Tuesday, December 31, 2013

My Great 2013 stock investments

My portfolio did so well -- so much better than the stock indexes -- in 2013 that I have to keep telling myself, my wife, and anyone else who cares to know that this is not repeatable. This qws a once in a lifetime year.

I am a long term investor, and for the most part just held the stocks I began the year with. I did trade, trimming in and out, a bit more than usual. One stock, Onyx Pharmaceuticals, was acquired by Amgen. I added positions in just two stocks, Agenus (AGEN) and (PLX). I dropped my position in FNHC, mainly because it had a big runnup and I cover it, so I was worried about maintaining objectivity.

On the whole I was up 79%. Just plain stocks. No options, leveraging, or shorting.

So here's the list of companies I owned both at the beginning of 2013 and at the end:

Symbol end price 2012 end price 2013 % change
ADEP $2.38 $16.89 610%
AMAT 11.20 17.68   58%
AMD 2.40 3.87   61%
BIIB 146.37 279.57   91%
CELG 78.47 168.97 115%
CMN 19.82 33.91   72%
CYCC 6.06 4.02 -34%
DNDN 5.29 2.99 -43%
GILD 36.72 75.10 104%
HILL 0.85 3.37 296%
HNSN 2.08 1.73 -17%
INO 0.46 2.90 530%
MCHP 31.80 44.75   41%
MRVL 7.08 14.38 103%
SGI 10.23 13.41   31%
STX 29.80 56.16   88%
TTMI 9.19 8.58    -7%

I've written extensively about most of these stocks, so here I'll just make brief year-closing comments on the 3 best percentage gainers, and the 3 worst. Worst first.

Proving I am not prescient we have Dendreon (DNDN). I once made a lot of money on Dendreon, but 2013 was a rough year. Its single approved therapy, Provenge, is not doing well against competition. In addition, Provenge is very expensive to make. Even approval for sale in Europe did little for the stock.

Cyclacel (CYCC), which is in a pivotal Phase III trial for leukemia (AML) in elderly people too old to do chemotherapy, lost 34%. That is surprising because the data during 2013 was pretty good: the independent data monitoring agency allowed the trial to continue after the half-way point, indicating the data so far shows the drug to be safe and effective. It is still a gamble, but it is a company to watch in 2015.

Hansen Medical (HNSN), a maker of surgical robotic catheters, had a mediocre year as sales did not ramp as well as expected. Maybe the Q4 report will be better. The technology is promising, but I'd be surprised if they get in the black in 2014.

As to the winners, from 3rd to 1st place:

Dot Hill (HILL), up 296% this year, is a little-train-that-could story. The data storage equipment maker landed a number of new clients in 2013, got back into the black after years in the red, and looks to be headed to a good 2014.

Inovio (INO) was up 530% when people finally realized that its DNA vaccine technology could be a major breakthrough. However, they don't even have successful data from a Phase II trial yet. What works in the test tube and in animals and Phase I trials may not ever make it to commercialization. I like the company, but I'd like it better with more concrete data.

Who, at the beginning of the year, would have thought Adept Technology (ADEP) would have a 610% year? The stock started cheap because they had a bad 2011-2012, with customers cutting back on orders of their industrial robots. So they cut expenses and in 2013 introduced new lines of robots and landed new customers. The price has also been driven up by momentum traders. Check it out, but you might want to see Q4 results before you take a plunge.

I am a professional researcher, analyst, and writer. I write about my personal experience with investing for fun. You can follow me at this blog site, at www.openicon.com, or at William Meyers at Seeking Alpha.

Monday, December 30, 2013

Dot Hill Ends 2013 on a Positive Note

Although it is a small cap, obscure stock, I decided to write up Dot Hill (HILL), the data storage equipment maker, for Seeking Alpha:

Nearly Quadrupling In 2013, Dot Hill Still Has 2X Potential In 2014

Data storage requirements seem to be endless: everyone wants to store video, and video inherently requires a lot of storage capacity. Throw in vast quantities of alphanumeric data, and with the demand for permanent instant access, you need a lot of drives, whether hard disk or solid state or even tape. Dot Hill has some very good technologies for handling all that, when you need boxes full of drives with wide pipes to the rest of your datacenter. Nothing is guaranteed in the world of small-cap stocks, but 2013 was a turnaround year for HILL. On the other hand 2012 was a bad year, which is why HILL's stock price at the beginning of 2013 was so low.

My data other storage stocks also did well this year: Marvell Technologies (MRVL) and Seagate (STX). I suspect corporations have been under-investing in storage technology for the past few years. If so, 2014 could be the catch-up year. Some one should probably make a data storage index fund.

My article was published yesterday evening, and Dot Hill rose $0.12 today (3.7%) to close at $3.37. Probably not due to my article, since the last time I wrote a positive article on Dot Hill, in August, a sell-off followed.

I own shares of Dot Hill. I am a long-term investor. I may buy or sell shares from time to time depending on how the stock price matches up with my view of the stock's value.

You can see my notes on Dot Hill analyst conferences, and a list of all my Dot Hill articles at Dot Hill at Openicon.com.

Happy New Year!

Thursday, December 5, 2013

Cantel Medical (CMN) record quarter

Cantel Medical (CMN) had a record quarter. Cantel specializes in infection control, which is a very cost-effective form of health care.

I own stock in Cantel Medical. For all my previous reports and articles on Cantel see Openicon Cantel Medical.

Here are my notes on today's analyst conference:

Basic data (GAAP):

Revenue was $118.3 million, up 4% sequentially from $114.0 million and up 19% from $99.7 million in the year-earlier quarter.

Net income was $11.2 million, up 10% sequentially from $10.2 million and up 17% from $9.6 million year-earlier.

EPS (earnings per share) were $0.27, up 8% sequentially from $0.25, and up 17% from $0.23 year-earlier.


No specific guidance (Cantel never has provided specific guidance). But noted the January quarter has fewer sales days than the October quarter.

Conference Highlights:

Cantel Medical delivered record sales and earnings. All three major business segments showed good performance. Organic sales growth was 10%. Cantel continues to benefit from its investments in development, sales and marketing programs.

The medical device tax impacted by almost $1 million; there was none year-earlier.

Realigning reporting segments were changed, adding some formerly "other" revenue to Water Purification/Mar Cor segment.

Endoscopy segment (Medivators) revenue was $43.6 million, down 2% sequentially from $44.5 million, and up 19% y/y. Launching new and improved lines for 2014 and adding to sales team. Recently acquired Jet Prep for its specialty colonoscopy catheter.

Healthcare Disposables (Crosstex and SPS) sales were $26.2 million, up 32% from year-earlier. Organic growth was 4%, the rest was from the SPS acquisition. 40% y/y increase in operating products with improved gross margins. Sterility assurance is a growth area, as are international sales.

Water Purification and Filtration segment (Mar Cor) revenue was $39.8 million, up 11% sequentially from $35.7 million, and up 20% y/y. Heat-based and portable systems see continued acceptance. Orders exceeded shipments, so backlog hit a record. Siemens customer transfers are going well.

Therapeutic Filtration (formerly Dialysis) segment sales were down 11% y/y. Now represents only 8% of operating profits, but still important to Cantel, with growth possible in international markets. Proposed U.S. 9% cut for dialysis treatments has been postponed to 2015.

43.5% gross margin, up sequentially from 43.1%.

Cash and equivalents balance ended at $28.5 million, down sequentially from $34.1 million. Debt ended at $82 million; net debt was reduced $13 million to $53.5 million. Cash flow from operations $10.8 million. Cap ex $2.2 million.

EBITDAS was $24.1 million, up sequentially from $21.6 million and up from $21.0 million year-earlier. EBITDA was $23.0 million. Stock based compensation was $1.1 million.

Cost of sales was $66.8 million, leaving gross profit of $51.5 million. Operating expenses were $33.2 million consisting of: $15.8 million selling; $15.2 million general and administrative; $2.3 million research and development. Interest expense $0.7 million. Income taxes $6.5 million.

36.7% effective income tax rate. R&D credit set to expire at end of year, but hopefully will be renewed.

$0.045 semi-annual dividend to be paid in January.

For 2014 plans substantial investments in the three major business segments. Adding international teams, notably in China and Singapore. Will continue to look for acquisitions.


Priorities for international markets? China received most of the investment in 2013; infection control is a top priority for the government there. Just hired first manager in Germany. Then the U. K., where we already have a present. Then Australia, where we already have a high market share. Many second-tier markets, like Latin America and Eastern Europe.

We are not likely to do acquisitions in China, but could in Europe to help enter established markets.

How much could you spend on acquisitions? We are in good shape. We have over $50 million available in the revolver, plus the opportunity to add an additional $50 million.

Expects 2015 to require investments equal to 2014, then operating leverage going forward after that.

We are not in markets that are growing at over 10%; we are growing faster than the underlying markets. Success depends on new products and on sales efforts. We would say 10% organic growth is a goal, not a prediction.

We would be willing to make an acquisition outside of our 3 core areas as long as it was within infection control.

Tuesday, November 19, 2013

AMD versus Nvidia

I have a new article at Seeking Alpha:

Advanced Micro Devices Versus Nvidia: Is There Anything For Investors In Their Final Battle?

As stated there, I own AMD stock. While I don't own NVDA, I have owned it in the past, and like the company.

