Wednesday, November 30, 2005


Some nice Insider Buying today in ITWO. Ten thousand shares each by one Director and the CEO and 22,000 shares by another Director, for a total of almost $600,000 worth of stock. ITWO is down from $25/share in August, trading at $13.25 at today's first filing, $13.50 when I bought in and as high as $13.94 in it's initial "pop." Maybe more to go.

Elsewhere, in our Bird Flu Basket, BCRX is up 33%, today, and that's on Roche news unrelated to its Bird Flu exposure.


Tuesday, November 29, 2005

Buying Opportunity?

One of our Bird Flu Basket holdings is Hemispherx Biopharma ("HEB"), courtesy of Ilene's research. Today HEB announced a Research Agreement with the Canadian Department of National Defence (their spelling, not ours). Although the stock is up 3% on the news, it may be that the news is worth a whole lot more then 3%. If so, it spells buying opportunity. I added to my position already and may add more after I post this. Good Luck.


Monday, November 28, 2005

NNVC - Update

NNVC seems to have found itself in a consolidation between about 90 cents as support and 1.20 as resistance. We continue to monitor all things bird flu for which the Internet in general and Google in particular have been incredibly useful. We have also maintained our correspondence with NNVC's management via numerous back and forth e-mails.

Back when we first became shareholders of NNVC, circa 10 cents a share, we felt the risk/reward assessment of the company was very highly in our favor. The market cap was low and there was no interest in the stock, even though it was a bird flu play. No one knew about it, yet. Now at over $1.00 per share, we feel the risk/reward is less attractive and we have less of a feel for which way this stock will move. Many of the other bird flu stocks we have been following have leveled off, though they do trade with great volatility.

NNVC has been receiving a lot of new investor attention and bird flu concerns are increasing at an exponential rate. Our questions to management are now are based on some very specific, science-based issues -- which have not been adequately addressed -- though we are still trying to get more specific answers. It may be that the answers to our questions would be inconsistent with the longer-term viability of NNVC as a biotechnology investment.

Although I am keeping most of my NNVC shares for now, I am taking some off the table above $1.00 a share and would even consider adding more under 75 cents, if it were to fall that far.

Bottom line here is that I'm a little less certain of NNVC then I once was and want to express that new sentiment to my readers, many of you who are watching this stock as closely as I am. If NNVC reaches my $10.00 target, I'll still do fine. But if it is going to drop back under $0.50, or worse, it would be nice to have had some NNVC cash off the table, to throw back into it, or even something else, as circumstances dictate.


Monday, November 21, 2005

Beating The Market

The following article appeared this past weekend in the NY Times. More evidence that the "random walk" theory of not being able to beat the market in the long run is erroneous. In fact, based on Renaissance's track record and to a much lesser extent, the work we've been doing day-trading the past two years, the opposite seems to be true. You can beat the market, if you are of the mind to do so.

NYTimes: $100 Billion in the Hands of a Computer


PEOPLE ask me all the time: What's your secret?" James Simons said. We were sitting in an office in Manhattan that Mr. Simons uses when he's not at the Long Island offices of Renaissance Technologies, the money management firm he founded in 1982. He was wearing an elegant shirt and tie, and loafers with no socks. He took a drag from a cigarette, the second of three he would smoke in the course of a long interview.

I had indeed come to ask him what his secret was. In the hedge fund world, that's what everybody wants to know.

Mr. Simons, 67, who rarely talks to journalists, is hardly a household name like Warren E. Buffett. But Mr. Simons, who got into the hedge fund business after abandoning a stellar career in mathematics, has a track record that is jaw-dropping. This summer, word leaked out that he was starting a new fund - people took to calling it the "$100 billion fund" because its marketing materials say that it could conceivably grow to that enormous size. Not surprisingly, that has caused Wall Street types to be even more curious about him.

Here are Mr. Simons's numbers: from 1990 to 2004, Renaissance's primary hedge fund, called Medallion, has delivered annualized returns of 33.21 percent. (The Standard & Poor's 500-stock index has returned, on average, 10.98 percent during those same years.) Since the end of 2002, the fund, which has $5 billion under management, has disbursed $4.9 billion to its investors - with another $1.5 billion to be delivered at the end of this year.

And these returns are after Medallion's 5 percent management fee and 44 percent share of the profits - surely the highest hedge fund fees in the land. Medallion's returns, and its fees, have helped make Mr. Simons a very wealthy man, with a net worth that Forbes estimates at $2.7 billion.

When I showed Mr. Simons's returns to a hedge fund friend, he looked startled. "Nobody has numbers like those," he said. But here's the real eye-opener: no one outside the firm's 200 or so employees has a clue how he does it.

