Advanced Cellular: The Future of Medicine

I spent a lot of time this spring learning about Stem Cell Technology. I now understand just enough to be completely uniformed and somewhat dangerous.

There are a couple of things I do understand about Stem Cells: 1. They represent a true potential “cure” for many very nasty diseases. 2. Stem Cells can literally “morph” diseased or damaged cells into healthy cells, and 3. The demand for effective Stem Cell therapies is going to go through the roof over the next 20 years.

I also understand there are two types of Stem Cells- Fetal and Adult. Fetal are far more robust and a bit schizophrenic. Adult are less potent, but a little more predictable.

Adult stem cells are completely non controversial. Fetal are controversial because there is a perception a future “potential life” must be lost in order to collect fetal stem cells. This is simply not the case.

Unless there is a major change in the current political climate, it would appear the recent gains made by conservatives are giving way to a more liberal approach to certain issues. This is not a political statement of postition- just an observation.

I have two offering in the Stem Cell arena- Advanced Cellular (OTC BB: ACTC), and Medistem (OTCBB: MDSM). Each offers different kinds of opportunity in the same space. Medistem, through a licensed clinic in Costa Rica, will be actually treating patients with adult Stem Cells in the near future.

Advanced Cellular, over the long term, has the more interesting science. They have demonstrated they can create Fetal Stem Cells from fertilized human eggs without harming the potential life. The fertilized egg can be taken to term.

They are going to bestarting clinical trials for their therapies later this year and into 2007- they are focusing their intial energies on eye disease, dermal repair (burn victims and other maladies of the skin), and heart disease.

Their management team reads like a Who’s Who in the Stem Cell field. It’s a remarkable opporunity in microcap form. They have been mentioned twice in NY Times articles.

I believe this stock will trade beautifully at some point in the future- whenever the market turns its fickle attention back to Stem Cells. Late this year the $3 billion California initiative to fund Stem Cell companies should clear a bunch of legal hurdles- I believe that could be the catalyst that puts a charge back into Stem Cells stocks.

In the interim, if you want a microcap position in a high risk/high potential reward stem cell situation, ACTC fits the bill. Here’s a chart:

If you want a full explanation of the expected ups and downs in this stock, please go back and read the initial presentation- you will find it in the current profiles archive section.

In short, in the initial presentation I suggested the stock would be subject to monthly swings, and therefore should be accumulated on dips. The downdrafts are generated by $750,000 worth of free trading shares that are awarded to financiers with itchy trigger fingers every month.

Therefore, particularly in tough markets like this, we can expect this stock to swoon every month. It is a very predictable buying opportunity. Notice in the chart I have circled the two moves up and down in the two months I have been covering the company. This pattern should continue up until the time the market falls in love with Stem Cell stocks again.

If you are thinking long term, and want to own a piece of a wonderfully exciting microcap stock with very futuristic technology, accumulate this one on the dips.

Comments and questions are welcome.

NeWave On A Tear

NeWave is what I would call a “sleeper” stock. It appears to be in a sleep state now, but some day it will wake up and then- watch out.

Corporate performance wise, this is the hottest little ecommerce company I know of. Last year at this time they delivered $1.2 million in revs in Q1- this year it was nearly $4 million in Q1- up 230%. More importantly, the moved from a $1.2 million loss to a $200k profit and were able to pay off nearly $1 million in debt in the quarter alone.

40,000 people signed up for their service in April, and the story just keeps getting better. This is exactly where I expected them to be one year ago, which would have saved us all a lot of brain damage.

The stock has been responding well to numbers releases, but it hasn’t been quite enough for a real breakout yet.

If they continue on their current course,otc chart, stock proiwhich I expect them to do, we can look for further increases in both revs and earnings in future quarters. Perhaps not 400%, but certainly successive quarters will show improvement. They are currently rolling out a Latino version of their service- a hot demographic target market.

Here’s a weekly chart going back to last year’s crash in the stock price:

It’s been a very slow but sure improvement since the December bottom in the stock. I don’t believe the stock price has nearly reflected the corporate achievement yet, but last summer when it was trading in the $1.50 range, the stock price did not reflect the difficulty the company was having at that time either.

I believe the stock has the potential to bounce to the 31.8% and 61.8% extension levels. Those are $.80 and $1.20 respectively. Over sold and underfollowed, but delivering big at the corporate level.

