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The Stock Market-
No Place For the Faint of Heart |
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As our current profile Diomed
(AMEX: DIO) continues to slide towards the $4 level, down from
the $9 high set just 10 short days ago, we are reminded that
the stock market is not the easy profit panacea it was pre March of 2000.
In fact, the market is not for the faint of heart or those who cannot afford
risk.
The relentless smear campaign on
the stock continues, and short sellers are winning for now. In this era
of mistrust spawned by the Enron disaster and Arthur Anderson indictments,
the media is in a shark like feeding frenzy for anything that could be
remotely controversial. Short sellers are using the media to help scare
investors into selling this stock, and it is working. Our congratulations.
The execution of your game plan is impressive.
Like a football team down by two
touchdowns after the first quarter, supporters of the company have been
outplayed, but the game is far from over. In fact, it is not just a game;
it is an entire season which will last for years. The best team will win
in the long run, and the only thing that will matter is Diomed's
corporate performance.
We still believe there will be one
high profile article, probably in Barrons, which will yield the
all time low. The article will focus on everything but the company, and
short sellers will be screaming I told you so from the mountain
tops. This will be the ultimate buying opportunity for those that can filter
the rumor, innuendo, and exaggeration from the truth. Look for it this
weekend. We hope it comes out. The anticipation of its publication is giving
short sellers courage. Just like investors on the long side, short sellers
need an exit strategy, and high profile negative publicity is just what
the doctor ordered.
Visit Diomed's message board
at the Yahoo! quote site. A few detractors are screaming with glee as the
stock drops, but there's not much fact about the company. We find it very
entertaining.
In the interim, we believe the stock
is now trading at a virtually risk free entry level. Extremes can be opportunities,
as we proved last year with Energy Power (OTC BB: EYPSF).
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Energy
Power Systems (OTC BB: EYPSF)- A Case in Point |
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Energy Power was our most
featured company in 2001. We launched our coverage of the company on February
10, 2001 at $2.90. The stock finished the year at $4.55 for
a net gain of 57%, a mammoth windfall in these market conditions.
This performance is even more outstanding when one considers the NASDAQ
was down about 21% for the year.
In 2001 we published 36 editions
either featuring or mentioning the company, and our coverage generated
significant profits for many of our members. The chart reveals that a 57%
return was not the whole story. Look at the chart and imagine the profits
you could have generated simply by trading this stock at the extremes.
Throughout 2001 Energy Power
had six major swings where the bottom fell out of the stock rapidly. Each
of those drops was followed up by a dramatic surge to the upside. In each
case, you could have nearly doubled your money within a matter of days
or weeks, but it took courage to act when fear ruled.
Energy Power, just like Diomed,
was also the target of multiple smear campaigns. However, during 2001 the
company grew, turned profitable, and investors made money.
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Diomed
(AMEX: DIO)- Is a Similar Pattern Unfolding? |
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A quick glance of the chart reveals
Diomed
has been crushed in the last 10 days. Fear rules the day as investors wonder
if the company has any merit, and short sellers are winning the game.
While it is too early to tell for
sure, a pattern may be developing similar to Energy Power in 2001.
Trading the extremes in Energy Power proved very profitable in 2001,
and we believe the same scenario will unfold in 2002 for Diomed.
Despite all the bashing of the company
on message boards and in the media, there is one fact which is indisputable.
Those who have taken the time to read the 140 page 8K SEC filing detailing
the reverse merger had the opportunity to review the independent valuation
prepared by Atlas Capital Services.
Atlas Capital is a Wall Street
based financial services company which was retained to render and independent
opinion of the valuation of Diomed. You can learn more about Altas
at
www.atlascapitalservices.com.
According to the 8K filing with the
SEC, Atlas independently determined Diomed to have a value
of at least $141 million. At today's prices, the company
is trading at a value of only about $120 million. This does
not mean the stock cannot go lower. However, we believe that based on Atlas's
independent valuation, the stock at these levels is about as risk free
as a small cap stock can be.
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Why
All The Excitement About Diomed? |
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Diomed issued a press release
late Tuesday evening which gives investors some insight as to why shareholders
have high expectations for the future of the company.
Late Tuesday the company revealed
that Massachusetts General Hospital plans to offer Diomed's EVLT
for
the safe and effective elimination of varicose veins by the end of this
month.
Massachusetts General is one
of the highest profile and most respected hospitals in the world, and the
first of many hospitals and clinics we believe will offer this procedure.
This is the first formal announcement from a treatment center indicating
they will offer the procedure.