Medallion, you see, is a quantitative fund. In quant funds, trading activity is generated by complex computer models rather than human judgment. Most quants are secretive about the algorithms that drive their models; after all, that's their investing edge. But of the handful of big-time "black box" investors, as they're often called, Mr. Simons's box may well be the blackest.

HERE'S what we do know. Medallion's portfolio contains literally thousands of stocks and other financial instruments that it trades in rapid-fire fashion. The firm's scientists are constantly searching for repeatable patterns, and other signals, in the enormous amounts of data they compile. The computer models they devise tell them when to make trades based on those signals.

As Mr. Simons put it - and this is about as specific as he would get - "Certain price patterns are nonrandom and will lead to a predictive effect." He also told me that Medallion sticks with highly liquid securities that trade in public markets around the world. Why? "Because there is a lot of data on such instruments, and we're very statistically oriented," he said. He stays away from exotic derivatives.

Not even Mr. Simons's investors know much more than I've just described. "We trust Jim and we think he's smart," said one longtime Medallion investor. "So we stopped caring what the computer was doing." When this investor began describing Mr. Simons's investing approach, he admitted he was guessing.

Mr. Simons shrugged when I suggested to him that his firm's lack of "transparency," as they say in the business, was bound to make people nervous. Humans fail in the market all the time, but somehow we are willing to keep giving our money to human beings to manage because we understand investing based on human judgment. Or at least we think we do. But black box investing feels different. It feels scary somehow, precisely because it is not something most of us can understand.

"How any great investor does it isn't in the least obvious," Mr. Simons responded. "How we do it isn't any more mysterious than how a great fundamental investor does it. In some ways it is less mysterious because what we do can be programmed." Then he stopped, took another drag from his cigarette, and let out a small chuckle. "Well," he conceded, "it's less mysterious to us."

Mr. Simons wasn't always a quant. A former crypt analyst - a code breaker, that is - he did important work in mathematics that helped lay the foundation for string theory. When he began managing money in the 1970's, he did it the same way most investors did: he used his own judgment. "At first," he said, "I didn't think about investing in a scientific fashion. But I was trading currencies, and it gradually occurred to me that there might be some way to create models that would allow you to predict currency movements."

Although Mr. Simons and a partner made an absolute killing in the currency markets the old-fashioned way - they made huge bets that turned out to be right - he began surrounding himself with scientists who developed models for all sorts of tradeable securities. "By the end of the 1980's," he said, "I was a model man, and didn't want to do fundamental analysis." One advantage, he said, is that "models can lower your risk." Another, though, is that "it reduces the daily aggravation." With old-fashioned stock picking, he said: "One day you feel like a hero. The next day you feel like a goat. Either way, most of the time it's just luck."

Indeed, trading the way he does, making thousands of small trades aimed at capturing small price movements, doesn't generate the kind of "10 bagger" that investors love. But when done well, quant investing is less likely to have the kind of disaster that is always the danger when one bets big on a stock.

To those who point to Long-Term Capital Management as an example of the dangers of black box investing, Mr. Simons's defenders point out that his fund has far less leverage than Long-Term Capital, and that in any case, while Long-Term Capital had several Nobel laureates on board, human bets were what caused it to go awry.

Clifford Asness, another well-known quant hedge fund manager, said that while he knew no more about Mr. Simons's methods than anyone else, "It's hard to believe that there isn't a measure of safety in Jim's approach.

"Presumably, he's got a highly diversified portfolio, high turnover, and he's capturing small inefficiencies. It's hard to lose a ton of money doing that. It is always possible that someday his models might stop working. But that's different from 'blowing up.' "

"You know," Mr. Asness added, "human beings have a black box, too. It's called the brain."
As for the new "$100 billion fund," Mr. Simons was even more constrained than usual, thanks to regulatory restrictions that limit what he can say publicly while the fund is raising money. People are buzzing about it nonetheless, for it seems to be a major departure from Medallion. Medallion's investors were almost all wealthy individuals; the new fund, called the Renaissance Institutional Equities Fund, has a $20 million minimum investment and is aimed at institutions. It has a much lower fee structure. It will invest in - or sell short - only publicly traded equities. Instead of making rapid-fire trades, it will be much closer to a buy-and-hold portfolio. And so on.

In one critical way, though, it is similar to Medallion. As the marketing document, which I obtained from a person unconnected to Mr. Simons, put it: "The company's risk control, variance and covariance estimation, execution techniques, slippage models, and predictive signals are all derived from those employed by the managing member in trading the Medallion Funds."

