Baltbear on Finance markets are like marshmallows

“In 2005, Nicholas Negroponte  — co-founder of the Massachusetts Institute of Technology’s Media Lab — unveiled a prototype of a $100 laptop for children in the developing world. India rejected that as too expensive and embarked on a multiyear effort to develop a cheaper option of its own.

Negroponte’s laptop ended up costing about $200, but in May his nonprofit association, One Laptop Per Child, said it plans to launch a basic tablet computer for $99.

Sibal turned to students and professors at India’s elite technical universities to develop the $35 tablet after receiving a “lukewarm” response from private sector players. He hopes to get the cost down to $10 eventually.”

MIT’s Media Lab should be one of America’s “elite technincal universities.” One upon a time it was–and still, probably, is.

In comments about this cited news release, at yahoo, the overwhelming response from Americans was that noting is made in America, this device will suck, it’ll be a cool toy. that last comment was the most intelligent, because those who made it usually said that their buying one would support the project.

Evidently, based on pure numbers, pure quant, pure “science” says that MIT made too many decisions that supported profits for the “cool people”.

The MIT  project depends on $100 per unit subsidy from taxpayers of some kind.
:”India plans to subsidize the cost of the tablet for its students, bringing the purchase price down to around $20.” That’s not a difference of just $85 per unit, it is a critical difference of 60% vs 100%.
There is an obvious Forex-like arb in currency conversion, but the % is what it is, and nothing else.

This device from India probably won’t have the panache and real world support of an i-Pad.
Assuming it works 1/3 as well, a retail buyer can get 5 of them, and run them til they break,
and be a full 50% ahead of buying an i-Pad.

But, without cultural changes, they won’t be “cool people.”

America is becoming a nation of “cool people” who have nothing but their self-absorption, living on borrowed money.  o, wait–it always was. the “money” was first the entire capital wealth of the first natrions people from the Quahog to the Lakota. Then it was the entire prodictive output of 100,000,000 slaves and “push” delivered “immigrants” (as opposed to the African slaves who were “pull” delivered.)

and then, in a “better” world, leaving people where they were, and importing their capital assets–neo-colonialism–and then, for the past generation, just importing their money–at interest.

What has America exported to balance this? belief systems it didn’t want. these were workable belief systems, as India, China, and others have shown. but they just weren’t cool anymore.

When the prudent speculator sees some stem cell stock going overseas to get work done, this is not because the USA can’t do it…but because the insiders at that puppy are working for “coolness”–profits on the books. the question then is where does this coolness flow: to the insiders or to common stock. The easy way to measure is whether the non-USA partners are putting skin in the game, or is the “foreign outreach” based on tax scams and buddy-buddy “cool people” partnerships.

Posted under business

In a day or three, depending on how the euro is doing as people begin to realise that false claims of progress will always be undone by inefficiencies and corruption, i’ll be talking about the most dangerous words in the speculator’s environment: “it’s different this time”.

recall the crazy valuations in the days of the net bubble?

at the time, it was “different this time.”

recall the “artificial blood” stocks of 98-99?

at the time it was “different this time.”

recall mortgage deals of 2005-2008 as the real estate industry sold off its assets??

at the time it was “different this time.”

i recently picked up a reasonable enough fee for explaining to a guy managing a fair chunk of other people’s money what “the big deal” is with stem cell stocks, from gern to isco.obb.

and is different about pricing them for speculation than is true about f, or ge, or mot…and what was the same, because the ojne thing always true for the prudent speculator is that it is never different this time.

Posted under business

i confine the title a little, for the spyders from google.

as noted about fnm…and prudent speculators who followed my thought a bout it made another above buffet roa recently on it…
there a class of equities one can only justly call whore stocks.
if u have the $$ to risk, they can show u a good time, leave u diseased, and aren;t going to be brought home to meet the folks.
they are often “story stocks”–but then so is fnm, the story being “housing makes america great.”
the prudent speculator stays cold enuff to examine the dd of serious money, when that dd is >seeable<
that is, subject to speculation.
i recently saw an article which gave me some dd from some very competent investigators.
here it is:
:”$3 billion for stem cell research, as authorized by California voters in 2004. Of the $1 billion awarded so far, more than a third — $358 million — flows to Bay Area laboratories.”
so: here is an asset pool, $3bb over 3 years. $1bb a year.
the holders of the asset pool get a benefit no matter the play, since the $$ will be spent in california, creating some cash flow from which the state will take a cut, and the state will be fulfilling its underlying contractual obligation of their being a stake from which to take a cut.
that already makes this a rigged game, one which people who are not from california derive no certain benefit. thus, following this play is already less prudent than it is for californians.
but, hypothetically, let’s say you have $30,000 out of ur working capital to put to stem cells. In itself, that should indicate that you have working capital far higher than $30k, since “stem cells” are by no means the only game in town.
let’s go verry speculative fwd thinking, and say ur totally future loaded, with $500k to work.
there’s solar, biofuel, stem cells, “media”, materials science.  that’s 5…so $100k in each.
so, $100k is to $1bb is easily workable.
a lot of cirm’s $$ will go to universities, again because as long as $$ are in motion in this direction, cirm will be a beneficiary. let’s call it 2/3. that further rigs the deck against you, but it is a price of  doing business as a speculator, obligating you to then get ruffly 3x the ror that cirm gets.
so, you might reasonable say that if cirm puts 1% of its funds on a bet in which you can participate, if you put 3% on the same bet.
if cirm says a corp with a publicly tradeable stock gets 1.6% of it’s $$, then u can, after your own dd, say that 5% of your %% is parity…$5,000 in the example being used.
anything above that suggests the hubris that the speculator knows more than cirm does about stem cell possibilities for making $$ flow.  that decision range is utterly imprudent–utterly stupid.
on the other hand, crim does not care at any given moment what is going on.
therefore, one can “dance” with a given stock, in/out, as long as the commitment is no less prudent than cirm’s.
and now u have a playable whore stock.