For details on the latest quarter results, and Q&A with analysts, you can see my notes at OpenIcon:

Nvidia Q3 2013 results and analyst call

AMD Q3 2013 results and analyst call

This is an epic battle, with a surreal sense since both companies make the chips that power computer games. I don't see an obvious winner. Both companies have beaten-down stock prices, but AMD's is more downtrodden than Nvidia's.

There are already 13 comments at Seeking Alpha. I write about both IT stocks and biotech stocks, and I have noticed that there are a lot more comments on IT stocks. It appears a lot of IT guys who are investors are members of the Seeking Alpha community.

They are a sharp bunch. They will fill in many details about AMD and Nvidia. They will pounce on any errors I made. The shorts will challenge my pro-long details, and the longs will challenge my pro-short details. It is a debate not dissimilar to what you see at sites like www.anandtech.com when someone reviews an AMD or Nvidia gaming card. But generally more polite, less sarcastic, and more fact driven.

I've been covering and investing in and out of Nvidia and AMD for a long time. For a long-term, historic view check out my numerous links to old article and analyst conference summaries at:

Openicon AMD
Openicon NVDA

Wednesday, November 13, 2013

Inovio and Dendreon Q3 analyst calls

I own stock in both Inovio (INO) and Dendreon (DNDN). Both reported Q3 2013 results on Tuesday.

You can read my notes on the results and analyst conferences at:

Inovio Q3 2013

Dendreon Q3 2013

Inovio had a good quarter on many fronts, probably justifying the huge leap in its stock price in the past year. It is a development-stage vaccine company, but is in partnership with Roche and apparently has the ability to make vaccines for just about anything, including cancer. Nevertheless, it has not yet had any FDA approvals,  and the risk of failure should be taken into account if you are thinking about investing.

Dendreon continues to struggle. Although Q3 revenue from Provenge was disappointing, they said that October was the best month for enrollments in 2013. So could Q4 come in at $80 million of revenue? No guidance was given, but between the approval in Europe and the

Dendreon's failure to capitalize on the first FDA-approved immunotherapy for cancer, Provenge for prostate cancer, had cast investor doubt on the entire immunotherapy for cancer field. In response to a question from an analyst, Inovio's CEO said if its therapy works and gains approval it would not have the high Cost of Goods Sold (COGS) that has plagued Dendreon. Inovio's therapy is more like its anti-viral vaccines, whereas Dendreon's therapy requires extracting blood from patients, activating T-cells, and then re-infusing the patients. Even at $100,000 per therapy Dendreon is losing money.

I am busy, busy, busy, so I don't know when I'll be able to write up these companies for Seeking Alpha. My last articles on them need updating, but there is still good background material in them:

Inovio's Price Spike and the Future of DNA Vaccines [August 17, 2013]

Dendreon Revenue and Cost Trends [August 13, 2013]

Keep diversified!

Thursday, November 7, 2013

Agenus Recommendation

My first Seeking Alpha article in a while, Agenus Valuation After Positive HerpV Vaccine Results, was selected by SA as a Small-Cap Insight article.

If you read it, be sure to check out the other recent Agenus articles.

My article has plenty of warnings about risk. Before my first buy of AGEN I not only read a variety of opinions at Seeking Alpha, but also listened to an analyst conference and checked SEC documents. In addition, AGEN represents only 1.25% of my portfolio holdings, which I think is enough for a risky small cap stock, despite my overall positive opinion of it. If it goes to a higher percentage on its own, that is different. My portfolio limit for a single stock is 10% of the portfolio. About half of my portfolio consists of biotech stocks.

Also, I am a long-term investor. I am making no predictions about the short-term (under 3 years, but particularly in the next few months.) All predictions are probability-based, and could be wildly wrong.

Happy hunting, and Keep Diversified!

Tuesday, October 29, 2013

Agenus, Biogen Idec, Seagate and Vertex Q3 results and calls

You can look at my notes on September quarter results and analyst calls from Agenus (AGEN) , Biogen Idec (BIIB), Seagate (STX) and Vertex (VRTX) if you like:

Agenus Q3 analyst call

Biogen Idec Q3 analyst call

Seagate Q3 analyst call

Vertex Q3 analyst call

I don't own any Vertex stock. I have owned Biogen Idec stock since 2008. I have owned Seagate stock since June 2012.

This is my first coverage of Agenus. I bought a small initial amount of AGEN in September and bought a like amount this morning. Agenus is a development-stage biotechnology stock, with no regular income source, though it has received some revenue from achieved milestones at partners. It should be considered a very risky investment. I hope to write up Agenus at Seeking Alpha very soon (I finished my Microsoft project, but got behind on so many things during it ...)

This afternoon I will be taking notes on Gilead, a company I have owned since 2007. I'm going to post the link even though no data is there yet:

Gilead Q3 analyst call

Keep in mind that anyone can listen to the analyst call of traded companies. Usually only buy-side (Wall Street) analysts can ask questions. You can listen by telephone or by web streaming. I always listen to at least one conference before buying a stock. The notes I post contain what is important to me, and can be read it a minute or two, but are not really meant to substitute for the full conference.

Thursday, October 24, 2013

Analyst Calls: Akamai, Celgene, Alexion

Yesterday I took notes on:

Akamai Analyst Call Q3 2013

Akamai had a good quarter, but not quite as great if you subtract out accounting change-based benefits. Guidance for Q4 was conservative. Since AKAM is a high P/E stock, it has to stay near perfection to avoid price drops. I have owned AKAM in the past and would buy on a significant dip.

Today I posted notes on:

Celgene Analyst Call Q3 2013

Celgene hit record revenue, but how you look at results depends on whether you use GAAP or non-GAAP numbers. I prefer GAAP for most purposes, and on that basis EPS was down y/y. But the value in Celgene is in recently approved and soon to be approved therapies. Those are going well, so I am sticking by my $200 per share by late 2017 thesis. I am a long-term owner of Celgene stock.

Later today I will post notes on:

Alexion Analyst Call Q3 2013

I do not own Alexion, but I am watching it as a possible addition to my portfolio.

Wednesday, October 23, 2013

Amgen and Altera Third Quarter Results and Analyst Calls

I took notes on the analyst calls of Amgen and Altera yesterday. I don't currently own either, but am contemplating buying each of them.

You can read my notes here:

Amgen (AMGN) Q3 2013 Earnings Call

Altera (ALTR) Q3 2013 Earnings Call

Amgen is doing quite well, confirming the analysis I made in Amgen With Onyx Pharmaceuticals: Long-Term Analysis. I would not call the stock cheap at today's price, but it is reasonable for long-term investors like myself. In addition to a slew of new drugs that may come to market in the next few years Amgen is setting up an infrastructure in China that should reward investors over time. My caveat on Amgen is that a friend recently stopped taking Enbrel for Rheumatoid Arthritis because her white blood cell count dropped to near zero. Looking at the number of deaths and adverse events associated with Enbrel, I can only hope that something safer comes to market soon. Amgen revenues from Enbrel in the quarter were $1.16 million.

Altera, which makes programmable logic devices (PLDs), had a more difficult time, with revenue down 10% y/y. Management thinks they will beat out arch-rival Xilinx with the new 28 nm and sub 28 nm chips, but so far the sales results have not proven that. For a fuller explanation of Altera's argument, see the notes in the link above. It is not a bad analysis, but until it happens I would refrain from buying Altera at current prices. On dips, maybe.

Later today I'll be taking notes on Akamai, then tomorrow is a heavy day, with Celgene, Alexion, and Agenus reporting. I own some Celgene and a tad of Agenus, but not Alexion or Akamai.

For a list of stocks I cover see William's List.

I don't think we are in a stock bubble yet, though it would look like it if you just looked at marginally profitable Internet stocks like Amazon and Facebook. I intend to be very selective in buying going forward, but I think there are still undervalued biotechnology and technology stocks, if you take a long-term view.

Keep diversified!

Friday, October 18, 2013

AMD and Intuitive Surgical (ISRG) Q3 conference notes

I listened to the AMD and Intuitive Surgical analyst conference calls yesterday.

You can read my notes following these links:

AMD Q3 2013 analyst conference call

Intuitive Surgical (ISRG) Q3 2013 analyst conference call

Market behavior this morning, following these results, is interesting. AMD actually beat its prior guidance, but the stock plunged, down 12.5% as I write. Which would seem to mean that at least some investors thought AMD would do even better. In any case AMD was in the black in Q3, both on a GAAP and non-GAAP basis, and has big plans for 2014. Following up on its wins for the processors of all 3 major game consoles, AMD has a pipeline of potential large volume deals for its SoCs (System on Chips). On the other hand, management made it clear that it can't promise profitability in Q1 or Q2 of 2014 because those quarters are typically slow for consumer electronics.

Intuitive Surgical (ISRG) missed guidance and reduced guidance for the full year. It also fell this morning, but currently at a less frightening but still significant 4.5%. Intuitive had high growth rates since it first brought its surgical robots to market, but now has hit y/y declines because of adverse publicity, market saturation in at least one key surgical procedure, and hospitals being more cautious about capital equipment spending.

I own some AMD stock and would like to accumulate more, if the price is right. AMD is having trouble with its traditional microprocessor business, but is smartly ramping up products that don't compete head to head with Intel. It will be a long, slow march to making serious profits that can pay off debt and eventually even be distributed to shareholders, hence the low stock price.