In other words, Mr. Simons believes that computer models similar to those that have worked for Medallion will also work for a fund that can hold $100 billion worth of stocks over long periods of time. It is absolutely audacious.

What interested me most of all was: why? At an age when most men are contemplating retirement, with more money than he can count, why was Mr. Simons still at it? "I enjoy the challenge," he replied.

He then began describing a demonstration he saw recently of a new nuclear accelerator at the Brookhaven National Laboratory, where he is on the board. Two atoms hurtled toward each other, colliding with great force. "A huge number of particles are thrown out," he said, "and the job is to analyze everything that results from the collision."

"Watching the spray of particles on the screen made me think of the stock market," he continued. Every trade, even of a hundred shares of a company, affects every other trade. And every day there are thousands upon thousands of such trades, all of them affecting the rest of the market. His work, as he sees it, is to analyze that incredibly complex mosaic and try to figure out how it all fits together.

"The subject may not be the most important in the world," he concluded, "but the dynamics of the market are really interesting. It's a serious question."

I suddenly understood the motivation behind Mr. Simons's new fund. He's doing it because he wants to see if it can be done. Once a scientist, always a scientist.

Thursday, November 17, 2005

NNVC Valuation

If NNVC were to reach the valuation of Genentech, based on the current float each share of NNVC would be worth $5,000.

If NNVC were to reach the valuation of Amgen, based on the current float each share of NNVC would be worth $5,000.

If NNVC were to reach the valuation of Amylin, based on the current float each share of NNVC would be worth $200.

If NNVC were to reach the valuation of the average Biotechnology stock, based on the current float each share of NNVC would be worth $70.

NNVC is trading today at $1.15.


Wednesday, November 16, 2005

NNVC Sentiment

Here is a sampling of sentiment toward NNVC from a few message boards. A lot of mindless hype, but maybe someone knows something and is guising it as mindless hype. Brilliant!



I have previously posted that i have orders in around $20 and $35, however I am taking only up to 10% off the table , because if they are only partially correct in their confidence about the efficacy in their own labs, this stock is destined north of $100. I know John Pierpont Morgan said when asked the about the secret of how he acquired tuch geat wealth hi he answered , " because I always get out too early " and that makes sense , but when you have a clear breakthrough getting out too early would haunt you for years or decades erasing any satisfaction you get from taking a large though sure profit. SAy the stock goes to $100 or a mere $10 billion market cap and you get out at $7 with a huge gain. How would that make you feel? Awful? I prefer to pull just my seed money out and not miss the mind nubming potential of this BREAK THROUGH TECHNOLOGY. HECK IF IT IS ONLY 10% OF WHAT ANIL DIWAN PREDICTS IT IS A $10 BILL DOLLAR COMPANY.


There are lots of "rules" for trading penny stocks. Notwithstanding those rules, once in a blue moon, an extraordinary opportunity presents itself. I think NNVC may be such an opportunity.

The bottom line, of course, is whether the science works (a question to which there is yet no definitive answer). However, if the science does work, Katie bar the door!

I can't quantify the chances of the science being successful, but I am impressed by the people involved, and what has been achieved to date.

If NNVC flops, my life will go on as before. If NNVC zooms, it's a different story. I like the odds enough to make, for me, a substantial investment here.

So, ala Clint Eastwood, I ask myself: "Do you feel lucky, punk?" And the answer is "yes."


For a .03 cent stock to run over a buck and hold steady between .80 and .95 on little news tells you someone does know it works.
If not you would think we would be back around .25 or lower

All hype aside if the next tests are succesfull this could pop between 5 and 10 dollars in a day.

Its possible,and yes 100 per share is possible too,if it works.


NNVC is focused on viruses - that is their thing.

The basic development covers cancer as well! I will follow THAT aspect carefully should our testing prove the efficacy of the development on viruses like HIV/AIDS and avian flu.

Should NNVC succeed in the virus field, cancer will be next, IMO!

Will NNVC be fortunate to enter that field as well? Could be. And the future would expand 10 fold, IMO.

Perhaps Theracour will license the cancer stuff to another company. That will prove interesting should it not be NNVC. At this moment I am not aware of any company having the license for cancer. I am a bit puzzled at that. Perhaps Theracour is waiting to see how the flu stuff goes and perhaps, as well, so as to focus all resources on the flu side, is concentrating on flu ONLY at the moment.

My point is to EMPHASIZE the wider application of the patented development to areas other than just viruses.


NNVC vaccine possible

Diwan says that if the FluCide-I trials are successful,
it will not be that difficult to create a vaccine
for Avian flu.

