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A Friday For
the Record Books |
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I spent the majority of the week
grinding through a number of research reports on Stem Cell technology,
which I am convinced holds out the promise of being the next generation
of advanced medicine- on a par with the advent of vaccines like the polio
vaccine, and the discovery of penicillin.
To that end, on Monday I will be
publishing a new idea in the Stem Cell arena. I am very excited
about this idea as I believe there is an easy one month trade in the stock,
coupled with a long term possibility of far more than simple trading profits.
Check your inbox on Monday if you want to look at a Stem Cell company
who's stock is absurdly oversold, and who's management team includes one
of the biggest names in the burgeoning Stem Cell arena.
So, after a long week of grinding
through 60 page research reports, I decided to devote 4 1/2 hours to frustration
on Friday afternoon by chasing an absurd little white ball around 25 acres
of some of the nicest real estate in Southern California. I was feeling
pretty good when I arrived home with $40 of fresh capital lining my pocket,
compliments of my three playing partners. Since I had departed an hour
before the close, I glanced at the computer to check the end of the day
quotes, and was blown away by two post close major events- both OTC
Journal followings. In this business, you never know what's going to
happen next. Here's a review of Friday's exciting conclusion to an otherwise
lackluster week.
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DexCom
(NASDAQ: DXCM) Gets Cramerized |
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I think I'll send this guy a dozen
roses. This is the face of the famous and some would say infamous Jim Cramer,
the wild buffoon who stomps around the stage of his studio at CNBC hosting
the after noon show Mad Money, and shouting Boo Ya like he actually has
the right to identify himself with the Marines.
Nevertheless, for the second time,
Cramer
put a smile on my face and substantial profits into the pockets of both
myself and other OTC Journal subscribers.
On his show Friday after the close,
Cramer described DexCom as quote: "DexCom makes the most important
advancement in the treatment of diabetes since we figured out how to manufacture
insulin, he said, referring to its new glucose-monitoring system for diabetics."
He went on to state the Dexcom
device monitored blood glucose levels every five minutes, which is in fact
wrong.
The Dexcom device measures blood glucose levels constantly in real
time.
DexCom, in after hours trading
spiked to $21 (I recommended it January 28th at $16), and will probably
trade up another few points higher on Monday.
So, rather than look at a chart of
Dexcom,
which I have already projected in the $22 to $25 range, let's look at Global
ePoint (NASDAQ: GEPT), another OTC Journal recommendation that
was "Cramerized". This will serve as the template for DXCM.
On June
3rd of '05 I recommended GEPT at about $3. There were
a couple of follow up BLOGS, suggesting continued accumulation of
the stock. On July 23rd of '05 I published a Profit Alert on GEPT.
For those who don't quite get it, a Profit Alert means I believe
it is time to take either part or all of your profits.
The stock closed just north of $4,
and after being Cramerized reopened in the 6's and briefly spiked up, challenging
the $8 level in a couple of trading days. Ka'ching- more than a double
for OTC Journal subscribers in one day. As a result of this incident,
I published the edition entitled "Event
Driven Trading Profits" in August.
Now- for OTC Journal subscribers,
here's another Cramerized Ka'ching. Those who have been accumulating DXCM
under the $20 mark should get ready to ring the profit bell. If
the pattern repeats itself, the high from this spike will be made sometime
in the next three trading days, and the stock will start coming down.
I am going to try to gauge the top,
and sell half my 8,000 share position with the intention of buying it back
a few points lower. Unlike GEPT, there is a major event pending
on DXCM. Once I am out of half my position, I will be taking the
risk of being out of 1/2 of my stock if and when they announce the FDA
Approval for their device. That's why I only plan to sell half. This is
called "trading around a position". It's something I generally do with
stocks I like and want to own for some time.
However, I violated my own precepts
in the next situation, which also rang the bell in a big way after the
close on Friday. Read on:
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HyperDynamics
(AMEX: HDY) Dishes the Goods |
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First of all, congratulations to
those shareholders who did not follow my lead and had a position in HDY
at the close of market on Friday. The stock's recent rebound up from the
$2 level should have clued me into the possibility the company would make
progress towards getting the drilling permits to drill the test wells off
the west coast of Africa.
While the stock has been very good
to my portfolio this year, I made the mistake of being out while looking
for a better price. I knew I was taking the risk that the stock would trade
up dramatically in my absence, and it happened after the close on Friday.
A very smart investor once told me
"Ideas are plentiful, capital is scarce". I missed the first boat as it
pulled away on this one practicing that discipline.
After the market closed on Friday,
HDY
announced it had signed what appears to be a Letter of Intent to finalize
the negotiated agreement which will allow HDY to get the drilling
permits from the Republic of Guinea. In an interesting twist, HDY
also disclosed they may be on the hook to pay some royalties in advance.
Where they will get the money, I have no idea. They don't even have close
to enough money to drill the first test wells. However, since it would
appear to be a fait accompli that the real deal will get signed, I'm sure
they will come up with the money from somewhere. They can always get it
from Dutchess Capital, who provided their last financing and is now making
a well deserved killing.
While I am naturally disappointed
that I make the mistake of not owning a few shares at this juncture, I
believe there will be numerous trading opportunities over many years in
this stock. After all, this step is only the very beginning of what I hope
will be a very long term home run.
For example, they still have to sign
the final deal. They still have to raise the money to drill the first test
wells. They still are probably going to have to take in a deep pockets
partner to develop the concession. They are a long ways from revenues.
The stock traded into the $3.50
range in after hours trading on Friday. I would guess it will make a new
multi year high and trade over $4 and possibiliy approach $5
to $6 early next week, at which point I would sell it if I were
still holding it.
Once the excitement dies down and
the volume subsides, I will look for a 61.8% retracement level to
begin to rebuild my position. Next time I won't make the same mistake of
selling it all.
For those who are interested, click
here to read Friday's press release. Once again, congratulations to
those who are still in. I hate missing a good party, but I know there will
be another one soon. My position in DXCM helped mitigate the pain.
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