I don't own ISRG but would like to start accumulating it. Whether I actually buy any depends on the price (hopefully even lower), the other possible uses of cash, and any changes in my opinion of its future.

I am way busy with higher-priority projects right now so I don't know when I will write up more detailed analysis of these companies for Seeking Alpha, but I hope to at some point.

Keep diversified!

Wednesday, October 16, 2013

Xilinx analyst conference for September 2013 quarter

You can now see my notes for the Xilinx (XLNX) fiscal Q2 2014 results and analyst call.

It is a busy week for me, and analyst calls will be piling up as the earnings season gets underway, so I can't say when I will write an analysis on Xilinx for Seeking Alpha.

I don't currently own Xilinx stock.

Wednesday, October 9, 2013

The Real Debt Ceiling

The Federal Government of these United States of America is partially closed down. Congress is divided against itself: the Republican-controlled House of Representatives can't agree with the Democrat-controller Senate on how to reopen.

More ominous, all pundits agree, is that the national debt will hit the debt ceiling sometime soon, with October 17, 2013 frequently given as an estimate. Since the federal government continues to run a budget deficit, its debt is increasing. The ceiling is $16.7 trillion.

The debt ceiling is artificial in the sense that it is legislated by Congress (and signed into law by the President). It can be raised or lowered by Congress. Those who believe the national debt is not a problem (or, misinterpreting Alexander Hamilton and John Maynard Keynes, is actually an asset) might want to just abolish the ceiling, or set at at $30 trillion and forget it for a couple of years.

There is a real debt ceiling, however. It does not have a definite number on it, but it is real enough.

Consider, as an analogy, propeller-driven airplanes. Each model of airplane has a ceiling, because air thins are you climb to higher elevations. The better designed and lighter the airplane and the more powerful its thrust (from the engine and propeller system), the higher the ceiling. But at some point every airplane stalls: its propeller cannot push enough air to give enough thrust to get it higher.

Likewise where the real debt ceiling is for the federal government of the United States depends on a variety of factors. For instance, if the government could raise more in taxes (by raising rates or because of an expanding economy), it would have a higher ceiling than if revenue from taxes fell.

If the federal government offers higher interest rates (which are set at auction), then investors should be willing to loan more money to it.

Investors, in fact, are the key actors. There are all sorts of investors who buy federal debt. Since the Great Recession began they have accepted very low rates of interest. More investors might buy federal debt if interest rates on the debt were higher.

But no matter how high interest rates go, there is still a ceiling. Even a loan shark charging interest (at perhaps 100% per year) to the federal government would stop loaning if it became clear that the loan could not be repaid. And who's going to break the legs of the federal government?

If the annual interest on the federal debt begins approach a high share of annual federal revenues, the federal government would go into a Death Spiral. Say the interest reached one-half, or 50% of annual revenues. Policy makers would have three basic choices. They could prioritize interest payments by cutting federal spending. But that would hurt the economy, resulting in lower tax collections the following year, plus there would be political fallout from the many Americans who depend on federal spending.

A second choice when interest on the debt reaches 50% of annual revenue would be to increase taxes so that spending could be maintained along with interest payments. The problem with that is that such taxes would have to be broadly based. The economy would go into a depression, lowering tax collections.

A combination of cutting spending and raising taxes might work today, but would just cause a depression if we wait until interest hits 50% of revenue.

A third choice is to simply let the debt balloon. But as the debt balloons, the interest would also balloon. Interest rates would have to go even higher. The necessity for defaulting on, or writing down, the debt would be obvious. The debt would quickly hit the real debt ceiling, but that would not stop the death spiral. If 50% of federal revenue were assigned to just pay the interest, it would not be enough. Bonds (federal debt) come due at intervals: the principle would have to be repaid. Just to replace the bonds would require higher interest rates, so the interest would soon consume 51% of revenue, then 52%, and on up to 100% of revenue.

Clearly the three choices above would lead to the end of the United States as we know it. A fourth possibility would be allowing inflation to reduce the real value of the debt. Long-term bond holders would just have to eat their losses. But even this would not likely work because it also would hurt the economy so badly that we would have a depression, which would be deflationary, defeating the purpose of allowing goods and services to inflate in dollar value.

The real debt ceiling is likely somewhere between where we are now and where the interest on the debt reaches 50% of federal revenue. Federal revenue in fiscal 2013 was budgeted at $2.9 trillion. 50% of that would be $1.45 trillion. If the average interest on federal debt rises to 5% (a conservative figure, but above what the feds paid during the recession), the debt ceiling in the scenario above would be 29 trillion dollars. Way above the current legal limit.

But if investors lose confidence in the federal government (which they should have by now) and the interest on the debt rose to an average of 10% (admittedly higher than it has been yet), the scenario of the death spiral would occur at $14.5 trillion dollars.

That is right. A death spiral is possible, if enough investors lose confidence, at below the current $16.7 trillion debt limit.

So where the real debt limit lies depends on where real investors, as a group, draw the line.

It would be interesting to ask a few people like Janet Yellen, Ben Bernanke, Lawrence Summers, Barack Obama, Jacob Lew and John Boehner exactly what they think the real debt limit is.

Even the GAO thinks "Debt held by the public at these high levels could limit the federal government's flexibility to address emerging issues and unforeseen challenges such as another economic downturn or large-scale natural disaster. Furthermore, in both the Baseline Extended and Alternative simulations, debt held by the public continues to grow as a share of GDP in the coming decades, indicating that the federal government remains on an unsustainable long-term fiscal path." [GAO Long Term Outlook]

I predict we are in for stormy fiscal weather. Today the government pays interest at a rate from practically zero on short term notes to 3.75% on 30 year bonds. I believe the Federal Reserve has gone to great lengths to keep interest rates low not just because that encourages an economic recovery, but because it puts off the day of reckoning on the real cost of the national debt.

The Republicans are right, we need to cut spending. But we have to cut spending in a way that minimized the hurt to both people and the economy. That means cutting subsidies to the rich, the upper middle class, and in particular military spending and foreign aid. But the Republicans want to cut payments for seniors and the poor.

The Democrats are right, we need more revenue, which means more taxes. We need a higher tax rate on people earning more than $50 million per year and on large inheritances. We need to close every loophole. We need to legalize and tax "street" drugs. But tax increases do result in less spending and less capital deployment, so they should be reasonable. And the Democrats, too, have been reluctant to cut military spending.

The American economy has been badly hurt by both parties and both branches of Congress and by the President these past few years. By protecting their turfs, including the Pentagon budget, they are weakening the long-term viability of the United States.

Both parties should agree to balance the budget in fiscal 2015 and start paying down the national debt in fiscal 2016. The pain will be shared by everyone, but to the extent it can be targeted by law, it should be dished out to those who have benefited most from the American economy.

Friday, October 4, 2013

Celgene partial sale

I am still a big fan of Celgene, but it again did so well that it violated my portfolio rules limiting the % of any one stock I hold. So I sold about 16% of my CELG holdings recently for $156.74 per share.

I last bought Celgene on June 24, 2013 for $111.40 per share. My rules allow me to buy more shares if for some reason the stock price drops again.

The shares I sold were originally bought for $38.59 per share back on May 4, 2009.

I continue to believe that for long-term investors like myself, CELG is a good bet. But I also recognize that every stock has its risks, and so limit my risks by following my portfolio rules.

Celgene will be reporting Q3 2013 results and holding its analyst call on October 24. As usual I will take a post notes which you can access at Celgene analyst call summaries.

I am pretty busy with other projects right now, so don't expect to write much in the way of articles for here or Seeking Alpha until early November.

Friday, September 27, 2013

Cantel Medical (CMN) update

In retrospect, one of my luckiest stock picks has been Cantel Medical (CMN) a manufacturer of sterilization and infection control equipment.

Yesterday the stock hit a record high after the market digested its morning report on its fiscal Q4, and the analyst conference. Hansen is still a small cap, so it is not well-covered by Wall Street, sell-side analysts. I've been covering it since before I bought it in 2009.

My Seeking Alpha article on it is:

Cantel Medical: Proven Aggressive Growth and Stock Returns [September 27, 2013]

My summary of Q4 is: Cantel Medical (CMN) Q4 2013 results and analyst call

For earlier analyst conference summaries and stories see Cantel Medical (CMN) Analysis and News

I own stock in CMN. Because it grew so quickly, at one point it violated one of my portfolio rules (not too much of any one stock) and I sold a portion of my original stake. I has split twice since I bought it. It pays a small dividend.

For those who wonder about how Seeking Alpha works, I would share that contributors get paid per page view. Hence, if you are writing mainly for pay, you want to cover large cap stocks that have a lot of shareholders, and especially stocks that are constantly in the news, like Apple and Facebook. There is basically no pay for covering small caps like Cantel. I made $3.60 on my last Cantel article. Hence, small cap stocks tend to be under-covered at Seeking Alpha, just as they are elsewhere. Another issue is pump and dump. Because they are thinly traded, small caps are subject to attempts to pump and dump them.

Seeking Alpha articles also can warn you about overpriced stocks. Often in the feedback you can read a contrarian view, which at least should discourage hasty decision making.

But for that very reason, small-cap stocks also are more likely to harbor undiscovered value than large-caps.

