt an additional 60,000 common shares during January 2009.  We have agreed to file a registration statement, at our expense, to register Greenbelt’s shares for sale under the Securities Act of 1933, as amended, upon Greenbelt’s request.  We also agreed to indemnify Greenbelt and its officers, affiliates, employees, agents, assignees, and controlling person from any liabilities arising out of or in connection with actions taken on our behalf under the agreement.

ok, 620k share at a basis of…..zero.
zero.

and: $225,000 in cash.
so, here’s the algebra problem:
a train leaves the nasdaq at 9:30 in the morning with 620k shares which can be sold at any price at all, and bought back at any price less than sold for;
a train leaves park avenue with $225k cash
to buy stock at any price and sell it for any amount more than was paid for;
what is big al’s  basis?
the answer?? 0 on more and more of the shares in his control+ 9% profit after trip tickets are paid for+ $225,000 in cash.
extra credit question:
if late comers to biotime should have to pay 4x more than al pays, what should be their basis?

Since inception, we have primarily financed our operations through the sale of equity securities, licensing fees, royalties on product sales by our licensees, and borrowings.

our total research and development expenditures were approximately $1,700,000 and our administrative expenditures were approximately $2,600,000.
The Credit Agreement permits us to borrow up to $3,500,000, and as of March 6, 2009, BioTime had outstanding Credit Agreement loans of $3,330,000.

Current loans under the Credit Agreement bear interest at the rate of 12% per annum and will mature on April 15, 2009, at which time the outstanding principal balance of the loans plus accrued interest will be due and payable.

Currently, lenders may exchange their notes for our common shares at prices ranging from $1.25 to $1.50 per share,

and our ability to commence and complete the clinical trials that are required in order for us to obtain FDA and foreign regulatory approval of products, depend upon the amount of money we have.

so, taking “big al” lol..out of th equation, what is there for fair market price in the opinion of those who have access to serious due diligence???
1 1/4–1 1/2 ….divided by 1.12.

hmmmm.
that put’s a price amusingly close to 1 3/8..which got defended as a raw marker…
and verrry close to 1 5/32….right where the defense kicked in.

so, those who see that hextend >>>works<<< and give a dang aobut that;
who see that hetacool therefore >>might work<<;
who think that “dr west” matters one way or the other;
and who can overlook an over 20 year trip to the gorss receipts level, and overlook the r&d/g&a of this puppy;
now know what price to pay.
there are 2 ways to pay it:
call them up and ask when they are getting ready for the next level of dilution (which is alread oocurring by seling embryome stock)
or trade this puppy into accumulation s that u end up with shares closer to “big al’s” basis.
so..what is big al’s basis???

anybody notice what this burst of news, did for volume?? 9k thru 2 pm…another 7k tossed back and forth in the last 30 minutes to to create illusion?
http://finance.yahoo.com/echarts?s=BTIM.OB#chart2:symbol=btim.ob;range=1d;indicator=bollinger+ema(20,50,10)+psar+ke_it+volume+rsi+volumema(10);charttype=candlestick;crosshair=on;ohlcvalues=0;logscale=off;source=undefined
anybody notice that the whole “sector” as a “story” play now rests on the spines of 8 rats?

Posted under finance

This is a general piece for the prudent speculator. It is about a tool for measuring, at an amotional level some cold hard facts ypou are going to need.
A little history:
once upon a time when the people who said this liquidity crisis couldn’t happn hadn’t been born yet, every 3 months publicly traded corporations wrote up dozens to hundreds of pages of impenetrable beancounter language and sent it to the sec as “proof” of something.
Then, eventuallly, the sec said it would no longer accept “the dog ate my homework”, “10k? the mailmain must have lost it”.
(if an adult reader doesn’t think this kind of excuse is till being made, i offr the 10q of biotime, btim:obb which contains the statement that becuse creditors of the self-styled stem cell research company are in different parts of the country, it took an extra time period to give an honest statement of the debt. some weeks later biotime filed, and the debt had been restructured in a d/e swap showing a clearing price of $1. )
the sec said that a transparent and liquid market is the goal of regulation, and thus mandated electronic filing of text files with readable data.
in just a few years the sec got around to noting that the .txt files could be made almost unreadable by human beings, and that the goal of regulation is a transparent and liquid market. thus, filins in .html became required. (this gives a file that opens from the sec website through your browser window, and then “reads” like a piece of paper.)
as an example:
compare the effort of reading
http://sec.gov/Archives/edgar/data/876343/000091957409002146/d964196_13d-a.htm
with
http://sec.gov/Archives/edgar/data/876343/000095000502000064/p14825_s3a.txt

A while ago, the securities and exchange commission got serious about the idea that actually, since relational databases and accessing data from them has been around for 50 years, they might have value for thw actual owners of a corporation–the people that hire management that then thinks it is the ownership–and potential owners have a right to not read, but actually understand what the filings say, as internally consistent documents.
since lotus notes, excel spread seets etc had been around for about 25 years, average people could find the relationships that had meaning to them.
since in about 1998 there had been serious work done, in part by tim berners lee, to find algorithms which would describe relationship between relationships seen by others, there could be an extensible markup language….xml..
CAn you see a thought emerging in the pea in the brontosauric sec’s head yet?
can you begin to imagine that since adobe acrobat has been capable of making a .pdf that contains pictures, movies, music–a complete little “website” all in one document, secure and shippable and readable, for >>>4 years<<< that corporations wishing te trust and money of the american people could be obliged to make the critical elements inside their filings “clickable” so that people could jump through them making sure there was honesty in them?
thus, there came, after lots of “pick me” “can i buy your congressman a nice plane ride” ? etc… a defined “extensible business relational language.”
xbrl.
an sec filing in xbrl is as searchable as this blog.
and any prudent speculator deserves one.
looking at some new ticker? wanting to get a feel for what your dd can get you?
call investor relations and ask them abot xbrl. if the answer is “we’ll do it as soon as we wil be kicked off the exchanges if we don’t” no matter how that is phrased, walk.
away.
the phrasing can be tricky. recently i was told by one posssible whore to dance with that management was far too involved in creating new products to hace paid much attention to another burdensome government regulation. i’ll never get near that puppy, becuase i never short.
i was told by another that they are looking forward to providing xbrl docs to the sec, because it will reduce calls to i/r to only those that point the company to ever more transparent means of presentation.
in reality, most tickers that speculators can work from are not your friends. they see you as fruit to be smashed to give them the juice to party on.
with this knowledge in hand, you can rob them of the secrets of their failures, double speaks, waste, hype, etc, by taking an x-barreled shotgun to their filings.
if they don;t want you to have that weapon, they are not your friends.

Posted under business