Dear New World Investor:
As we come to the end of the year, company news flow shrinks sharply. They enter a blackout period when they can’t buy back stock and don’t want to comment on how their December quarter is going, unless it is much better or much worse than what they’ve said previously. With the companies mum, brokerage firm conferences stop.
At the same time, Wall Street gets ready for the annual tsunami of pension fund cash from corporations – yes, that’s still a thing – by buying stocks before their customers can. All eyes turn to bigger news, primarily economic. Since last Thursday we’ve gotten November payrolls, the November Consumer Price Index, and a Fed meeting – all good news for stocks. Let’s dig in…
November Payrolls
Payrolls added 199,000 versus the +180,000 forecast and +150,000 in October as striking auto workers and Hollywood actors came back to the workforce. September and October were revised down again – the 11th straight month – but this time by only about 36,000. The Bureau of Labor Statistics models may finally have caught up with reality.
The unemployment rate dropped from 3.9% in October to 3.7% while the worker participation rate increased slightly from 62.7% to 62.8%. Annual wage inflation, which the Fed watches closely, held steady at 4% in November.
The message to the Fed and the markets was the economy is not falling apart but also not wildly overheating. Soft landing, anyone?
November Inflation
The headline year-over-year Consumer Price Index declined to 3.1% and the core (ex-food and energy) came in at 4.0%, both as expected. The entire rise of the Core CPI was due to cars and housing.
Click for larger graphic h/t @fundstrat
If Shelter was 0%, both the headline and core month-over-month CPI would be way negative . But Shelter shouldn’t be zero, it actually should be negative to match real rent deflation in November. In other words, we already have deflation in November but it is masked by the badly lagging Shelter cost data. Chairman Powell knows this and that the services figures are distorted by car-related services. Powell explicitly acknowledged that non-housing service disinflation progress has become significant.
The November CPI shows why the Fed could cut rates, but the shelter component is still giving them an alibi to keep rates high. As I’ve been saying, “high (but not higher) for longer.”
The Fed
Chairman Powell, December 1: “It would be premature to … speculate on when policy might ease.”
Chairman Powell, December 13: Rate cuts are something that “begins to come into view” and “clearly is a topic of discussion.”
Is this an election-year rate cut projection? I don’t think Powell cares about elections, the level of the stock market, or anything but inflation as measured by the core Personal Consumption Expenditures Index and the value of the dollar relative to other currencies.
So on Wednesday, as I expected, the FOMC held rates steady at a 22-year high, extending the pause, and retained a weak tightening bias in the statement. They now expect inflation to fall to 2.4% next year – down from 2.5% forecast in September – and drop further to 2.2% by 2025.
The Dot Plot shows a median projection of three rate cuts in 2024. One FOMC member expects six rate cuts in 2024, four see four cuts, six project three cuts, five see two cuts, one thinks one cut, and two expect no cuts. That is the most confused “year ahead” FOMC we’ve seen in years.
Click for larger graphic h/t @NickTimiraos
After the dovish FOMC meeting, Fed Funds Futures are now pricing SIX rate cuts in 2024. That’s a total reduction of 150 basis points to a range of 3.75% to 4.00% that is expected to begin in March. I think that’s nuts, but so much for the Dot Plot suggesting three cuts and the futures market caring at all.
As I see it, real interest rates – the amount by which they exceed inflation – are the highest in this cycle while Quantitative Tightening continues. What else could Powell want? He loves sounding dovish when he isn’t – it keeps Senator Warren and her ilk off his back. As he said about the last mile of getting inflation down: “We kind of assume it will get harder from here, but so far it hasn’t.”
Powell made it clear the Fed wouldn’t wait until inflation gets all the way down to 2% to start cutting.
“It would be too late,” he said. “You would want to be reducing restriction on the economy before you get to 2%…so you don’t overshoot.”
Personal Consumption Expenditures Index
The Fed’s favored inflation measure — the core Personal Consumption Expenditures index — was 3.5% for October, down from 3.7% in September and 4.3% in June. The November PCE announcement comes December 22. Based on the November CPI and PPI, headline PCE inflation likely declined last month. Core PCE inflation is projected to have been a very mild 0.06% in November. This could lower the 12-month core PCE index to 3.1%. The 6-month annualized rate would fall to 1.9%, below the Fed’s target.