the next step is to examine where $$$$$ place their dd. that can be read from filings, and expreses as the basis at which financial insiders are in, with whatever yout own voodoo tells you about black-scholes and the actual events transpiring…not the news releases.
if a year ago, insiders were in at a dime, then paying more than $1.20 is bowing the knee to them. if the stock is trading at 2 7/16, one can trade in/out until a basis close to 1 1/4 is in the port.
thinking that you are not entitled to such a basis is just drinking the  kool-aid offered by the cult leaders.
buffet says it’s better to pay a high price for a great company than a low price for a good one.
but then, he’s talking about stocks with actual events, actual; cash flow, actual markets, and not “stories”.

Posted under business

elsewhere a few boiler room employees and random people who do not yet understand that “the stock doesn’t know you own it”– peter lynch’s classic paraphrase of the principal of insufficient reason–have been paraphrasing my thoughts about the plan by which btiotime (btim.ob) stays in business.

these hypesters maintain that i said biotime (btim.ob) has no business plan. that’s not anything i have ever said at all. but then hypesters exist to push the greed inverse of fud.

so, for the “record”, here is the summary of biotime’s nusainess plan from inception to now, with michael west, the “stem cell guy” at the purported helm, although al (outboard al, twa al, bethlehem steel kingsley) is actually now running the shoppe.

i have never sad that btim has no bizness plan.

the plan, according to btim, as stated in its filings is:

1. license patent estates and repackage them; (being done)
2. license software  for the building of a clearing house for stem cell info; (done);
3. develop a line of reagents and tools for biomedical research (in progress)
4. sell stock to fund the inner circle (being done more and more)
5. use the buzz to get listed on nasd or..lol..amex… (in progress)
6. hire boiler rooms to pump (done regularly);
7. increase financiers’ net $$ and % without risk (every year since 96)
8. sell stem cells (been being done for over a year without report of any sales)
9. cash checks from hextend license and distribute to financiers  to keep the door open,(done every year from 2000 to april this year);
10. get grants, and do work once the $$ are in hand; (limited success with hextend (<$1mm since 2000, studies evidently failed since there was no follow up) $1.6mm a year for 3 years offered by california for stem cells. six month after grant authorised, no reports of money received, but a statement from btim that with $4mm in the bank thy will do no work on th grant project til cash in hand, even tho the grant is for the core of their held-out biz strategy.
11. spin off “subsidiaries) that allow the financers to profit w/o very low risk;
12. use warrants as a play pretty to manipulate the borrow and bring in cash to the treasury (maybe 5 or 6 times in 12 years);
13. paint the tape.

how well is this plan working??
for those who like the story and understand this puppy is about 1% as solid as fnm, i’d suggest a tonne of limit orders ~4, and get out anywhere north of 5 that makes you happy.
that’s 25%. or, if u really like this puppy, open up the limits in a widening ram from 4 7/16, and taper i out over 5 1/4… for 25% plus some free shares.
…since that’s what the players here have been doing since… hmmm…. ‘96???
what was it that happened in 96? that’s about when biotime started paying al kingsley for “advice.”

Posted under business

someone suggested to me that i was paid to bash biotime (btim.ob). i replied that the paid bashing on the net was being done by steven seinberg, chief financial officer (cfo) of biotime, in posts to the securities and exchange commission.  it is of interest possibly to note that  some anonymous person publicly stated a day or 4 ago that biotime was about to receive a $5mm grant.  That’s the kind of world where bucket shops and boiler rooms thrive: people doing honest analysis must be “paid bashers” while people doing mindless and dishonest cheerleading to protect teir positions are considered “loyal shareholders.”
here’s an example f what i mean:

the 8k filed on 0417 describing what happened on 0415:

The maturity date of our Revolving Line of Credit has been extended to December 1, 2009 with respect to $2,669,282 in principal amount of loans. (a revolving line of credit for $2.669mm got a new date, 7 1/2 month away.)

“We repaid $223,834 of principal and accrued interest on loans that matured on April 15, 2009 and were not extended.
(some part of the credit line was shut off, and paid out. does biotime bother to be honest enough to say which part?)