If the company continues on its current fundamental tear, higher prices are inevitable. I just don’t know what the summer will bring as far as market conditions, and I certainly don’t know when ecommerce stocks will get hot again. That will be up to the whims of Wall Street.

Against the backdrop of what looks like tough sledding ahead in the summer months, this is oneI really believe should be held for the long term from here forward. As long as the company continues to deliver, this one will have its day sooner or later.

Comments and questions are welcome.

HyperDynamics- The Market Casts Its Vote

Everyone wants to know what is going to happen with HDY- including me. I am currently in at $3.215 for 5,000 shares- down $5k.

I have been reluctant to add to my position despite the stock’s history of rebounding off low points. Here’s why- In my view this company is pretty much worthless without obtaining the drilling permits. The previously highly touted natural gas properties in Lousianna generated a whopping $134k in revs in Q1- these properties were supposed to generate about $5 million in annual sales. There is a law suit with jv partners in the Lousianna properties alleging they misappropriated funds earmarked for Lousianna towards their Guinea project. I have no idea if this lawsuit has merit- I just know their Lousinna properties appear to be one big joke so far.

The Lousianna situation pales in comparison to the problem in Guinea. In my view, the majority of the market value of this company is tied to the eventual awarding of the drilling permits for the Guinea concession off the West shore of the African continent.

The market was optimistic a revised contract and drilling permits would be awarded early in 2006. The company has not been able to deliver the goods. Earlier in the year, HDY traded extremely well when any rumor surfaced management’s presence of communication with the Republic of Guinea goverment officials.

As time goes by, the market is less reactive to these peripheral events. In fact, I believe investors have reached the point where they will only bid up this stock if the company delivers the deal. No more free ride in the stock price. That appears to be over.

Drawing on many years of experience in microcap stocks, it is my belief and conclusion that the price of this stock will continue to slowly erode as they take longer to get a deal signed. Furthermore, the longer it takes, the less likely it is to happen in my view. I have seen this time and time againin 20 years of investing in microcap stocks.

Here’s the chart:

For those looking for the ever important 61.8% retracement level to add to positions, here’s a long termweekly chart. The longer term the time frame, the more powerful the chart.

As measured byweek since last August when thestock began a rebound phase, the ideal entry point now would be about $1.92.Anysignficant drop below that level on a weekly basis would be a majortechnical negative, and suggest itisall over.

I’m going to hang in there for now. If the stock blips up on fluff information I will sell it. If the stock blips up on theawarding of drilling permits, I will buy more. If they don’t deliver something inthe next few weeks, I will probably sell it with an eye towards buying it back if the tide turns.

Comments and questions are welcome. I’msure there will be many, as this stock has developed a bit of a cult following with religious believers.

Nighthawk- Power Switch Appear To Be Off

I had a lot of optimism about NIHK in the early going, but my optimism has been replaced with a muted feeling that this company’s time is not quite here- yet.

The company has a very unique wireless remote power supply on/off system. Ituses the same technology used by pagers.

Back in January when I first looked at the company there were a number of factors which could have led to a winner. They had a huge contract with a Texas based utility they were hopeful of landing. It was awarded to a competitor. They signed a distribution deal with Verizon Wireless- nothing has come of yet it.

NIHK points out the importance of stop losses in the microcap world. My published SSL (suggest stop loss) on the stock was $.09. I pointed out in the last BLOG entry when it traded below the stop loss level, and suggested traders get out.

Now, NIHK is trading at $.06 with no signs of life. Concrete sales from the Verizon relationship is the problem. When and if they materialize the stock will be easy money. However, as we are entering the quiet summer months, I don’t believe anything big will happen until the Fall.

My guess- the stock will probably end up making a round trip back to $.04 where it will be easy money for a rebound in the Fall.

Comments and questions are welcome.

Bad Toys Trades As Value Proposition Now

Bad Toys has been a bitof a thorn in the bear’s paw. Out of the gates from $1.70, we made a high of $2.50 in pretty short order.

However, since the initial move, what appeared to be a pretty simple situation as turned into an unclear, muddy mess.

A recap- Bad Toys owns a subsidiary called Southland Healthcare- which is basically an ambulance and transportation company. Southland should achieve about $48 million in sales this year with net income in the $6 million range. Based on Q1 numbers, these targets seem realistic.

Bad Toys planned a share distribution of Southland to all shareholders- 1.3 shares of Southland for every 1 share of Bad Toys you owned. The share dividend was supposed to be distributed in January.