A potential bonanza
It is clear that if any one company were to
develop a highly efficacious vaccine against Avian
flu, the financial rewards could be enormous.
“Just as penicillin brought on a major revolution
in antibiotics, the first viricide will create a
similar revolution,” Diwan predicts. “Just imagine;
a vaccine that attacks and destroys the virus
particle itself.”

Sunday, November 13, 2005

Mid-Term Exam

What, you thought I was kidding? Here it is, open book, sixty-minutes "honor code" time limit:

1. Give an example of how Daytrading can make you money in the stock market.

2. Give an example of how a Bird Flu Basket can make you money in the stock market.

3. Give an example of how Insider Buying can make you money in the stock market.

4. Give an example of how Bullies with Guns can make you money in the stock market.

5. Give an example of how The Deiphosophist can make you money in the stock market.

Extra Credit:

Identify the single best stock to buy on Monday's open and explain your reasons including any relevent calculations, equations and/or links.



Friday, November 11, 2005

Putting It All Together

Here is a sumamry of topics we have covered this semester. It is from this list that I will be creating your mid-term exam. I suggest you review these topics and associated blogs. Remember, it's your understanding of the course material that I am most interested in, not your memorization of my lectures.

!. Elements of Daytrading
2. Bird Flu Basket
3. Insider Buying
4. Bullies with Guns
5. The Deipnosophist


Wednesday, November 09, 2005


Lest I be accused of only posting about NNVC when it's up 20%, here's my contribution when its down 20%. By the way, this decline is a buying opportunity and I have a bid in slightly under current prices to add to my position. I may move it up before the close, depending on, well, just depending.

The article below was posted today on Silicon Investor and provides a little background on just what we have in this stock and company.



Indian scientist Dr Anil R Diwan develops bird flu drug

NN Sachitanand
Wednesday, November 09, 2005 21:32 IST

A novel medication called a nanoviricide, being developed by Westhaven, Connecticut-based NanoViricides, Inc, is likely to prove much more efficacious in treating patients infected by the deadly Avian flu than current favourites like oseltamivir (TamiFlu) of Roche and zanamivir (Relenza) of GlaxoSmithKline.

The key intellectual property on which the new drug is based is a flexible nanomaterial that contains an encapsulated active pharmaceutical ingredient and, using a ligand , targets it to a specific type of virus.

There is an Indian connection to this. The inventor of this nanomaterial is Dr Anil R Diwan a B.Tech from IIT, Bombay and PhD from Rice University, USA. He holds a US patent on his older polymeric micelle technologies, with his colleagues at University of Massachusetts. He continued to work further in the field, to develop nanomaterials that are capable of multi-specific multi-targeting of viruses, and at the same time capable of encapsulating active pharmaceutical ingredients (API) in industry-leading payload capacities. This new work has resulted in nanomaterials called “TheraCour” (therapeutic courier).

NanoViricides, Inc., where Dr Diwan is the President, has a full license to TheraCour technologies for developing nanotechnology-based targeted anti-viral therapeutics. The company went public earlier this year when it was acquired by Miami-based, Inc. In an e-mail interview, Dr Diwan pointed out that the existing drugs for treating Avian flu are not efficient because they do not work for all of the patient population, but only in a fraction of patients, they lead to a multiplicity of resistant strains in anywhere from 1% to 10% of patients or more, and with influenza, reassortment is an additional scary possibility when poorly efficacious drugs are used.

Diwan believes that FluCide will be far more effective than TamiFlu, for both prophylaxis and treatment due to its comprehensive destruction of the virus particle and being safely metabolised in the body after accomplishing the job.

Immunotherapies like vaccines require the body’s immune system to be in a very good state and require the body’s immune system cells to participate in clearing up the infection. The antibodies only ‘tag’ the virus to identify it to the defence system. FluCide does not require the body’s immune system to participate at all. It is expected to work via multiple concerted mechanisms. It first binds to the virus particle like a Velcro tape, rather than through a single point attachment like other influenza drugs. This causes FluCide to completely envelop and engulf the virus particle, so that it can no longer infect a cell.

Tuesday, November 08, 2005

Truth in Advertising

Jim Cramer is all over the place lately, TV, Radio, RealMoney Blogs, CNBC specials and apparently yet another book. One would think he adds something to the quest for the holy grail of stock trading and/or investing. His legion of followers seem to either love him or hate him. Why the disparity of opinion? Rank ignorance. Let's fix it right here, right now.

Cramer runs a trading service called Action Alerts PLUS. Lets use this service to evaluate Cramer, since the only true objective test of his expertise is his actual documented performance.