I am a long-term investor and write for long-term investors. I think  the vast majority of writers on Seeking Alpha are honest, but even honest writers (including me) can get over-excited about a stock. Never buy a stock without first, at minimum, reading the recent SEC documents and running the numbers yourself. That is true of large cap stocks as well. Look for value. Don't try to be a momentum player unless you are an insider. Never fully trust anyone. And above all:

Keep diversified!

Tuesday, September 17, 2013

Provenge Approval and Biotechnology Recap

Dendreon's Provenge received earlier than expected approval by the European Medical Agency. It will now be possible to sell the prostate cancer therapy in Europe. It is likely to be a slow ramp, however, because each nation has to approve Provenge for reimbursement (they all have national health insurance in Europe) and a facility to process the Provenge (which involves tagging patient blood to make it attack the cancer) has to be built. Since two facilities are operating in the United States, at least they should know how to set up one more efficiently this time around. See Dendreon Provenge Approved in Europe press release.

I added to my Dendreon stock position, but note that with an exist market capitalization of half a billion, and little likelihood of reaching profitability even in 2014, this is still a very risky investment, not for the faint of heart. Don't bet money on Dendreon if you can't afford to lose it.

Followers know I have been reviewing the biotechnology stocks in the Nasdaq 100 at Seeking Alpha. The overview and comparison article on those stocks has been published:

Biotechs in the Nasdaq 100 Recap

Wednesday, September 11, 2013

Analysis of Vertex Pharmaceuticals (VRTX) added

I am now watching and analyzing each of the biotechnology companies in the Nasdaq 100. My latest add is Vertex Pharmaceuticals (VRTX):

Vertex Pharmaceuticals: Dog of the Nasdaq 100 Biotechs [at Seeking Alpha]

You can also read my Q2 2013 Vertex Pharmaceuticals Analyst Call Notes

My main page for Vertex will be Vertex Pharmaceuticals at OpenIcon.com

Note I am not saying Vertex is a bad company. They had a bad piece of luck not getting their Hepatitis C therapy to market earlier. They will do fine in the long run. The other Nasdaq 100 biotechs are a tough lot to be in competition with.

Next, I'll start on the smaller, undervalued biotechs, but I'll go back to some of my favorite information technology stocks too.

Tuesday, September 10, 2013

Intuitive Surgical, Mylan, and Regeneron

I have had three Seeking Alpha articles published since my last post:

Regeneron Pipeline Worth Tens of Billions in Market Capitalization

Mylan Pursues Global Generics Dominance Strategy

Intuitive Surgical Market Saturation Could Be Brief

All three of these biotechnology companies are part of the Nasdaq 100, which I have been plowing through, looking toward my next round of investment. Each has something unique to offer. As detailed in the articles, each of them, at the current price and based on current information, looks like a good long-term investment. But I'll be doing considerably more research before making any actual purchases.

Wednesday, September 4, 2013

Amgen Gets Aggressive

I have a new post at Seeking Alpha:

Amgen with Onyx Pharmaceuticals: Long-term analysis

I will be covering Amgen again at OpenIcon.com, and went back to take notes on the Amgen Q2 2013 analyst call before writing the article.

I like Amgen's relatively new, more aggressive pursuit of growth. The combination of Amgen's existing, deep and valuable pipeline with Onyx's newest approved products and pipeline is a heady mix that I don't think is fairly valued in the current stock price.

It is true that Amgen is a large-cap biotech, so it takes blockbusters to move the growth needle significantly. I don't own Amgen, and I sold my Onyx stock (because Amgen is acquiring it anyway). I am going to be searching for 2 or 3 new positions to use the cash from Onyx. I am likely to pick a smaller, even more undervalued company with a good pipeline. That has been my winning formula in the past. But that also involves more risk. Amgen looks like a good fallback candidate.

I am going to finish reviewing and writing about the biotechnology stocks in the Nasdaq 100 before plowing through companies with smaller market caps. I am submitting an article on Intuitive Surgical in a few minutes, so hopefully that will be up for you at Seeking Alpha tomorrow.

Also, before actually buying a company like Amgen, I usually cover at least two consecutive analyst calls, and of course do a thorough review of SEC filings.

Keep diversified!

Wednesday, August 28, 2013

Alexion Pharmaceuticals and Adept Technology

I have added Alexion Pharmaceuticals (ALXN), a creator of therapies for blood disorders, to my list of covered stocks. I do not currently own ALXN. You can read my Seeking Alpha article: Alexion Pharmaceuticals Offers Long-Term Value or look at my notes from the latest analyst call, Alexion Pharmaceuticals Q2 2013 Analyst Conference Summary.

Connected only by alliteration, we have robot manufacturer Adept Technology (ADEP), which had quite a stock boost today based on June quarter (fiscal Q4) results. My notes are at Adept Technology Q4 2013 Analyst Call Summary. You can see my prior prediction that this should be a turn-around quarter at Adept Technology Order May Signal Turnaround published at Seeking Alpha on June 28, 2013.

I do own ADEP stock.

Wednesday, August 21, 2013

Applied Materials long

Applied Materials Process Advantages Build Market Share [August 21, 2013]

One reason I like to have stocks like AMAT in my portfolio, besides the dividend, is that most investors have very short time horizons. If Applied Materials non-GAAP EPS is indeed in the vicinity of $1.50 per share for full fiscal 2016, then it should be around $30 per share then. Almost doubling what it can be bought for today.

Doubling in 3 years is actually great returns. But so many investors are just thinking about what returns they can get within the next quarter, or the next few hours if they are day trading, or the next few nanoseconds if they are computer algorithms, that this long-term value is overlooked. And in many cases, three years from now the investors who pursued what they thought were short-term opportunities will not have doubled their money. A substantial percentage will have halved their money, or worse.

I do have some of my portfolio in high-risk, potentially high gain small cap stocks, but the bulk of it is in Nasdaq 100 stocks or stocks that could potentially join that index.

Tuesday, August 20, 2013

Nvidia article and analyst conference notes

now at Seeking Alpha:

Nvidia's Competitive Outlook

While Nvidia is actually one of my favorite companies from way back, I have not owned the stock for years. Partly that is due to my shifting my earlier mostly IT technology portfolio to one that has become more than half biotechnology. You can also see notes on last-week's Nvidia Second Quarter 2013 analyst call (Q2 fiscal 2014)

Next up is Applied Materials. Marvell Technologies reports on Thursday, so I am likely to write about that on Friday.

Saturday, August 17, 2013

Inovio Gone Wild

Inovio Pharmaceuticals (INO) released Q2 results on August 9, 2013, and you can read my notes here: Inovio Results Q2 2013.

Because Inovio had been an under $1 stock until a few months ago, and then spiked to $3.03 on August 6, and because I had already invested in INO over a year ago, I thought it would be a good time to write an article for Seeking Alpha explaining my understanding of the company.

Here it is: Inovio's Price Spike and the Future of DNA Vaccines

The funny thing is, the article got quite long, and in the end I did not reference the Q2 results. That is okay, because the Q2 results don't tell you whether any vaccine in the INO pipeline is going to eventually get data good enough for FDA approval. Which is the crucial issue for start-up biotechnology companies like Inovio.

I tried to show what I think if the proper way for investors to think about startups and therapies that are in clinical trials, or even preclinical. Most analysts want to reduce everything to a "buy, hold, or sell" paradigm. But with healthcare pipelines no one really knows what the result of a clinical trial will be. IF we knew, why conduct the trial? And since nobody knows (including Wall Street sell-side analysts and hedge fund managers), the sensible approach is probability based and statistical. Bets should be spread out over a variety of companies that have a good probability of a high return on investment, with the expectation that some will have failed therapies. You have to make up for your losses with your gains.

If you have not learned basic probability and statistics (that's all you need), stay away from biotech therapy pipelines (or let someone manage your money who does. I do not manage other people's money, and I don't trust anyone to manage mine. Call me quirky.)

In particular, avoid stocks where the investment community, usually driven by sell-side analysts at major banks, has fully priced in victory. If FDA approval is priced into market capitalization, there is no reason to buy a stock (but your broker will suggest you do it anyway). What those of us who manage our own accounts want is companies where the market cap does not take into account the probable outcome. My usual examples of this for the past 5 years were BIIB, GILD, CELG, and ONXX, all of which had pipelines that were undervalued by the street. I continue to own all 4 of these stocks because while I think their current prices do predict a healthy 2014 in each case, I think the rest of the decade is not priced in.

But what I want to continue to search for, when I have time, is stocks like INO that still have a long way to go.

Keep Diversified!

Thursday, August 15, 2013

Applied Materials Sees Market Share Gains from R&D efforts

Applied Materials (AMAT) issued July quarter results that were within guidance and therefore probably a disappointment to speculators.

You can read my notes here: Applied Materials fiscal Q3 2013 Analyst Call

Applied Materials makes the rather expensive machines that are used to make semiconductor chips. The optimistic part of the presentation I found believable was that AMAT has been able to cut administrative expenses and move the money over to use for R&D. The result is new, improved machines that will gain market share, in particular as the newer 20 nm-ish process node goes mainstream in 2014.

In any case Applied Materials generates a lot of cash and pays a nice dividend. It is one of the safest stocks I own, and if 2014 is a good year, hopefully they will increase the dividend again.