Diomed just received its FDA
Approval in late January to begin offering the EVLT procedure.
EVLT is proven to be the most effective and least invasive treatment
for varicose veins.
Mentally fast forward two years and
imagine five hundred hospitals worldwide offering EVLT. Visualize
each of those hospitals performing an average of three procedures per day,
250 days per year. This equates to 375,000 EVLT procedures
being performed in 500 hospitals yearly. Of course you have to be willing
to take the risk this scenario will at least partially unfold, and you
have to think long term.
The disposable fiber used in each
procedure earns the company approximately $250 in gross profits. 375,000
procedures each year would yield $94 million annually in gross profits.
This does not factor in the profit margin for selling the original laser
or the profits from PDT therapies.
Is it any wonder investors are willing
to take the risk on shares of Diomed with this kind of profit potential?
We have published this edition because
we believe Diomed is trading at a nearly risk free level, and now
is the time to load up. No doubt the bashing and smear campaign will continue,
and as a result lower levels are possible. However, remember that short
selling represents future buying as positions eventually have to be closed
out.
On behalf of our members we would
like to thank the perpetrators of the smear campaign. We never thought
our members would have the opportunity to participate in Diomed
at these levels, and if the company ends up prospering, profits will be
enjoyed by courageous investors.
Here is the complete text of Tuesday's
New Release For Your Review:
Tuesday March 19, 6:02 pm Eastern
Time
Press Release
SOURCE: Diomed, Inc.
Massachusetts General Hospital
to Offer Innovative EVLT(TM) Varicose Vein Treatment
ANDOVER, Mass., March 19 /PRNewswire-FirstCall/--
DIOMED, Inc. (Amex: DIO - news) announced that Massachusetts General Hospital
(MGH) plans to offer Diomed's EVLT(TM) (Endovenous Laser Treatment) for
the safe and effective elimination of varicose veins by the end of this
month. This minimally-invasive procedure takes less than one hour, requires
only local anesthesia, offers a rapid recovery and return to normal activities,
and results in no scarring.
``Varicose veins are a very common
medical problem, occurring in one-tenth to one-fourth of the general population,''
said Chieh-Min Fan, MD, a vascular radiologist at Massachusetts General
Hospital. ``The Division of Vascular Radiology at MGH is very pleased to
be able to offer an effective new treatment for varicose veins to patients
in the Boston area. The success rate from this procedure has been outstanding,
and we believe this is an exciting and potentially very beneficial treatment
for patients with varicose veins.''
The EVLT(TM) technique closes the
greater saphenous vein. This main vein runs the length of the inner leg.
If its valves malfunction, this results in the creation of varicosities.
Closure of this vein allows the branch veins that have become twisted and
varicose to shrink and lose their unsightly appearance.
``We are very pleased to have the
opportunity to work with an institution such as Massachusetts General Hospital,''
commented Wade Fox, Diomed's Vice President of Global Sales and Marketing.
``This greatly expands varicose vein treatment options for MGH's patients.''
For more information about EVLT please
visit www.evlt.com.
Diomed provides clinical modalities
and specializes in the development and distribution of equipment and disposable
items used in minimal and micro- invasive medical procedures. In developing
and marketing its innovative clinical solutions, it uses proprietary technology
and aims to secure strong commercial advantages over its competitors by
gaining governmental approvals in advance of others and through exclusive
commercial arrangements. To participate in the rapidly growing minimal
and micro-invasive medical procedure industry, Diomed seeks to integrate
disposables into its product lines. Diomed holds proprietary technology
in certain methods of synchronizing diode light sources and in certain
optical fibers. Diomed focuses on photodynamic therapy (PDT) for use in
cancer treatments, EndoVenous Laser Treatment (EVLT(TM)) for use in varicose
vein treatments, and on dental and general surgical applications. For more
information about Diomed, Inc., please visit www.diomedinc.com.
For more
information from DIOMED, Inc:
Contact:
Investor Relations
Phone Number:
+01 866-4DIOMED (434-6633)
Fax Number:
+01 978-475-8488
E-mail:
Lbruneau@diomed-lasers.com
Mailing
Address: Diomed, Inc., One Dundee Park, Andover, MA 01810
USA
For more
information from Massachusetts General Hospital,
Public
Affairs Office:
Contact:
Susan McGreevey, Manager, Science and Research
Communications
Phone Number:
617-724-2764
Fax Number:
617 724-7475
E-mail:
smcgreevey@partners.org
SOURCE: Diomed, Inc.
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