July 31, 2020 8:05am
Optimists will usually say the glass is half-full, whereas pessimists will usually point out that it's half-empty on the last trading session of the month
Pre-open indications: 1 SELL <Biostage (BSTG) Chronicles offers the five (5) year attrition numbers defining the warning>
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Dow futures are UP +0.28% (+74 points), S&P futures are UP +0.27% (+9 points) and NASDAQ futures are UP +1.02% (+110 points)
Stock futures were barely higher early Friday;
European equities traded higher earnings roll-out with economic data as the pan-European Stoxx 600 index was up +0.35%
Asia Pacific were mixed as markets in Singapore, Malaysia and Indonesia were closed for a holiday; Japan led losses while the MSCI Asia ex-Japan index dipped -0.16%.
Data Docket: Emergency unemployment benefits are set to expire Friday and Congress and the White House still seem far apart on an agreement. Economic data coming, 8:30 a.m. Personal income, 8:30 a.m. Employment cost index, 9:45 a.m. Chicago PMI and 10:00 a.m. Consumer sentiment
Big tech earnings do NOT at all resemble RegMed/cell and gene therapy results – we live in an LPS (loss-per-share) continuum
Stocks linked to an economic recovery like banks and retailers were lower in pre-market trading Friday as investors asses the biggest quarterly gross domestic product (GDP) contraction on record and persistently weak job growth and high unemployment claims.
Thursday night’s post title – “that battle of the oversold to re-achieve past value. When you’re on a roller coaster, the only thing you can be sure of is you’ll end up back where you started”
- The NASDAQ closed UP +44.87 points (+0.43%);
- The IBB closed up +0.29% and XBI also closed up +1.43%
- Sector volume was LOW with 2 of the 24-upside having higher than the 3-month average volume and 1 out of the 8-downside having higher than the 3-month average volume;
- The CBOE Volatility Index (VVIX: INDEX) was up +0.66 points or +2.74% at 24.76;
- Thursday’s percentage (%) of the 24-upside were +0.37% (ALNY) to +14.55% (SGMO) while the 8-downside ranged from -0.18% (VCEL) to -18.92% (BSTG);
Last five (5) sessions:
- Thursday closed positive with 24 advancers, 8 decliners and 3 flats
- Wednesday closed negative with 9 advancers, 25 decliners and 1 flat
- Tuesday closed negative with 6 advancers, 27 decliners and 2 flats
- Monday (7/27) closed positive with 22 advancers, 11 decliners and 2 flats
- Last Friday closed negative with 7 advancers, 27 decliners and 1 flat
Companies in my headlights – It’s your decision; I provide an idea and context:
Biostage (BSTG) closed down -$0.49 to $2.10 after Wednesday’s -$0.01. On March 25, it was priced at $4.30, April 1st at $4.20, May 1st at $3.35, June 1st at $2.61, July 1st at $2.51 – so what does the price hold for the future?
Answer - UNDER $1.00, I’d take that bet as the multiple private rounds of $3.20, $3.50 and $3.70 and warrant executions amass millions of shares outstanding. What are their chances of financing – slim to none as warrant executions have kept them alive.
Questions of corporate attrition NEED answers … I’ve read comments on trading websites that question WHY hasn’t there been more communication from the company and when will the BSTG website be updated. There are a few senior individuals no longer with the company or on extended unpaid leaves of absence or have they exited the company?
Consider the attrition rate of the past five (5) years: two (2) CEOs, one (1) CMO who became president, one (1) CFO, one (1) interim CFO who walked-out over irregularities in an audit review, three (3) controllers, a VP of Finance who left without notice and reappeared as a consultant, five (5) members of the board of directors of which three (3) were on the audit committee, three (3) other operating VPs and twenty (20) scientific employees.
Is there a pattern here … and WHO is left with biotech experience to focus the clinical trials that have YET to be initiated after an IND approval?
I also read a Boston Globe article about a BOD member of Moderna (MRNA), a hospital president who resigned from its board of directors after a “conflict of interest questions was raised”. Does BSTG have a similar issue as pre-clinical research is being conducted at Connecticut Children’s, the CEO owns shares, the hospital owns shares and the principal investigator owned shares – conflict?
These issues NEED to be transparent … also do these events constitute a need of oversight by regulatory bodies like the SEC and Mass Secretary of State enforcement division. Mrs. bin Zhou, as the major stocker holder and head of DST Capital, BSTG’s funder: WHY are you not overseeing the disorder wreaked by the current and latest iteration of a so-called management team? Public shareholders deserve accountability!
Facts are irrefutable and the First amendment of the U.S. Constitution protects American’s free speech.
As far as predictions or prognostications of my covered universe, I am NOT commenting TODAY as this sector and reliant market are becoming TOO speculative and I say vulnerable.
The BOTTOM LINE: What do analysts do, they separate actionable numbers or intelligence and news into a short-term investment thesis to tackle the “unknown unknowns”
Expectation versus forecasts will be the theme of Q2’s earnings’ season.
Seth Klarman, the billionaire behind hedge-fund giant Baupost Group, tried to explain the current market climate in a letter to investors (cited by Bloomberg News Thursday).
- “Surreal doesn’t even begin to describe this moment,” he said, adding that investor “psychology is surprisingly ebullient even though business fundamentals are often dreadful.”
Klarman, who said his fund has recently had a strung stretch as a net seller, continued the comparison saying, “As with the 30-year-olds still living in their parents’ basements, we can only wonder whether the markets will ever be expected to make it on their own.”
The “opinion” is harsh, but reality is what it is! Instead of trying to guess at what the sector will do, I continue to do what I always do, and that means watching what the patterns and markets are telling me.
Insight is about understanding perception and putting into context what is relevant to expectation fulfillment. Amen …
Opinions expressed are those of the author and are subject to change, and not intended to be a forecast of future events, a guarantee of future results, nor investment advice.
Whether information or intelligence is good, bad or somewhere in between; I put into context what is relevant and useful for investors. All investments are subject to risks. Investors should consider investment objectives.
Henry McCusker, the editor and publisher of RegMed Investors does not hold or have positions in securities referred to in this publication.