I hope to write at more length for Seeking Alpha, but I have several other companies on my list at this point, so it could be a while.

Tuesday, August 13, 2013

Dendreon Q2 analysed

I have a new post at Seeking Alpha:

Dendreon Revenue and Cost Trends

You can also look at my note from the Dendreon (DNDN) Q2 2013 Analyst Conference Call

I have owned Dendreon stock since 2005 and its been a lesson in how badly the market prices stocks. Which is to say, The Market is just a bunch of humans, most of whom grew up well-off and like the English aristocracy of old, barely no how to dress themselves. They let the herd think for them, and constantly overprice and underprice stocks. Which means an individual investor can take money from them pretty easily if: you do a good job at research and analysis; you keep your emotions in check; you keep in mind that the world is a chaotic place; you are patient; you keep diversified.

In particular with Dendreon, when it finally got approval for Provenge for prostate cancer, a bunch of brokers who had never heard of Dendreon before hyped it to their clients, sending the price soaring to levels inconsistent with reality. I sold most of my stock then. As the price has fallen I have started accumulating DNDN again. I could lose my money, there is at least a 25% chance DNDN will go bankrupt by 2015, but I don't think so, as a say in my article.

Thursday, August 8, 2013

Dot Hill analyst call notes posted

I have posted notes on this morning's Dot Hill Q2 2013 analyst call

While HILL did better than guidance and increased 2013 EPS guidance, I guess traders were hoping for better because it dropped on the news. If, like me, you are in for the long term, the overall picture is quite good. I am still expecting HILL to top $3 per share in 2013 and go to $5 or more in 2014, which of course depends on execution, competition, and the economy. I own HILL stock and won't buy or sell any for 3 days; probably will just hold what I have until at least 2014 unless there is some major price movement.


Seeking Alpha selected my Dot Hill Likely To Reach $4 Per Share In 2014 as a Small-Cap Insight article. It is the first time I've had that honor. I am very pleased. Nevertheless, keep in mind that predictions about the future can be wrong ... so Keep Diversified!

Wednesday, August 7, 2013

Microchip (MCHP), Akamai (AKAM), SGI, and Hansen Medical (HNSN)

Earnings season is in full swing to me, as small and mid-cap firms that I follow report.

Today the editors at Seeking Alpha accepted and posted these articles I wrote:

Akamai Remains Volatile, So Buy on Dips

Microchip for Solid Growth and Dividends

I also posted my notes on the analyst conferences:

SGI June quarter 2013 analyst call

Hansen Medical (HNSN) June quarter 2013 analyst call

Neither SGI nor HNSN were very inspiring, which I'll explain when I have time to write articles on them, though it is pretty obvious from the June quarter results.

As I write this I own Microchip (MCHP), Silicon Graphics International (SGI) and Hansen Medical (HNSN) stock, but not Akamai (AKAM).

Tuesday, August 6, 2013

New Seagate (STX) article

And another article accepted at Seeking Alpha:

Seagate Offers Dividend and Potential 2x Upside

I own some Seagate (STX) stock, not much, but I bought it at $23.13 on June 12, 2012 and right now it is at $40.50, so I am happy with it. The dividends, too, should add up over time.

Friday, August 2, 2013

Biogen Idec (BIIB) Runs Up

I submitted an article to Seeking Alpha yesterday, in favor of Biogen Idec, and the stock ran up substantially this morning before my article was released around 11 AM Pacific Time. I own some BIIB. I just want to say that the editorial turnaround time was within normal limits, and other articles have appeared elsewhere that are also positive on BIIB, during the last few days.

My article:

Biogen Idec Product Pipeline will Propel it Higher

Don't ignore the risks, even when the upside dominates: keep diversified!

Thursday, August 1, 2013

TTM Technologies (TTM) Q2 analyst call notes

I've posted notes on the TTM Technologies (TTMI) Q2 2013 analyst conference

I own TTMI stock, but have not been recommending it for a while. It has been digesting an acquisition, giving it a presence in the Asian printed circuit board (PCB) market, in addition to its North American operations.

Things seem to be going pretty well. Debt is being paid down even as investments are being made in advanced PCB technologies. Demand is picking up, and profit margins are improving. I would peg $16 as a reasonable stock price.

I'll write a longer analysis for Seeking Alpha, but I have quite a backlog at this point.

Keep diversified!

Wednesday, July 31, 2013

Microchip (MCHP) fiscal Q1 analyst call notes posted

Microchip had a good quarter. You can read my notes on their analyst call at:

Microchip (MCHP) fiscal Q1 2014 Analyst Call report

This is a dividend and growth stock, a nice combination for investors.

Hansen Medical, Gilead Sciences, and Biogen Idec

Well I'm having a good day, with Hansen Medical (HNSN) up almost $0.22 to $1.45 at the moment, and Inovio (INO) up $0.21 to 2.08. These were minor positions for me given their risks, but large percentage moves can turn a minor position into a major one, which is why I am always looking for good micro-cap stocks, but never have more than 3 or 4 in my portfolio.

Hansen has actually been doing quite badly until today. I was going to write an article "Hansen still has a pulse" based on preliminary Q2 results in which they again sold only a couple of robotic surgery systems. But today they got a very large cash infusion, showing some powerful investors believe sales are just around the corner, or that Philips or Intuitive Surgical or someone might buy the company for its IP.

Overnight the editors at Seeking Alpha posted my Gilead Sciences Hepatitis C Approval May Be Factored In. I sound wishy-washy in giving a value to Gilead or dissing it or recommending it, but that is because no one knows where the price will be set for the new therapies. The execs at Gilead probably have some ideas, but they are not talking. And they should not, until they get FDA approval. When they announce prices to the medical community the stock price will adjust accordingly as all we analysts plug the therapy price into our spreadsheets. As a citizen I hope the price is low, because the government (we taxpayers) will be footing the bill. As an investor, not so much. In any case actually having a cure (for most patients) is going to cut down on the long-term costs from hepatitis C damage. Then again, if you don't die of liver failure you have to die of something, and whatever it is the doctors and pharmaceutical companies will want to get what they can out of that tragedy.

I still hope to get to Biogen Idec today. This afternoon Microchip (MCHP) will be reporting, so I'll be taking and posting notes on that conference.

Tuesday, July 30, 2013

New Celgene (CELG) article

I have a new article published today at Seeking Alpha:

Celgene Up Over 100% in a Year. Still a Buy?

I also have an article under editorial review on Gilead (GILD).

Today I hope to write up my thoughts on Biogen Idec as well.

On the whole Celgene, Biogen, and Gilead, plus Onyx Pharmaceutical, have been my best investment segment. Buying them goes back to the time I wrote:

Choosing a Biotechnology Stock

Which, while the specifics have changed, still gives some good tips on what tips to look for if you want to choose individual stocks instead of a biotechnology fund.

Thursday, July 25, 2013

Gilead Sciences and Biogen Idec analyst call summaries posted

I have now posted my notes on two more calls:

Gilead Sciences (GILD) Q2 2013 analyst call

Biogen Idec (BIIB) Q2 2013 analyst call

Celgene analyst conference call notes

I have posted my notes on today's Celgene (CELG) analyst conference call:

Celgene (CELG) Q2 analyst call

The key takeaway was updated 2013 guidance.

I'll also be taking notes on Biogen Idec and Gilead today. I have a Xilinx article in the Seeking Alpha queue that needs some links to be added. I will probably write about Celgene next, then Akamai, Biogen, Gilead, and Intel and Altera updates, if I have time.

Wednesday, July 24, 2013

Seagate June Quarter call notes

I was a bit surprised when Seagate (STX) had released its fiscal Q4 results and held its conference call before I even woke up this morning.

I have now posted notes on the call: Seagate STX fiscal Q4 analyst call

Akamai will be reporting this afternoon. I own shares of both Seagate and Akamai.

I now owe articles on both Altera and Xilinx ... busy, busy, busy.

Tuesday, July 23, 2013

AMD Q2 results analyzed

My new post at Seeking Alpha:

AMD has been a dog for some time, but I see Q2 2013 results as showing its about to get up and show us what a smart dog can do. I own AMD stock and am thinking of buying more. I believe AMD can do well bringing its semiconductor design expertise into industrial and medical applications, but of course we won't really know until the second half of 2014.

You can also see my notes on last week's call here: AMD Q2 2013 earnings call summary

Later today I hope to post notes on the Altera Q2 2013 analyst call, and I'm trying to find time to write up my thoughts on their rival Xilinx for Seeking Alpha. Then Akamai on Wednesday.

But my big day this week, covering a large % of my portfoliio, is Thursday when Biogen, Celgene and Gilead  all report on their June quarters.

Keep diversified!

Saturday, July 20, 2013

Xilinx analyst call notes available

I am resuming coverage of Xilinx (XLNX) with notes on the July 17, 2013 analyst call:

Xilinx fiscal Q1 2014 conference call

I hope to have an article up at Seeking Alpha in the next couple of days.

Thursday, July 18, 2013

Covering Altera (ALTR) again

Now that I have a larger audience through Seeking Alpha, I am going to cover a wider variety of technology and biotechnology stocks. I am starting with a company that I covered in the past, Altera Corporation (ALTR)

In my introductory article, Altera Worth Watching for Upside Surprises, I take an essentially neutral stance. In future articles I'll be digging more deeply into the Altera story and comparing it with rival Xilinx, as well as other semiconductor companies that make programmable logic devices (PLDs).

