The Lighthouse keeper rarely issues any stock tips, as we tend to stick to weightier issues, but from time to time when there are exceptional opportunities, we can all have some fun, and maybe make a few bucks too…
In my last suggestion, with Italian bonds (ITLT Powershares) any takers on my suggestion were up a cool 60% or so in a couple of months (read here)…
There are two very interesting positions right NOW…
Amarin Corporation, AMRN (ADR)
Amarin, a cool small (in pharmaceutical terms) little Irish company which specializes in developing cardiovascular related drugs recently received FDA approval for their new drug Vascepa. The stock had traded above 15 as the announcement came last Thursday. In a classic case of “buy rumor, sell News” the stock traded up heavily in the days prior the announcement, and then (after a brief respite of shorts covering their positions) crashed hard.
Rumors, speculation about the lack of NCE granted by the FDA, speculation that the FDA label was more restrictive than the market anticipated and reports of insider sales after the FDA announcement, have helped the stock to continue to tank.
Traders often make the mistake in thinking you can trade “Headlines” or recent developments (ie: News). It is surprises that change a market direction, not simply a recent event itself. News of an unanticipated event change the market direction in real-time, but not the announcement of things the market already assumed.
So many small investors undoubtedly were left holding the bag, and wondering why their brand new stock that just got FDA approval, and seems so wonderful, is crashing like a ton of bricks. Worse yet, the panic induces many of them to sell and take a big loss. If you invested on market fundamentals, wild short-term swings of the market should not affect your decisions (at least not negatively), stay the course according to the fundamentals.
The crash I believe has created an excellent opportunity here. Without getting into too many details, everything that can be reasonably researched about Amarin and Vascepa indicates that its share price will be much higher, and perhaps double or triple in the near future (anywhere from tomorrow until early Jan 13). The insider trading is logical and normal. The mentality and mechanics motivating insiders who have worked for years on a project in order to cash out, and did not typically “buy” their shares at any price are very different from the trader viewing a computer screen and entering and exiting positions in order to make some small swing profit (and more importantly, not lose their principal). Traders often forget that. At this point in Amarin’s history, it is hard to imagine why insiders would not sell up to half or more of their allotted shares in order to guarantee themselves a cash payout for their hard work, while leaving another half for future potential growth. SEC regulations and contractual obligations with their investors, the company, and potential buyers of Amarin also severely limit when and how insiders can buy or sell shares.
Their drug, though really nothing more than fancy fish oil, is worth what their FDA label is worth. It is superior to the only other similar drug on the market due to several factors, and that competition has an annual sales of 2.5 billion dollars. Anything in that vicinity, weather Amarin develops and markets Vascepa alone, or is acquired by another larger company, indicates a drastic stock increase.
At the time of writing, AMRN is in the vicinity of 11.60 – 12.00 dollars a share. An excellent time to purchase the stock. IMORTANT: I would not suggest and there is no need to enter the trade “naked”. Buying enough puts at 12 to cover its possible decline to near 0 (if something goes wrong with marketing, development, patents or the FDA label) is cheap enough compared to the possible up swing. The point is, AMRN is not staying at around 12 for long, it either will crash down significantly or swing up drastically… and in fact it may do both in the coming weeks and months. Therefore, a great opportunity to make some money.
Cellcom Israel Ltd- NYSE:CEL
Cellcom has just announced it will migrate its networks to Cellcom.
Also without delving into too many details, Cellcom was Israel’s first maverick cellular company. Due to its early success in the 90’s it slept in its laurels a bit, allowing for a very high dividend and making windfalls of money due to the lack of competition and heavily regulated Israeli market.
A combination of recent deregulation in Israel which has finally allowed in real competition, plus an increase in anti-telecom regulations (price controls, banning customer yearly contract subscriptions, etc) really battered Cellcom. However, the recent sell-off was drastically exaggerated, assuming that Cellcom had seen its last days. This is wishful thinking, Cellcom, now risen from its sleep, has massive advantages in the Israeli market in infrastructure, political connections, experience, and perhaps most importantly, capital. The dividend (though likely to change) is huge, the company is flush with cash and is making the needed changes to meet the competition.
It still has regulatory advantages over its competitors, since it is the only company allowed in all areas of telecommunications (phone, Internet,Long distance, etc). I believe as soon as the numbers come out for the new subscriptions (responding to Cellcom’s aggressive new pricing for families and small businesses), the market will regain ground. At that point however it may be too late. I believed this to be the situation as of a few days ago, but today just hours ago we have a new announcement that seals the deal:
The entire IDF has chosen to migrate networks from MIRS to Cellcom. Though this is unfortunate for MIRS, which I always enjoyed as the military network, they dropped the ball in allowing their networks to be too easily compromised; spying by Hezbollah and Syria in the north have been too common. Cellcome has promised better technology and features (not to mention probably pricing) for the army. The IDF is such an influential and large part of Israeli society that this will make a sure difference. AS of writing of this article, the US media had not even picked up on the announcement but already CEL shares were up 5% or so, since it was announced in Israel. Expect Cellcom to rise moderately nicely in the coming weeks and months.
It is customary to include disclaimers for Americans in almost everything anyone says, writes or does in order to avoid someone blaming the speaker/doer/writer for their own actions. In the spirit of keeping with conventions, here it is:
Do not buy, sell or otherwise engage in action in the stock market (or any other type of market) whatsoever unless you are prepared to lose ALL the money you have risked. And certainly, do not do it because I said so. Think for yourself, take responsibility for your own actions, man up, and either decide to risk some of your money in a particular investment or don’t; and either way live with the consequences.