There were some conflicting regulatory issues surrounding the method for giving out the dividend, and it has been delayed. In the interim, the company decided go ahead and file an S1 registration statement with the SEC to take Southland public on its own.

Investors are losing patience with the process, and Bad Toys has done nothing to make believers out of shareholders. Fast forwarding to now (nearly 4 months later), Bad Toys has given no shareholders any reason to believe they can get Southland spun out into a separate public company. From time to time I call CEO Larry Lunan and ask him if they are closing in on filiing the S1- for the last two months there is always a promise the filing is imminent- however, talk is cheap and it has not happened as of yet.

Therefore, I cannot blame shareholders for becoming impatient with the process.

On the plus side, the company is delivering corporate results that suggest the stock is worth considerably more than where it is trading today if it were fully valued. They earned $.05 per share in Q1 on $10.5 million in revs. This suggests the stock is worth as much as double where it is trading now.

The recent market swoon had the stock in a light volume free fall.

The market makers used the recent market swoon as an opportunity to spook investors out of this issue at the bottom. This was one of the quickest rebounds off an oversold condition I have seen.

A few smart investors held their collective noses and pounced on the stock in the $.75 range. They were rewarded for their courage with an instant turn around in the stock price.

As far as the dividend and the spin off goes- I’m pretty sure the company is going to file the S1 reasonably soon and get the regulatory wheels turning. Once the registration process begins, we could have some information on when the stock dividend will actually be paid. Right now, it is safe to assume the stock is trading with the dividend attached. You can sell or buy with no consequence on the dividend until you hear otherwise.

I continue to believe there is not a lot of risk in hanging on to this one. I am not surprised to see investors slowly throwing in the towelwho bought it for the special situation. The company has not earned your allegiance by their actions.

My guess is they will move forward with the originally laid out program pretty soon, and it should get interesting again at that point. Bottom line- hang in there for either the value or the special situation. But, if you are losing patience, I wouldn’t blame you for selling.

BrandPartners- It’s Over For Me

BrandPartners was out with Q1 numbers earlier this week, and it took me a couple of days to get to writing my thoughts on their performance. When I looked at the numbers I simply got ill.

Here’s the long and the short of it: The corporate performance in Q1 was atrocious. Revs: $11.1 mill vs $14.6 mill a year ago. Losses $1.2 mil vs $1.8 mil gain over last year.

It is often said the market’s job is to divorce you of your hard earned gains at the point of maximum fear, the market bottom.

I have been sitting with 100,000 shares of BPTR with a cost basis of $.60 for about 18 months, and I am officially throwing in the towel.

Despite repeated promises of improving results over the last several quarters, the previously forecast results have not materialized.

As if to add insult to injury, this year the company’s compensation committee decided to drop the employee option program to $.50- they are rewarding poor performance. Sounds like a government job.

As a further slap in the face, Chairman Tony Cataldo did not even extend us the courtesy of delivering his melifluous tones to the conference call, despite a generous salary of $30,000 monthly- for what, I am not sure.

In all fairness, Cataldo was instrumental in negotiating the company’s restructuring several years ago and pretty much singlehandly put the company in position to affect one of the most impressive turnarounds in history. It was impressive. That was then, this is now.What have you done for the shareholders lately?

Also, it would seem the company’s bets on Graffico and BrandPartners Europe are flops to date. Based on management’s comments, Graffico seems to be gaining some traction, but BP Europe has yet to generate a dime in revs, despite ongoingcosts in the range of $1.2 million annually. The earnings could clearly use that money.

Since I have decided to unload my shares and take my lumps this will no doubt be the bottom. As I stated, it is the market’s mission to divorce you of your hard earned capital at the bottom. However, I have better uses for this money and feel there are better places I can put it to gain it back. In addition, my portfolio was extremely profitable in Q1 (see DXCM- a company that delivered on promised results). I could use the tax loss.

Here’s a weekly chart going back to the Fall of 2004 when the company was performing beautifully.

Since the chart measures the stock price week by week, you don’t see the capitultion down to the current pathetic price of $.28. It is probably a buy here because it represents a heck of a value if they do turn profitable for the year as CEO Brooks predicts. The long term 61.8% retracement level has given way dramatically- very bad technically.

There is risk in the mic rocap world. Sometimes I sell them simply because they act like mental portfolio cancer. Cancer is best cut out so the patient can get healthy.

