Wednesday, October 12, 2005

Vical-Part II

Vical announced this morning a private placement of $22.2M in stock priced at $4.80 per share. The price is based on a 30 day average of closing prices, which unfortunately for those of us who bought in yesterday, was way below recent price action, causing about a 15% decline in value of our VICL holdings today.

What to do?

I doubled up my VICL positions today, bringing my average cost basis down. My thinking is that despite the drop in stock price, that this is longer term good news for VICL which is increasingly in the forefront of vaccine technology. The money bolsters VICL already strong balance sheet and the offering was sold out, meaning the deep pocketed institutional investors jumped at the opportunity to add to their holdings. In other words, my timing was off by one day, but my underlying analysis remains bullish, if not more so.

This also highlights the advantage of a basket approach in ideas like Avian flu and biotechnology stocks in general. Although a 15% haircut hurts like hell, it's more or less a paper cut, having minimal effect on our basket as a whole.

Anyway, when NNVC hits $10 a share, none of this will matter.

A

8 comments:

Ranter said...

which one of the flu picks have the most potential ???

I got 10K of NNVC when it was 87 cents, should I hold on until it is 10 ...

Allan said...

I hope you meant $0.087 cents.

As for the most potential, I can make the case for any one of them, ergo the, "basket."

A

Ranter said...

yes, 0.087 ...

I will check out the others ...

how come the verification word is getting longer and longer

Anonymous said...

Allan,

Your commentary is helpful and encouraging. I hope you are right in your analysis, and I have more than a hunch that you are. Though with the market always full of surprises the only thing I think I count on unfortunately is being wrong, and regularly.

You've explained the cause of the 15% haircut in VICL but what about some of the other items in the basket? BCRX down more than 11%; CRXL down more than 6%; HEB down more than 5%. What might their story be?

If I'm reading between the lines of what you've written correctly, it seems that, though you're an active daytrader, you have been holding this basket overnight day after day without liquidating before the market close like you would with your day trading positions. If that is the case, why do you do that? Why wouldn't you just click the mouse a few times and liquidate shortly after you read the graphs and see the stocks are about to take a big dive? Then you could put more of the same in your basket at, say, noon, or tomorrow, or whenever else.

Thanks for your time and advice.

Ali

Allan said...

Why wouldn't you just click the mouse a few times and liquidate shortly after you read the graphs and see the stocks are about to take a big dive?

Tried that for 20 years or so, didn't work. Took that long to realize it. The problem is you get lucky a few times and confuse luck for skill. I can't really post much about my day-trades as many are over before I can compose a Blog about them. B&H ideas allow me to collect my thoughts and post them here. If we're lucky (there it is again), we'll make some money along the way.

A

Ranter said...

I think it is just normal profit taking for some of the stocks in the basket

Anonymous said...

Thanks for the answer Allan. I'm glad I can learn from your twenty plus years of experience in my less than one. Is there ever anything but regret in trading? It seems to bring out the worst in me. If my holdings go down, I regret that I was holding. If they go up, even spectacularly as many of your avian picks did today, i regret that I wasn't holding more.

So, what you think, should we make our baskets bigger and fuller, or should we consider cashing in a bit? If you plan to make your basket bigger and fuller, is Monday as good a day as any, or should we wait for an expected pullback.

Thanks.

Ali

Allan said...

If you plan to make your basket bigger and fuller, is Monday as good a day as any, or should we wait for an expected pullback.

Ali, if you didn't average down yesterday, what makes you think you could at the next pullback? The market is always trying to psyche you out of your hard earned money. Look at the TV, Bird Flu is all over the place and before this is over, what you paid to get into the sector shouldn't make much of a difference at all. If I'm right on that, relax, buy at will and enjoy the ride. If I'm wrong, what are you doing listening to me anyway?

A