AMD reports later today. I will be in transit, but hopefully can get a report out tomorrow.

Monday, July 1, 2013

Onyx Pharmaceuticals (ONXX) Amgen Bid, review

Onyx Pharmaceuticals (ONXX) is up roughly 50% today on news that Amgen made a $120 per share bid to buy the company, which was rejected.

I certainly agree with the Board that the bid undervalued Onyx. Whether there will be a bidding war is a matter of speculation. I believe that Onyx can do well continuing to operate independently if no reasonable buyout offer is made.

Since no substantial new information is available for analysis, I just going to provide links to my prior articles. Note that the buy-side, Wall Street analysts that are touting ONXX today were mostly dissing in back in 2008-2012.

From latest to earliest:

Onyx Pharmaceuticals Sees 2013 Acceleration [January 7, 2013]
Kyprolis Approved [July 20, 2012]
Onyx Pharmaceuticals New Back of Envelope [June 27, 2012]
Carfilzomib (Kyprolis) Recommended for Multiple Myeloma by FDA Committee [June 20, 2012 press release]
Onyx (ONXX) Sees New Product Upside [November 21, 2011]
Onyx Pharmaceuticals Gets $160 million for Nexavar, Plus Regorafenib Royalties [October 12, 2011]
Onyx Pharmaceuticals Readies Carfilzomib [August 17, 2011]
Onyx Pharmaceuticals ASH Conference [December 7, 2010]
Onyx Pharmaceuticals (ONXX) Jumps on Carfilzomib Revenue [November 22, 2010]
Onyx Pharmaceuticals Jumps on Carfilzomib Data [August 8, 2010]
Onyx Pharmaceuticals Acquires Proteolix, Carfilzomib [October 12, 2009]
Onyx Breast Cancer Trial Results [September 30, 2009]
Onyx Positive Surprise for Investors [November 11, 2008]
Onyx Chooses the Long Run
[August 11, 2008]
Onyx In The Black [May 7, 2008]
Onyx (ONXX) Nexavar Trial and Q4 results comments [February 20, 2008]
Can Onyx Deliver? [May 10, 2007]

In addition, you can find my notes for years of analyst conferences at OpenIcon Onyx Pharmaceuticals Analyst Conference Summaries

And here's the Onyx Pharmaceuticals Confirms Receipt of Unsolicited Acquisition Proposal from Amgen press release.

Friday, June 28, 2013

Dendreon's Provenge Recommended by European committee

New article posted at Seeking Alpha:

Dendreon Gets European Recommendation

See also my: Q1 2013 Dendreon Analyst Conference Notes

Provenge is approved in the United States for the treatment of metastatic minimally symptomatic castrate-resistant prostate cancer. Dendreon is seeking approval for Provenge in Europe.

Monday, June 24, 2013

Bought More Celgene (CELG)

In the interest of full disclosure, this is a note that I bought Celgene stock today at $111.40.

I had sold 17% of my CELG on June 7, 2013 for $126.80. Today I bought twice as much as I sold on June 7. Celgene is now the largest position by value in my portfolio.

I acquired my long Celgene position over time as follows:

6/7/2007 at $59.34
5/4/2009 at $38.59
1/28/2011 at $52.40

For my latest analysis of Celgene see:

Celgene 2013 Guidance: Two Times 2013 Revenue

Note that while I like and own Celgene, my portfolio is constructed to balance risks and opportunities as a whole.

Keep diverfied!

Wednesday, June 19, 2013

Adobe Fiscal Q2 2013 Analyst Conference Notes

My notes on the latest Adobe (ADBE) results and conference can be found here:

Adobe Fiscal Q2 2013 Analyst Conference Notes

It is still hard to tell at this point how the shift to selling Adobe prodocts as subscriptions rather than in iterations (CS6 following CS5, etc.) by download or disks will work out. Revenues are not climbing, and profits are down, but this was expected even if the shift to subscriptions is successful. Management sounds confident, and seem to be executing to plan. No money down, pay later plans are the American dream, so it will likely work out but for investors it is a waiting game.

Wednesday, June 12, 2013

New post on Inovio (INO)

Yesterday I was thinking I had not written about Inovio (INO)  for some time. I checked Seeking Alpha to make sure no one was writing about the company, and too my surprise found several articles already there.

One negative article struck me as mistaken in its analysis. I like to read negative articles because too often the negative points of stocks are ignored. But I did a bit of research and concluded that, while nothing guarantees that a small company like Inovio will ever get FDA clearance for its vaccines, Inovio is still a buy for me.

Here's the article: Sorting Out Inovio Claims

Once again, this is not a recommendation for anyone to buy INO. It is a high-risk biotechnology stock and should only be owned by people who know how to manage such risks properly.

Keep diversified!

Monday, June 10, 2013

Cantel Medical (CMN) outlook

My latest at Seeking Alpha

Cantel Medical over the last 5 years has proven to have sound management. Growth prospects now appear to be as good as ever. The infection control market is growing because of the increase in global pandemics and antibiotic-resistant bacteria. This is not a hot short-term trade, but as a long-term investment I can highly recommend it.

You can also read my detailed notes on the analyst call: 

Thursday, June 6, 2013

Cantel Medical Analyst Call (CMN)

I have posted my notes on today's Cantel Medical (CMN) analyst conference call here:

Cantel Medical fiscal third quarter 2013

Cantel had a good, but not spectacular, quarter.

I own stock in CMN. I have watched them expand revenue in the healthcare infection-prevention market for several years now. I see no reason Cantel should not continue to do well these next few years and see a gradual but significant rise in the stock price.

I hope to post a longer analysis at Seeking Alpha sometime today or tormorrow.

Tuesday, June 4, 2013

Microchip (MCHP) Increases Guidance

My newest article at Seeking Alpha:

Microchip Ups Guidance

I should add that I first bought Microchip (MCHP) stock in 2006 and it has always been reliable, even during the recession. Management is as honest as they come, though of course on occasion events occur that they could not foresee.

I became aware of Microchip from playing with microcontrollers when I thought I might make a hobby of robotics. I used a STAMP board, which was set up with a working PIC microcontroller. It was amazing how easy it was to write small programs to turn electronic devices on and off and monitor the environment.

Thursday, May 30, 2013

Marvell 2nd half opportunities

I have a new article at Seeking Alpha:

Marvell Technologies Opaque Second-Half Opportunities [May 30, 2013, Seeking Alpha]

That article was long, and so I did not go into the networking segment outlook, or into some other areas where we should see revenue ramps in late 2013 or in 2014. One bright spot is LED controllers. Another is ARM-based servers. I should also point out that Marvell (MRVL) first talked about the tablet market several years ago, so it is good to finally see a yet-undisclosed OEM going with Marvell for a tablet. Marvell's ability to integrate a variety of components on an SoC may yet get some tablet traction.

Saturday, May 25, 2013

Marvell Technology (MRVL) Q1 results & conference notes

Marvell Technology Group (MRVL) reported results on Thursday, May 23 that were at the high end of prior guidance. You can see my notes on the analyst conference at Marvell analyst conference, fiscal Q1 2014.

The most significant point is that new products that have been a couple of years in development should start ramping revenues in the second half. While no specific guidance was given for Q3 or Q4, the guidance for Q2 was revenue between $770 million and $800 million, which would be a significant sequential increase.

I own stock in Marvell.

Thursday, May 23, 2013

Intel analysis

My latest article at Seeking Alpha:

Intel: Neither Bullish Nor Bearish Stories Hold Up

It mights seem a bit strange writing an article where, after a complex analysis of moving parts, my conclusion is close to neutral. But after doing my research and analysis, that was my conclusion. I spend a lot of effort trying to predict the future. That is what individual stock picks are about. In this case several variables could have gone in either positive or negative directions, so my best bet is neutral. That does not preclude the bears or bulls on Intel being right, but they certainly can't prove they are right. If they were, the stock price would be different.

Monday, May 20, 2013

AMD new post

My newest post is at SeekingAlpha:

AMD Game Console Triple Crown: Will there be Profits

There is already a great discussion going on this article and the prospects of AMD and Intel (INTC)

Tuesday, May 14, 2013

Dot Hill Outlook and Change to Seeking Alpha

In the past I have posted articles here. Seeking Alpha has reposted some, but not all of my articles.

Because so many more people are viewing the articles at Seeking Alpha than here, I am now posting the articles first at Seeking Alpha. I will post a link to the Seeking Alpha articles here.

Articles not appropriate for Seeking Alpha will continue to appear here.

Here's my first link:

 Dot Hill Sees 2013 Revenue Ramp And Profitability

To see all my articles:

William Meyers at SeekingAlpha.com

Keep diversified!

Tuesday, April 30, 2013

Biogen Idec Too High Too Fast?

Biogen Idec (BIIB) is now off its 52-week high of $226.18 (reached earlier today) but up from a 52 week low of $126.39 (of June 4, 2012). At $218.84 it has risen 73% off the low.

I began following BIIB in the first quarter of 2006, but did not acquire stock until February 2008, when I picked it up at $61.57 per share. In the short run I overpaid, but I picked up more later that year at $46.97. I person with perfect timing could have picked up shares at $40.27 on November 28, 2008. Biogen then  rose to $67.05 by the end of 2010, and looks like it invented an anti-gravity machine this January.

