KAL erupted up the charts today, and I have no idea why. If you are still holding this stock after the long, hot, declining summer, this is one that has never recovered. My stop loss for traders was $1.20. Therefore, if you held it down below that level, you are defined as a long term investor.
As a long term investor you have to be pretty excited today. This is one of the exciting things about biotech- you never know when you will have an explosion for whatever reason. It is highly unpredictable.
Here’s the chart from about 1/3 of the way through the trading day:
As you can see, the stock was hovering around $.75 two trading days ago. Today, it simply blew up the charts on the highest volume in many months- it has already traded 1/2 million shares at 9 AM Pacific.
I have no idea why- there is no news from the company, and no SEC filings in the EDGAR system to explain the move. Perhaps a peer review in a scientific journal.
In a case like this, there are a number of possibilities- perhaps rumors of a potential buyout. A pending regulatory event- good clinical results to be released.
Or, sometimes in a case like this it is technical. Some hedge fund could be short the stock, and is being bought in against their will due to some failure on the funds’ part.
The company could put out news, or it might not. We might never know. However, I will take it. Gladly.
Comments and questions are welcome. If anyone knows what is going on here, I’d sure appreciate some 411.
It’s pulling back. Both Etrade and Ameritrade refused to let me buy this stock online and required me to call a broker to purchase this stock. Is there something fishy??
Editor: Amazing- why would they lock you out from buying a stock on the American Stock Exchange?- do you mean they wouldn’t let you buy it at all, or they wouldn’t let you buy it electronically? I am going to call the CEO and let him know about this. Â
They wouldn’t let me buy electronically and wouldn’t even tell me a reason. I am traveling in Asia now. Difficult for me to call their brokers. Not sure what they want from me before I can place a trade. Anyway, now that it went back down to $0.8 so I think I will wait to see what happens next. BTW, did you get any explanation for the big surge?
Editor: No, I have not. I have some time budgeted on Monday to try to reach the CEO to let him know about what happened. It bears watching now. My guess- someone sold stock they shouldn’t have and were bought in against their will. Â
What about the issue of shares? Will it probably go down like the other stocks?
Editor: It depends on the terms. Dilution is rarely favorable, but sometimes you can be right in along with the big money price wise. I noticed on the KAL deal they issued a bunch of warrants at $.75- the stock is not trading much higher than that. I don’t know the terms of the preferred.Â
Infact it happened to me as well – could not
buy electronically, just 2 weeks ago on e*trade. I had to phone up e*trade to buy, though commision was waived. Most weird indeed. Hope this does not happen when I try to sell, for the delay could be costly.
Do try and find out from your contacts.
Editor: Who knows about that stuff. Crazy.
What about an update about KAL?
What about these stocks: FMLY, VTSI end TLPE? Is it safe, in your opinion, increase the position?
Editor: I really don’t communicate with them anymore. It’s simply a very long term hold with some great technology and real upside. Those other three are long gone- I told everyone to sell and I dropped them a long time ago- all losers. The current offerings are doing very well.
Dear Editor
I actually didn’t recall (in any of your blogs) that KAL is no more
followed. Me? I haven’t given up on it, and I feel that you need to
look at it again.
One thing, though, I can’t understand its action today, given the
news that was released at 07:00 ET. I’ll however be most obliged
indeed for your view on todays news.
Kind regards
Simon
Editor: Simply, a great very long term (meaning two years or more) hold. However- here’s the problem- FDA clinical trials are very expensive. About every 6 months these guys raise another $10 million, each successive financing cheaper than the last – the most current at $.50. Unless these very small biotechs get really hot, the stock could keep just grinding lower for some time. The market is responding to the latest financing.