Click for larger graphic h/t @NickTimiraos
The news of lower inflation and a strong economy is being met with more optimism from the market now. We have not seen this before in this cycle – fear of the Fed after every bit of good news has been replaced by hope for a stronger economy. The latest University of Michigan consumer sentiment survey showed consumers expect inflation to sit at 3.1% in a year, a big decrease from last month’s expectation of 4.5%. That’s the lowest since March 2021 and only slightly above the 2.3% to 3.0% range seen in the two years before the pandemic. Expectations for long-run inflation fell to 2.8%, down from November’s 3.2%, which was the highest reading since 2011.
Click for larger graphic h/t @OphirGottlieb
Market Outlook
The stock market has been up for seven straight weeks. After the Fed meeting on Wednesday, Powell’s press conference unleashed historic devastation on the net-short hedge funds. There were margin calls galore into the close. The venerable Dow Jones Industrial Average closed at a new all-time high as it surpassed 37,000 for the first time ever. The S&P 500 added 2.9% since last Thursday and is up 22.9% year-to-date. Not bad!
The Nasdaq Composite also gained 2.9% and is up a stunning 41.0% for the year. Thank you, AI! The SPDR S&P Biotech Exchange-Traded Fund (XBI) climbed 6.2% to tell the world the biotech bear is over (see chart below). It is only up 3.0% year-to-date, but it’s on a roll. The small-cap Russell 2000 soared 7.1% to close over 2,000 and is up 13.6% in 2023. 2024 should be much better.
The fractal dimension signaled a new uptrend a few weeks ago and nailed it. We probably have six to eight more up weeks before the inevitable next consolidation.
Top 5
Changes this week: None
Near-Term – chronological order
SCYX – ScyNexis – Data releases and resolution of the manufacturing problem
TGTX TG Therapeutics – Rapid recovery from overdone pullback
EQT EQT –natural gas price rebound
USL United States 12 Month Oil Fund, LP – crude should rise quickly
FCX Freeport McMoRan – copper shortage
Long-Term – alphabetical order
EQT EQT – largest US natural gas company
GBTC Grayscale Bitcoin Trust – Bitcoin is headed for $100,000
NVTA Invitae – the winner-take-most of genetic testing
META Meta – a (the?) leader in the metaverse
RKLB Rocket Lab – #2 to SpaceX in space
SCYX ScyNexis –First new antifungal in 20 years
VLD Velo3D – Return manufacturing to the US
Economy
This morning, the Atlanta Fed’s GDPNow model increased its forecast for December quarter real GDP to +2.6% due to big increases in personal consumption expenditures growth, domestic investment growth, and government spending growth.
Coming Events
All times below are ET, and most presentations and slides are archived on the companies’ websites so you can listen to them.
Friday, December 15
RKLB – Rocket Lab – Unspec. – Bank of America Virtual STARS Summit
Thursday, December 21
September quarter GDP – 8:30am – Third estimate
Winter Solstice – 10:27pm
Friday, December 22
Personal Consumption Expenditures Index – 8:30am
Big Tech: The Biotech & Digital Dominators MegaShift
There are at least four ways to make money in the stocks of these large, growing, dominant companies. You can:
* * Buy a stock and hold it
* * Buy a stock and write a call option against it
* * With a Level IV options account, write an out-of-the-money put option
* * With a Level IV options account, write an out-of-the-money put option and use part of the premium to buy an out-of-the-money call option
Apple (AAPL – $198.11) set new all-time high intraday and closing records today. Wedbush’s Dan Ives just raised his 12-month target to $250 and Kieth Fitz-Gerald predicts it will go on from there to be the first company to hit a $4 trillion capitalization.
That could be. When the Apple Vision Pro is introduced early next year, most of Wall Street will be stunned when the $3,500 device sells out. Apple just introduced OS 17.2, and iPhone 15 Pro and Pro Max users can now record spatial videos and play them back on Apple Vision Pro early next year. Apple is creating demand ahead of supply. AAPL is a Buy under $150 for new iPhone rollouts and augmented/virtual reality products.
Gilead Sciences (GILD – $81.78) had an amazing ASH (American Society of Hematology annual meeting) this year. They announced results from a three-year follow-up analysis of ZUMA-12, their Phase 2 trial of Yescarta as first-line treatment after two cycles of chemoimmunotherapy in patients with high-risk, large b-cell lymphoma The analysis demonstrated durability of clinical benefit – both high complete response (CR) and objective response rates (ORR).