Biogen did so well that it became too large a percentage of my portfolio (according to my portfolio rules) so I sold half of my position on May 16, 2012 for $137.19. Now of course I wish I had violated my portfolio rules and kept the stock longer, but I had other situations where those same rules kept me out of major trouble (they were the main reason I sold most of my Dendreon stake before the price collapsed).

Even though my remaining Biogen stake is well within my portfolio rules I have to ask: is BIIB overpriced? Should I sell it and look for a better value proposition?

There were reasons Biogen was priced where it was in 2008 through 2010, the big one being a disease called PML (progressive multifocal leukoencephalopathy) caused by the JVC virus. Biogen's specialty is multiple sclerosis MS therapies. Its Avonex was the most prescribed MS therapy, but the new wonder drug was supposed to be Tysabri. MS is an autoimmune disease; MS therapies work by selectively suppressing the immune system. Turned out, the JVC virus lurks in the brains of about 1/2 the population, generally doing no harm except when the immune system collapses, when it causes PML, and often results in death.

Tysabri use led to some PML cases, and in a few instances to death. Not knowing what the rate was, nor what treatment could be given for PML, the FDA revoked Tysabri's marketing license. The immediate solution turned out to be to monitor for PML and stop giving Tysabri if there were symptoms. The FDA re-approved Tysabri provided a monitoring program was in place. While Tysabri was so effective that sales ramped back up substantially, naturally there was concern by doctors, patients, and investors that we might see more PML deaths and a permanent ban on Tysabri.

Nevertheless in Q1 2008 Tysabri sales were $115 million, total Biogen revenue was $942 million, and GAAP EPS was $0.54. It being the recession, investors were risk-adverse, and it seemed no amount of good news on Tysabri, revenue, or profit could do much for the stock until late 2010.

So much of the run up in the price was just investors catching up to the new reality: a highly-profitable biotechnology company with a strong pipeline of potential future blockbusters. But in the same way investors lagged reality before 2011, perhaps so many momentum players have jumped on the BIIB bandwagon that the stock has gotten ahead of its fair valuation.

By the beginning of 2013 we had pre-screening for JVC and better treatments for PML, reducing the risk of PML mortality to statistically close to zero. We have substantial Fampyra revenues, though that therapy had also had its issues.

Plegridy (peginterferon beta-1a) for relapsing MS pivotal Phase III data has met all primary and secondary endpoints after 1 year cutoff of a two-year study. Biogen expects to file with FDA and EMA (Europe) by mid-2013

Daclizumab-HYP Phase III data readout expected in 2014. It is also for relapsing forms of MS.

Biogen also filed for approval with FDA for Hemophilia Factor 8 for A and 9 for B, based on significant Phase III trial results.

A number of other therapies are in Phase I, II, or III trials. See the Biogen-Idec product pipeline for more details.

So we can figure that the most likely scenario is that Biogen Idec will see substantial revenue and profit growth over the next few years and new therapies come to market. It is unlikely that everything in the pipeline will get good results and FDA approval, but Biogen has a lot of shots on goal.

You can build spreadsheets (and I have, and sell-side analysts certainly do) guessing at revenue and profits from future therapies based on patient populations, competing therapies, and guesses about pricing. But experienced pharmacology and biotechnology investors know that promising therapies often fail, and unexpected side effects can show up even after FDA approval. Picking winners of competitive races is also more guesswork than science.

So a good hard look at the latest quarter should keep us anchored in reality, and then some P/E ratio points can be added to reflect optimism about profit growth in the next few years; add as many points as you are comfortable with.

Biogen reported on the first quarter of 2013 last Thursday. Revenue of $1.415 billion was up 9.5% from Q1 2012, which is quite good and means a fair P/E ratio should be above the market average. GAAP EPS was $1.79, up 43% y/y; now that should be worth some a P/E ratio well above market. Ballpark it at 30 to 1.

Guidance is for 2013 GAAP EPS of $6.69 to $6.90. Given that non-GAAP guidance is $7.80 to $7.90, let's use $7.00 and multiply by 30. That gives us $210 per share, not much off today's auction price.

So my ballpark estimation is that even at this price BIIB is still a good value. Included in the price are estimated 2013 profits. The pipeline of new drugs revenue and profits won't kick in substantially until 2014. I would expect BIIB to end 2014 in a higher price band, depending on the details of new product ramps.

I am inclined to hold my BIIB and, if I need to sell stock because I spot another opportunity as good as Biogen was in 2008, I could probably find something else to sell. Most likely I will leave BIIB off the leash until it again becomes a risk management problem from being too large a percentage of my portfolio. If I am wrong and it falls in the short run, or becomes a smaller percentage of my portfolio again because something else runs up, I might even buy more.

Keep diversified!

Disclaimer: I own share of BIIB and reserve the right to sell them or buy more at any time, even though I currently have no plans to change my position.

See also:

My Biogen Idec main analyst conferences page.
My BIIB Q1 2013 conference notes

Monday, April 22, 2013

Applied Materials, Process Nodes, and Future Profits

Applied Materials (AMAT) makes capital equipment for semiconductor chip manufacturing. Demand in that sector has not been robust these last couple of years, although it has come off the bottom that lagged after the recession. This article will look at AMAT as a long-term investment, not a short term trade. Given that, the first thing to note is that it pays a dividend, which is currently $0.10 per quarter, or 3.1% per year at the current $13.06 stock price.

I believe the largest factor determining future AMAT revenue and profit will be the ongoing trend towards new, small process nodes (indicated by the size of the lines used to put transistors in chips. 32 nanometer is older than 28 nm.) But let's start with where we are now.

AMAT last reported on February 13 for the first fiscal fiscal quarter of 2013, which ended January 28, 2013. Against an overall global semiconductor capital equipment spending drop of 16% in 2012, AMAT reported revenues of $1.57 billion, down 5% sequentially from $1.65 billion and down 28% from $2.19 billion in the year-earlier quarter. That is discouraging, for certain.

Applied's core semiconductor equipment business saw a Q1 y/y decline to $969 million from $1.34 billion, a decline of 28%. Its display screen segment did better, but the solar segment did worse. Display revenue dropped 17% y/y to $87 million from $104 million, which was already low by historic standards. Solar revenue dropped 77% y/y to $47 million from $206 million. There is a glut of solar supply in the market, so no turn around is expected until at least 2015. Display may see some rebound in 2013 as screen sizes start to increase in developing markets and new screen technologies are adapted.

The bulk of Applied's revenue and profit comes from the semiconductor segment. It is well known that demand for PCs has been down, and it is hard to predict where the bottom may lay. Demand for tablets and smartphones has been increasing. Overall demand is dampened because smartphones simply contain far less silicon than PC's do. They have weaker processing chips and far less memory.

Does that mean Applied and other semiconductor equipment manufacturers should be written off as dinosaurs? I think not. I think overall computational demand will continue to increase rapidly for at least the next two decades. To cram more computation into portable devices (and the computers in the cloud that serve those devices) the industry will continue to move to smaller process nodes.

Right now demand is still high at the 28 nm node. Most chips, which work in legacy, non-mobile applications, are still made at much older nodes. For high-end graphics chips from AMD and NVIDIA, 28 nm is the cutting edge. Intel is already manufacturing its newest CPUs at 20 nm, and new memory-chip production at Samsung is just started at 10 nm. Memory process nodes typically can be smaller than computing process nodes. The most advanced ARM-based chips were recently taped out at 16 nm at TSMC.

Smaller (newer) process nodes mean that more capability can be built into mobile devices (and also non-mobile devices). Transitions to 14 nm and 20 nm are almost entirely ahead of the industry. To some extent moving to these nodes may open up capacity at 28 nm, but there is a lot of technology out there that has yet to migrate to 28 nm.

The other factor is overall demand, and that depends on the global economy and the frequency of consumer upgrades. There is a lot of old equipment out there, as seen by the high percentage of PCs still running Windows XP. With the exception on Intel, Samsung, IBM, and a few others, most chip makers are now really chip designers who send their designs to foundries like TSMC and Globalfoundries for actual production. These foundries don't want to have capital equipment sitting idle, but neither do they want to lose business because of insufficient capacity.

Generally capacity has been lean since the recession, which is one reason why there has been a shortage of 28 nm capacity. The other reason 28 nm has been tight is it was harder to get it working with good yields than had been expected There is quite a bit of impatience right now among the more cutting-edge designers because of a lack of sub-28 nm capacity.

Anything under 28 nm is far more expensive to make than 28 nm. Only Intel and Samsung have had the vast capital resources to simply move to the lower nodes without concern about how much demand would be there at startup. Even Intel announced it was cutting back capital equipment spending by $1 billion in 2013 due to lower demand projections.

But what is bad for foundries is good for AMAT and other equipment manufacturers: future nodes will require far more spending on capital equipment. One reason is that some 20 nm chips will have a 3-D structure. This means a move away from lithography defined shrinking to process-defined, where with precision engineering AMAT claims a considerable advantage.

In addition to reporting revenue, AMAT reports orders for each quarter. The good news for Q1 was that orders of $2.11 billion were well above revenue and up 31% from orders in Q4, as well as up 5% y/y.