Many apologies to those who are getting their brains beat out on this one along with me. All I can say is I believed former optimistic predictions of a return to profitability and growth.

If they get back on track, I can always buy it back.

Comments and questions are welcome.

NeWave Becomes Tidal Wave

NeWave simply partied like a rock star today. The stock made a 50% move on by far the highest volume day in its history, proving that the market does reward corporate performance.

The stock closed at $.27 yesterday, opened at $.34 today, and made an intraday high of $.47. The closing trade was $.405. The stock traded 3.44 million shares- which is absolutely astounding.

As astouding were their Q1 numbers- the company delivered nearly $4 million in sales and reported it’s first profit. This was up from about $1.2 in the same quarter one year ago. The market rewarded the company’s turn around approriately.

Here’s the chart:

Note the huge volume bar and the massive move in the stock. All in all, a very satisfying day for those who chose to hang in there on this former disaster, now turned microcap rock star.

Here’s my thoughts- if you want to own this streaker don’t jump in now. Late the lemmings go over the cliff. Use some common sense and let it cool down a little.

The 61.8% retracement off today’s move is $.335. If you think it won’t go back there, think again. It is a distinct possibility. A more important question- will you be paying attention when it is quiet and no one wants it?

I believe the stock is worth well north of $.40, but there will definately be profit takers and those who wish they got out before the big drop of last Fall. They will sell, and it will head back up and make them look foolish.

My thought- let this one cool off a bit. If it hits the 61.8% retracement it will be time to jump on it.

Comments and questions are welcome.

Golden Peaks- Breakout Confirmed

I love it when a plan comes together. Like a trained hunting dog fetching a bird, Golden Peaks broke out Monday perfectly on cue.

I particularly liked the trading action in the early going yesterday morning. The stock behaved admirably, trading several hundred thousand shares early in the day at the recommended entry level before breaking out to a new all time high. As I write today’s BLOG, the stock is trading at $3.30 Cdn, up nearly 14% from yesterday’s levels in the first few hours of trading.

The breakout is confirmed. Here’s the exact same chart I put in the weekend edition, fast forwarded to this morning:

The stock had traded sideways on lessening volume since Mid April. If the uptrend were to continue, the next volume surge should take the stock higher.

The volume surge happened yesterday. Why, I can’t say for sure. Most likely, there were a lot of investors watching for the breakout. Early morning volume from the weekend edition might have served as a catalyst to bring investors off the sidelines.

Now that the stock has broken out, if you don’t own it and want to, I would recommend waiting for mini retracements to get on board.

I am looking for $3.75 to $4 in the short run, much higher in the long run. As it stands right now, I would be very happy selling my 25,000 shares at $4. FYI- I own it at about $2.90 Canadian ($2.62 US).

Comments and questions are welcome.

Advanced Cell In Wall Street Journal Again

Advanced Cell charged out of the gates this AM for no reason I could figure out until now. The company put out what appeared to be a fairly benign press release, and the stock has become a good solid rebound phase on a big volume day.

As it turns out, the company was once again mentioned in a feature article in today’s Wall Street Journal.Full text below.

The market is currently obsessed with commodities- oil and gas, gold, etc. Biotechs have sufferedduring this rotation ofcapital.

As I covered in a recent edition, it might be time to start looking at companies in the biotech once again. The stocks are oversold and closing in on a bounce.

Today, ACTC bounced hard. The stock has admittedly done poorly since I started covering it. The timing was unfortunate in that I introduced the company just before the recent mega surge in oil and gold, which turned the market’s attention elsewhere and caused the stock to swoon.

Here’s a chart of our history with this stock:

As you can see, the stock has dropped from where it was after my first edition. The drop coincides directly with the surge in oil and gold.

However, if you want to own a piece of an underfollowed situation in the Stem Cell space, ACTC fits the bill. Details in the first edition I wrote on the company. Click Here to read it.

The article references human cloning. ACTC is not in the business of human cloning. ACTC has very unique technology which, through cell splitting, has the potential to produce custom made embryonic stem cells, targeted for individuals with no harm to any human reproductive process.

This little company’s achievements are important enough to garner attention from the Wall Street Journal. Here is the text of what was published today:

Cloning Efforts Resume in U.S.

By ANTONIO REGALADO and DAVID P. HAMILTON
May 8, 2006;PageB6
Marking the re-entry of U.S. researchers into a controversial medical endeavor, two American research teams say they will resume efforts to clone human embryos.