They also announced data from five-year follow-up analyses of three trials of Yescarta that demonstrate the long-term survival potential for patients living with several sub-types of relapsed or refractory non-Hodgkin lymphoma.
Finally, they announced the results of four new analyses supporting the use of Tecartus in relapsed/refractory mantle cell lymphoma (R/R MCL) and relapsed/refractory adult B-cell precursor acute lymphoblastic leukemia (R/R B-ALL). These results include four-year overall survival (OS) data from the pivotal ZUMA-2 study and primary results from ZUMA-18, an expanded access study, evaluating the CAR T-cell therapy Tecartus in patients with R/R MCL.
Gilead is building an oncology powerhouse, and the stock still is cheap because Wall Street thinks its an HIV company. GILD is a Long-Term Buy under $80 for a first target of $120.
Small Tech
PagerDuty (PD – $23.29) got a new Buy rating and a $40 target price from BofA. The analysts said that PagerDuty is a market-leading incident management software platform which helps businesses troubleshoot everything from cyber attacks to computer glitches. Recent macro-related challenges have pressured revenue growth and the stock trades at a 43% discount to infrastructure software peers. However, they think the company is poised to outperform as it improves execution and accelerates growth over the next year.
The analysts noted that the turnaround story creates an attractive 2024 setup. With PagerDuty’s shares down 15% year-to-date from slowing billings growth due to macro headwinds, they think this creates an attractive 2024 catch-up setup – a compelling turnaround story powered by improved growth, profitability potential, right-sizing of operations throughout 2023, and new C-suite additions that levels up the team to execute the strategy to steer better revenue growth, efficiencies, and higher cash flow.
In addition, the analysts said that their bottom-up Total Addressable Market, or TAM, analysis suggests a $23 billion market for 2023. As the pace of digital transformations accelerates, the TAM can expand to $32 billion by 2028.
The analysts added that their checks and prior work suggested that PagerDuty is viewed as a leading platform with an attractive subscription-based model and upsell/cross-sell opportunities. The analysts noted that PagerDuty’s valuation is inexpensive and it has an attractive risk-reward profile.
No argument here! PD is a Buy up to $30 for a 2- to 5-year hold as their digital operations management Software-As-A-Service gains market share.
Primary Risk: Digital operations management is a competitive area.
QuickLogic (QUIK – $12.79) presented at Oppenheimer’s 4th Annual 5G Summit: The Revolution Continues (AUDIO HERE and SLIDES HERE).
After CEO Brian Faith came in, he dramatically changed QuickLogic from a company that made field-programmable gate array semiconductors for applications they hoped would sell (and often didn’t) to a company that sells high-margin software for chip design and gets royalties when the design goes into production.
Click for larger graphic
Brian built on the company’s 30+ years of FPGA experience and embraced open-source FPGA tools to cut their customers’ design time from many months to a few weeks.
Click for larger graphic
They now have five sources of revenue, four based on the Australis software. They use it to design FPGAs for customers and get paid for design services and may get royalties. They also license the intellectual property (with very high profit margins) to companies that want to do their own designs, which also carry a royalty. They also make some chips for their storefront that they can sell off the shelf. The fifth area is their SensiML software, which they make available as Software-As-A-Service (customer pays per seat) with royalties on designs that get to market.
Click for larger graphic
As a result, they’ve been able to sign $31 million in new contracts since July 2021, most of which have substantial future upside. They have pipeline opportunities of $162 million over the next two years, although they won’t win them all. The big driver of their 30% revenue growth has been and will continue to be Australis.
Just as important, as revenues accelerate they are keeping a tight grip on costs, hiring engineers only as absolutely needed. That’s how they turned pro forma profitable and can grow the bottom line quickly.
Click for larger graphic
QUIK is a Buy up to $10 for my $40 target as their earnings repeatedly surprise Wall Street.
Primary Risk: Customers’ product introductions and associated royalties are unpredictable.
Rocket Lab USA (RKLB – $5.17) signed a launch services agreement to launch an Earth observation satellite for the Korea Advanced Institute of Science and Technology on a rideshare mission in the first half of 2024. KAIST’s NeonSat-1 will be the primary payload on an Electron rideshare mission that will also deploy NASA’s Advanced Composite Solar Sail System, or ACS3 satellite. The mission will lift-off from Rocket Lab Launch Complex 1 in New Zealand.