Year-to date, the S&P 500 index is up 0.50%. Against that benchmark, Cramer's YTD return is up 4.38%.

Let's look at this two ways. One, Cramer is beating the market averages by about 9 fold. (9 X .50 = 4.5%) The other way, the way I look at it, is that for all his bluster, the guy is barely beating out a 5-year bank CD.

'Nuff said.


Saturday, November 05, 2005

Short-Term Stock Trading Ideas

Based on my private e-mail, there is a lot interest in successful stock trading. I can tell you until the cows come home about insider buying, but nothing I say is going to ring as true as the numbers I am about to provide below. These are all trades generated last week on insider-buying and nothing else. All entry prices are based on the close of the day the trade was published to the public on the SEC web site. They were highlighted by one of my favored services, Insider Cow ($25/mo). No one has to day-trade nor give up a day job to have taken these trades.



The average return last week for these four trades was 17.1%. That's not to say you could exactly duplicate these trades, although I see no reason why not. Nor is it to say that you will always get these kinds of returns, although after a year of insider-trading I am convinced that it is one of the easiest and most consistently profitable short term trading methodologies I have ever come across.


Friday, November 04, 2005

Our First 10 Bagger!

NNVC has hit 99 cents this morning, making it our first 10 bagger since introduced in this post at the end of August:


What to do now?

Anything you want. But I'm holding my core position for a lot more then 99 cents. Taking your origanal stake off the table is not a bad idea, but I do believe we are closer to the beginning of the run then the end.


Wednesday, November 02, 2005

Discovery Laboratories Inc. (DSCO)

A few days ago my trading partner Ilene suggested that we add Discovery Laboratories (DSCO) to the Avian Flu Basket.

Ilene's analysis was based on her reasoning that DSCO might be serendipidously involved in the development of a drug, Surfaxin, that could be used in the treatment of Acute Respiratory Distress Syndrome("ARDS"), a condition, often fatal, that may be caused by bird flu. If it is found that Surfaxin is effective in ARDS, then it should similarly be useful to treat avian flu. DSCO is currently engaged in a clinical trial using Surfaxin for ARDS (caused by other insults to the lung besides avian flu infection).

We posted our thoughts on Silicon Investor and on the Yahoo message board for DSCO, looking for some feedback from others who follow the company. Our efforts have paid off, as based on what we have uncovered in the past few days, we are adding DSCO to our Avian Flu Basket.

Here is a link to Ilene's original post on Yahoo and a series of outstanding responses from some very informed individuals, the final three of which simply hit the ball out of the park on this one:

DSCO & Bird Flu

This brings to ten the number of stocks on our Avian Flu Basket.


Tuesday, November 01, 2005


NNVC has begun preclinical studies on one if it's products, Flucide-I, an anti-viral. This was expected, nonetheless, is big news. I added to my NNVC position yesterday at 55 cents.

NanoViricides Has Begun Preclinical Studies For Their First Anti-Viral Drug Targeted Against Bird Flu

Monday October 31, 8:00 am ET

Studies Are Being Conducted at the Beth Israel Deaconess Medical Center, a Teaching Hospital of Harvard Medical School

WEST HAVEN, Conn.--(BUSINESS WIRE)--Oct. 31, 2005--NanoViricides, Inc. (Pink Sheets:NNVC - News), today announced that it has commenced preclinical studies for its anti-viral drug FluCide-I(TM). The studies are being conducted at the Beth Israel Deaconess Medical Center, a teaching hospital of Harvard Medical School, under the direction of Dr. Krishna Menon. Dr. Menon, the Company's Chief Regulatory Officer, explained that nanoviricides are complex materials. "We have started working on the basic safety of the polymer under a maximum tolerated dose protocol in mice. In the second part we will study the ligands that target FluCide-I(TM) to H5N1 and common influenza viruses. Thereafter, we will study the efficacy of FluCide-I(TM) itself against H5N1 and common influenza."

Dr. Anil Diwan, President, explained that, "if successful, the relevance of nanoviricides can be compared to the discovery of Penicillin, the very first bactericide. Prior to antibiotics, bacterial infections were treated with patient isolation, chicken soup and Vitamin C. Current anti-viral medicines can at best only partially inhibit the virus from multiplying in the human body. Although we cannot make claims of certainty yet, after we get good results from these studies we will be able to say that we have developed a true virus killer."

The Company is encouraged by the recent statements from high level international officials and health ministers of different countries concerning the urgency of developing effective vaccines and treatments and believes that a rapid regulatory approval of FluCide-I(TM), is possible should these studies be successful.