Guidance is for Q2 fiscal 2013 revenue to be up 15 to 25% sequentially. Non-GAAP EPS is expected between $0.09 and $0.15.

While Applied Materials has substantial competition in each of the types of tools that are needed for semiconductor manufacturing, it is second in overall sales revenue only to ASML in an industry where scale matters. ASML is not much bigger: it had sales of $7.9 billion in 2011, AMAT had $7.4 billion. Another American competitor is KLA-Tencor, which had $3.1 billion in sales, placing it fourth globally.

On the whole, I think it is likely that 2013 will be a year of improvement for AMAT, and with major gearing up for 20 nm in 2014, that will be a very good year. How much improvement depends on the degree of strengthening global demand for semiconductor chips.

Disclaimer: I am a long-term investor in AMAT. I also am long AMD, but do not own any other company mentioned in this article. I will not buy or sell AMAT stock for one week following this article's publication date.

See also:

My main AMAT analyst conferences page.

My Q1 2013 AMAT analyst conference notes


Saturday, April 13, 2013

Provenge Could Be Combined with Other Prostate Cancer Therapies

Provenge is the only immune therapy approved by the FDA for the treatment of prostate cancer. It is an expensive treatment, about $100,000 per patient, and it is only approved for asymptomatic or minimally symptomatic metastatic castrate resistant (hormone refractory) prostate cancer. In other words, once prostate cancer has become both malignant and keeps growing despite testosterone being artificially lowered, and before it has become painful.

According to its Seattle-based maker Dendreon (DNDN) , Provenge will "jumpstart your immune system to fight advanced prostate cancer." Unfortunately some prostate cancer has its own tricks for defeating the immune system. As a result, in clinical trials, compared to untreated patients, Provenge therapy extends life by a median (50% of men don't get this much benefit, 50% get more) of 4.2 months. Some lucky men live much longer, including some who have now survived for years.

Finding out why some men don't respond well, and helping all prostate cancer patients live longer, is now a major medical science question. One group of doctors who may have an answer is led by Samir N. Khleif, MD, director or the Georgia Regent University Cancer Center. He believes there is good science indicating cyclophasphamide and CT-011 both inhibit prostate cancer's ability to circumvent both the body's natural immune system and therapies like Provenge.

A trial is planned in which men with metastatic prostate cancer will also take either or both cyclophasphamide and CT-011 along with Provenge. While this is an exciting theory, it should be emphasized that it will likely be a couple of years before the results are known. Then, most likely, the FDA would require a larger Phase III trial to be successful before approving the combined therapy. [See also Interview with Samir N. Khleif, MD in Renal & Urology News]

Prostate cancer is quite common in older men and generally is not a death sentence: In the U.S. 240,000 men are diagnosed annually, and about 30,000 die. Most prostate cancer victims die of some other cause, and it is difficult to predict which individuals will see their disease progress to being metastatic and castrate resistant. However, at that point it tends to be deadly. There is a broad debate over whether earlier interventions like surgery and radiation are overdone. Those who favor early treatment believe it cuts down on the number who progress to deadly disease. Those who oppose early treatment point to its cost, the low likelihood of progression being the cause of death in older men, and the complications from treatment (loss of control and occasional deaths from surgery.) Even lowering testosterone levels has side effects men don't like.

David Crawford, MD, is one of the growing number of physicians who believes that the answer may be in sequencing therapies for late-stage prostate cancer patients. He points out that in the last 3 years several therapies that are proven to help have finally been approved by the FDA, and more may be on the way. In addition to Provenge, we now have Zytiga which lowers testosterone more than previous drugs could, and Xtandi, which is an androgen receptor antagonist.

Doctor Crawford believes that for cancer in general multiple therapies have been more successful than single therapies. This is partly because cancers can develop defenses against therapies over time. By attacking prostate cancer at one, or in quick succession, with the newer therapies, Crawford believes patients will see better results. Trials are underway to determine if there is a preferred sequence for prostate cancer. [See Optimal Sequencing of the New Prostate Cancer Drugs in Renal & Urology News]

Currently doctors are divided into two camps. Some favor either Zytiga or Xtandi first because they act quickly to reduce hormone levels. Others favor Provenge first because the immune system acts over time and the cancer at this stage is already

The consensus in the community seems to be moving towards giving both types of therapy as soon as possible. As with Provenge, neither Zytiga nor Xtandi are cures, but instead, on a statistical basis, prolong the lives of the patients who take them. Xtandi prolongs life by a median of 5 months, slightly longer than the Provenge median.

Disclaimer: I own Dendreon (DNDN) stock and will not trade the stock for 7 days after the publication of this report.

William P. Meyers

See also: www. dendreon.com

My main Dendreon notes page.

Monday, April 8, 2013

Dot Hill Ups Guidance, Announces Quantum Parntership

Dot Hill's stock price shot up today on a series of announcements about partners and future guidance, as well as holding its annual analyst day. The last 5 years have been rocky for HILL despite gradual acquisitions of new customers since in lost Sun. In 2012 Dot Hill was developing products that it said would attract new customers [See Dot Hill's 2013 Hopes]. Today was delivery day.

New guidance was given for Q1 2013, Q2 2013, full year-2013, and (tentatively) 2014.

A recap of Q4 2012 provides perspective: revenues were $44.1 million, down 6% from year earlier. Non-GAAP earnings per share (EPS) were negative $0.03, down from $0.00 year-earlier. Not a great quarter.

Prior guidance for Q1 2013 was revenue between $43 and $46 million, with a non-GAAP EPS loss between $0.02 and $0.04.

Today's guidance for Q1 (which should be pretty close, given that the quarter is over) is revenue of $44 to $45 million, narrowing but not increasing the range, with EPS as low as negative $0.02 and as high as $0.00.

$0.00 non-GAAP EPS may not seem like much to get excited about, but that includes research and development costs for new products as well as startup manufacturing costs in costs-of-goods sold. With higher revenue and flat or lower R & D costs going forward, we get to the prettier picture for the future:

Q2 2013 guidance is for revenues between $47 and $53 million, up about 12% sequentially. Non-GAAP EPS estimated range is negative $0.01 to $0.02 per share.

For the full year 2013 revenues are estimated between $205 and $227 million. Non-GAAP EPS should be positive $0.02 to $0.10. That would be great if it happens.

For the full year 2014 revenue estimates are between $231 and $301 million and non-GAAP EPS could be $0.11 to $0.40.

While such long-term predictions should be taken with a healthy spoonful of the salt of cynicism, consider the value of HILL stock if it hit the $0.40 per share top of guidance in 2014. That would likely more than restore investor confidence, so let's give a PE ratio of 15. That would bring the stock to $6 per share. As I write it is trading at $1.53. There are a lot of hoops to jump between $1.53 and $6.00, but there are some reasons to not entirely discount the top range of estimates.

The world of data storage has been evolving rapidly. HILL does not sell disk drives. It sells storage systems for small, medium, and increasingly enterprise businesses. It used to make storage systems for Sun Microsystems until Sun brought a competitor in house. It then picked up HP and NetApp as OEM clients, plus some smaller players and system integrators. Dot Hill dumped NetApp because the margins in the deal was bad, and that made its revenues slump. But all the while it used its substantial cash to develop better systems. Now we are seeing the payoff.

The big announcement today is that Quantum is selling systems, its new QX family, supplied by Dot Hill. A rep from Quantum, at today's Hill analyst conference, reviewed how Quantum has been addressing the rapidly evolving data storage market and how Hill's new products fit into the picture. The amount of data stored in the world is climbing rapidly, largely to accommodate video, full time data feeds, and the mining of big data. Verticals with particular needs to expand their disk drive farms rapidly include entertainment, government, life sciences, and resource extraction (geology). In entertainment many company are rapidly expanding their incoming video feeds, and need all that video instantly for editing and pushing out to consumers. Clients need cheap, reliable storage, and that is what Dot Hill has been developing and is now shipping.

HP, which has provided the bulk of HILL revenues these last few years, has committed to continue using Hill as a supplier of their lower-end, mass market products, the MSA line, the market share leader in its class. While no specifics were mentioned, HP indicated a product refresh is on the horizon. HP has noted Dot Hill systems value, reliability, and interoperability (ability to work with most hardware and software).

The new data storage workloads that are driving the adoption of Hills (patented) technologies are described as a randomized sequential workload. In other words, a lot of data has to be quickly available, and it is hard to predict which data will be needed. However, in a VMWare environment, the new Dot Hill systems were shown to be rock solid reliable and capable of learning about the data demands so as to increase spread over time. With SSD still expensive and tape still much cheaper (using less electricity) than disk drives, the ability to load balance between various media has become a necessity, and Dot Hill does that well.

Also notable is that Dot Hill has greatly increased its addressable market by moving to the higher-end of the data storage market. It is also bringing high-end capabilities to the midrange and even lower range business markets, which makes all of its offering attractive at their price points.

It is an exciting time to be an owner of Dot Hill, but the usual cautions apply: data storage is highly competitive, margins could be better, and the global economy is always an issue.

So keep diversified! And congratulations if you already own HILL stock.

Disclaimer: I own HILL stock. I won't trade HILL stock for at least 3 days from the first publication of this article.

See also:

My Dot Hill main page.

My Q4 2012 Dot Hill conference notes

and of course www.dothill.com