Officials at the University of California, San Francisco said Friday that they would immediately resume a cloning program, with the goal of creating new stem-cell lines that can be used to model genetic diseases.

The renewed efforts to use cloning as a source of stem cells come on the heels of a scientific fraud in which a South Korean team’s claims to have perfected so-called therapeutic cloning were found to have been faked.

Separately, executives with Advanced Cell Technology Inc., of Alameda, Calif., said they plan to announce their cloning plans soon. Advanced Cell’s vice president of research, Robert Lanza, said the company is recruiting female egg donors and is interested in creating tailored transplant treatments.

Other institutions, notably Harvard University, are seeking to conduct similar studies, although plans by researchers affiliated with the school’s stem-cell institute have been on hold for more than a year because of extensive ethics reviews and administrative delays.

The cloning of embryos is controversial because some view it as the creation of human life for the sole purpose of scientific research. Advocates say cloning may provide a pathway for making customized stem cells useful in medical research.

Cloning programs are moving forward thanks to state laws put in place to protect and regulate the research. In California, voters also approved a ballot measure designed to provide as much as $3 billion in stem-cell funding over 10 years.

UCSF began its cloning effort in 1999, but the program ran into trouble in 2001 after UCSF lost its top stem-cell researcher, Roger Pedersen, who took a job in the United Kingdom, citing a hostile atmosphere in the U.S. Advanced Cell’s cloning effort was last active in 2003, Dr. Lanza said, and stopped because of political pressures and because the company lost its source of human eggs.

Write to Antonio Regalado at antonio..regalado@wsj.com and David P.. Hamilton at david.hamilton@wsj.com

I view ACTC as a little longer term idea, but it is an outstanding way to participate in the future of Stem Cells without committing a huge amount of capital.

Please read my original presentation on the company for more details.

At this point, if you want to take a position, you need to have a longer term outlook (over one year) for maximum potential return. Comments and questions are welcome.

US Energy- Pounce Now

The purpose of this BLOG is to provide users with real time content when stocks are volatile- either oversold or overbought. It also serves as a forum for users to ask questions or share points of view. So, let’s use it.

US Energy (HYFS) dropped from $.38 to $.29 today for no apparent reason on very light volume relative to the price movement.

In short, I believe thisswoon is a perfect window ofopportunity foreither traders or long term investors. I checkedwith the company- there are no negativeunpublicized events causing the swoon in the stock.

Goingback to our theme of buying smart andaccumulating on dips the stocksthat are trading well- check out the nearly perfect 61.8% retracement in this stock:

The perfect 61.8% retracement would be $.276. At $.29, you are close enough. Also, note the volume bars circled at the bottom of the chart. Note that the up days are generally much higher volume, and the down days are lower volume. This suggests the stock is under accumulation.

I believe this company will begin to deliver much stronger evidence their fuel saving technology will be adopted in fairly short order. The stock could rebound any day.

Strong, strong, strong buy recommendation on this low volume swoon. At $.30 or less it could easily be good for a trade.

Comments and questions are welcome.

Teleplus Likely to Swoon

Recently I have been asked to share my thoughts on Teleplus- TLPE on the OTC BB. Investors are confounded by continuing positive fundamental developments which suggests the stock is undervalued, but it seems to be going nowhere.

I have taken some time to review the pending registration statement for the shares underlying the $9 million in convertible debentures the company has filed. If you look at the SEC filings, you will see several versions. You canidentify them as “SB-2/A” if you want to have a look for yourself at SEC.GOV.

In my view, despite ongoing strong fundamental growth, this stock will be going nowhere for sometime to come, and could have significant downside if the note holders become aggressive sellers.

Here is the key phrase out of the Registration Statement:

The secured convertible debentures are convertible at the holder’s option at a conversion price equal to the lesser of (i) an amount equal to $0.275 or (ii) an amount equal to 95% of the lowest volume weighted average price of our common stock for the 30 trading days immediately proceeding the conversion date. The debenture is secured by substantially all our assets.”

TLPE is registering nearly 300 million shares on behalf of the noteholder. This note holder can sell all the stock is chooses to at a 5% discount to the market, no matter how low the market goes.

This could become what is known as “Death Spiral” financing. As such, it would be my expectation that this stock is going nowhere for sometime, and could even begin to collapse and spiral down out of control if the noteholder wants to get aggressive.

To learn more about the toxic nature of convertible debentures like this one, you can Click Here to visit the description at the SEC Web site.