” In addition, certain lenders exercised their right to exchange $572,404 of principal and accrued interest on loans for an aggregate of 473,131 of our common shares.”
Does biotime bother to say how much of the $572k was principal and how much interest?  some loans were at 12%.
if one speculates that 12% is the figure, and 1 year the time period, then the lender lost oportunity for 1 year on apx $511k, and then was traded for 473k shares, for a basis of 1 3/32 ish…. ($1.08).
And actually, its worse than that. How??
becuase, to use a term from aother world, biotime had to pay vigourish on the loan. it was forced to give for free  91,526 shares, based on a 6% iterest rate, to the lenders.
91,526 is therefore 6% of what? 6% of the $2mm comes to $160,156. and that converts to 91,256 shares how? on a basis of 1 3/4 ($1.75 a share).
does this sound like an invented number?
biotime identifies this number:
“Promissory notes that were exchangeable for our common shares at a price of $1.50 and Embryome Sciences common stock at $2.50 until April 15, 2009, may now be exchanged for our common shares at $1.75 per share”
and i offer that as evidence of the soundness of this analysis.

a coupl;e of days later 14ds were filed with the sec, and the movement from the dtc to the recipients had to cross the tape. it crossed it at prevailing prices f the moment, cuasing some to see a “rally” which they traded into and or out of.
However, the idea that the buyers actually paid anything more than is stated above is a fiction.
Biotime would, imho, have a moral and fiduciary duty to identify it as a fiction.
Did it?
ask the reporters who called (or were they called??) what the ceo, dr michael west said.
then the prudent speculator has a metric for the integrity of the “science” of biotime.

the “good news” in this 8 k is that the exchange price isn;t 16 cents.
the hoest news is that this is the 5th amendment to a credit agreement that is nowhere near being retired, and there is no evidence in the 10k as to how it ever will be.
bottom line?
people buying biotime stock are not buying equity in biotime, bcuase there is no equity except patents 1/2 way thru their life.  they are supporting the acquisition of biotime by al kingsley and neal bradshear, who are paying next to nothing for it.

” We may borrow up to an additional $830,718 under our revolving line of credit if we elect to do so and are able to obtain additional loan commitments from our current lender or from new lenders.”

notice how bio time cannot, unnder thee covenenants borrow $1 mm from somebody new.
notice how biotime evidently needs permission from the current creditors to eve look for financing, up to the $830 mark.

Posted under business

let’s talk about biotime, as a classic story of how to read a tape, a chart, hear a story, and watch the trader get screwed.

recently th stock has been "very active". rumours started a few month ago about obama liking stem cells, and oddly enough biotime was suddently in th stem cell business.

volume kept slowly increasing, and the ticker moved up to a 4 bagger for some sharp traders. i commented on this elsewhere.

but in a "story stock" sooner or reality tere needs be a reality.

and here it is:" The maturity date for the amended line of credit has been extended from November 15, 2008 to April 15, 2009. As of November 17, 2008, certain lenders elected to convert $1,050,000 in principal and $62,013 of accrued interest on their loans to 1,112,013 BioTime common shares."

:"$16,956 in investor relations expenses"
biotime continues its long term trend of selling stock to meet "expenses" and continues to do nohing. ho many years between phase ii trials for hextend, and the end of phase ii for pentalyte? 10 and counting…10 years to demonstrate one stasticially verifiable outcome. in the meantim, hextend works. hextend works, no matter hat shortsellers wanted to say about it.
  what doesn’t work is the revenue model. becuase of the, lol, "management team."

so… for a couple of months the pump and dump specialist were paid a lot of stock and cash to create some action for btim.
  how many share were shorted into the run? at what prices?
 the average "investor" or trader will never know. never.
 becuase nasd allows insamely late reporting on short interest.
 and if te short was covered inside a 30 day reporting period, to the guy at te end of the chain, it never happned.
 and then, one fine day, and i specifically asked people "where are these shares coming from" a million shares "changed hands" that is, went from treasury to street, and the exchange registered the traansaction.
 a level ii scren would probably have shown bloks of 50k hitting th tape.
 and some people would have nibbled in to that stream, and bought more.
 the stock ended down that day. but the volume average will be distroted for 3 months, and then come crashing down. in the meantime, brokers and hypesters will tell cleints, yes it was down, but on far below average volume…don;t worry, be happy.
   in th meantime..there’s <$60 cash on hand, and another loc for another million bux. incoming cash is eaten by debt service:
"Royalty revenues recognized for that three-month period were $341,391…
For the nine months ended September 30, 2008, we incurred a total of $366,795 of net interest expense," ….
   so what does btim offer to anyone wanting to roll it up or be rolled bu it?
   i’m still seeing 5/8 coming as a price. i had said within 60 days of the new dc admin. it might be a while later, becuase of the effectiveness of the pump.
   but based on anyt f/a, cmbined with th story, 3/16 is actually high for the actual value by p/e, (negative) p/s call it 12 for generosity,8 for a norm), or eps (stated unknown becuase of military sales) or, lol… 2x book.
  

Posted under markets