December 30, 2015 6:40am
RegMed: Be ready for shareholder activism in the New Year; pressure from investors on CEOs to perform better will be intense
Officers and boards of directors (BOD) will be held accountable for lapses in codes of conduct, governance and transparency, especially if BOD members are abusing their role and depleting company coffers for reasons that help them more than shareholders!
Henry’s Wednesday’s “6” indications. The time has come to SUBSCRIBE! Can you afford not to?
Whether information or intelligence is good, bad or somewhere in between; I put into context what is relevant and useful for investors before the sector and markets open.
DOW futures are DOWN -0.2% and NASDAQ futures are DOWN -0.1%
U.S. stock futures on Wednesday signaled a lower open, as sentiment was hit by a drop in oil prices.
European equities were mixed to slightly lower as investors fretted over renewed weakness in global commodity markets. The pan-European Stoxx 600 index pared earlier losses, but remained lower, down 0.1 to 0.2% with sectors mixed.
Asian shares retraced some early gains to close mixed, with South Korea and Hong Kong falling into the red, while the Australia and Shanghai markets ended on a positive note. The Japan market finished its final trading day of the year in positive territory as the Nikkei registered a yearly gain of 9.27%.
Data docket: The MBA mortgage index at 7 a.m. ET, at 10 a.m. ET, a November report on pending home sales is due, with economists polled expecting 1% growth and weekly crude oil inventories at 10:30 a.m. In other economic news, International Monetary Fund Managing Director Christine Lagarde warned in a guest column for Germany’s Handelsblatt newspaper that global economic growth will be “disappointing and uneven in 2016.”
Shaken not stirred: KaloBios Pharmaceuticals Inc. (KBIO, -5.09%) — the company that’s majority owned by controversial biotech investor Martin Shkreli — has filed for bankruptcy. Shares have been halted since Dec. 17, the day that Shkreli was arrested on fraud charges.
The RegMed sector closed barely POSITIVE on Tuesday following a NEGATIVE close on Monday, with Christmas on Friday following Thursday’s NEGATIVE close after a POSITIVE close on last Wednesday.
Past and present, the pattern forms:
· Tuesday closed POSITIVE with 20 decliners, 21 advancers and 2 flats;
· Monday closed NEGATIVE with 29 decliners, 13 advancers and 1 flat;
· Friday was closed for Christmas;
· Thursday closed NEGATIVE <also early close> with 27 decliners, 15 advancers and 1 flat;
· Last Wednesday closed POSITIVE with 9 decliners, 32 advancers and 2 flats;
You’ve made it to the office, turned on the monitor having just gotten your coffee and it hits you - what are today’s trades?
- Stem, cell and gene therapy RegMed (SCGT&RM) stocks closed positive but, barely after Monday’s down closing session - will we repeat the alternating dynamics!
- The short version: low volume, flattening-out of short positions and increased resistance while traders chase profits into the year-end !
Activism in the New Year will be much more important because it will be focused on performance and executive compensation in which the investor will seek and demand catalysts for CEOs and BODs to retain their seats at the “table”.
- Shareholder activism has been surging in recent years and will most likely intensify in the upcoming year, considering the inconsistent performance of the sector. Review the CEO and BOD’s small ownership positions in the companies and ask why! Compensation should be performance driven and less due to surviving another year!
By participating with an activist group; stakeholders can create their own catalysts by pushing for CEOs, corporate officers and BODs for actions. Shareholder involvement brought forth by united investors on performance will be related to share pricing, insider holdings and compensation!
Wednesday’s trading indications:
- Aduro Biotech (ADRO) closed UP +$0.95 after Monday’s +$0.45 to $29.12. Speculators will “nibble “on the edges of appreciation – Maintaining SELL;
- Bellicum Pharma (BLCM) closed UP +$0.79 <after Monday’s decline of -$1.10> to $20.58. Any “iffy” moves without substance are suspect. Let the share price settle down until the New Year – Maintaining SELL;
- Capricor (CAPR) closed DOWN -$0.18 <after Monday’s -$0.12> to $2.65. I haven’t been wrong and unfortunately for CAPR, too many investors have agreed as CAPR has been a consistent loser even when they have been in play with small volume! When will the CEO learn to talk to investors and not at or even listen to investors especially the BOD? Maybe it’s time for a change as the first time CEO has the tendency to NOT listen to anyone! $2.50 could be a bottom after a failed offering - SELL;
- Kite Pharma (KITE) closed UP +$2.34 <after Monday’s -$0.63> to $63.96. Take advantage of a potential short dip! Remember 10/14/15’s $60.40 and 10/13/15’s $59.44 – I believe to make the trade now; and look back in a short period of time to buy it back cheaper – SELL;
- MiMedx (MDXG) closed UP +$0.23 after Monday’s +$0.21 to $9.84. Speculators will “nibble” the edges of appreciation – Maintaining SELL;
- Spark Therapeutics (ONCE) closed UP +$1.85 to $45.96. ONCE is a top percentage performer in 2015, being up 91.22% having jumped over 300% the first two months of trading. Priced at $23 on 1/30/15, trading at $46.00 on 2/2/15, the stock jumped to $77.50 on 3/31/15, $60.27 on 6/30/15 and $41.73 on 9/30/15. Even after the positive response to an offering on 12/15/15 of 3 M shares at $47.00 - SELL
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.
Henry McCusker, the editor and publisher of RegMed Investors does not hold or have positions in securities referred to in this publication.