It had to be a rideshare because 2024 is shaping up to be their busiest launch year yet with a fully booked manifest of Electron missions. They are preparing to launch the 42nd Electron mission as early as tomorrow from Launch Complex 1. It carries a single satellite for a Japan-based Earth imaging company, the Institute for Q-shu Pioneers of Space, Inc.
Rocket Lab closed today with a total market capitalization of $2.5 billion. SpaceX, the Big Guy, is now a “centicorn” – a $1 billion “unicorn” 100 times over. SpaceX is discussing an agreement with insiders to sell some stock at $97 a share on the private market, equal to a $180 billion market cap.
Morgan Stanley thinks space is a $1 trillion industry by 2040. They are way low. RKLB is a Buy up to $13 for my $30+ target as low earth orbit satellites and space exploration grow.
Primary Risk: A new competitor emerges.
Velo3D (VLD – $0.69) recognized $200,000 in revenue in the September quarter that should have been deferred and recognized later, probably in the next 12 months. More than likely this was a service contract – no big deal, no question they’ll get the money.
But restating the quarter by moving the $200,000 from Revenue to Deferred Revenue put them in violation of a Minimum Quarterly Revenue covenant in their recently sold convertible note, and the holders extracted their pound of flesh in negotiations to cure the default.
Big deal. The future of Velo3D depends entirely on their revenues and revenue growth. Since they are the only additive manufacturing company that can handle many metals critical for aerospace and defense applications, I continue to think VLD is a Buy up to $6 for my $50 target as Velo3D’s high-tolerance metal parts printing business grows.
Primary Risk:A new 3D metal printing competitor emerges.
Biotech MegaShift: The $20-For-$1 Stocks
Say you put $2,000 into a stock that goes from 50¢ a share to $10. The $2,000 turns into $40,000. Then you put the $40,000 into another stock that goes from 50¢ to $10. That turns the $40,000 into $800,000. You did it with two stocks and never risked going negative more than $2,000. (Not that you won’t be mad at me if the first one works and then the second one doesn’t, taking your $40,000 to Money Heaven.)
If you can afford it – and it would not be too big a position in your portfolio – putting $2,000 into each of these speculative biotechs might be a good way to start. Buying these out-of-favor, fallen, or forgotten companies that can get important products through the FDA at very low market capitalizations seems like a good strategy to me.
Risks
Development-stage biotechs are subject to investor sentiment swings from wildly optimistic to excessively pessimistic – mostly the latter recently. After the Primary Risk for each company, I’ve added the clinical stage of their lead product, the probable time of their first FDA approval, and the probable time of their next financing.
As always, you need to think about an appropriate position size. You could buy a full position upfront and then just hold on, or buy some upfront and leave room to add more on the inevitable financings, transient clinical trial setbacks, and the like.
The 2 ¾-year biotech bear market ended with a bang on October 27. Next, the strength in the XBI will spread down to the smaller companies.
Click for larger graphic
Aptose Biosciences (APTO – $2.44) presented the latest tuspetinib/venetoclax trial data last Saturday at the very important American Society of Hematology (ASH) annual meeting (SLIDES HERE). They reported data from more than 100 relapsed/refractory acute myeloid leukemia (AML) patients from multiple international clinical sites who had failed prior therapy and then were treated with tuspetinib (TUS) as a single agent or tuspetinib in combination with venetoclax (TUS/VEN). TUS and TUS/VEN delivered multiple composite complete remissions (CRc) in this very ill AML population, while maintaining a favorable safety profile across all treated patients.
In the TUS/VEN doublet study, 49 patients were dosed with 80 mg of tuspetinib and 200 mg of venetoclax, with 36 evaluable (and 13 patients too early to assess). Among all evaluable patients, TUS/VEN demonstrated a CRc rate of 25% (9/36); 43% (3/7) in VEN-naïve patients, and 21% (6/29) in Prior-VEN patients.
They also pointed out that while patients on the TUS/VEN therapy are early in their treatment cycles, most who are achieving a response remained on treatment and that responses have begun to mature as dosing continues. Aptose’s Chief Medical Officer said: “Brisk patient enrollment in our APTIVATE trial has led to a fast-growing database that includes many more patients at various stages of treatment. We look forward to reporting our next set of data in the first quarter of 2024.”
I’m expecting another upside surprise, and I wouldn’t be surprised if a partnership or merger comes out of the ASH presentation in the next few months. APTO is a Buy under $2.50 for a $300 target in a buyout.
Primary Risk: Either drug fails in clinical trials.
Clinical stage of lead product: Phase 2
Probable time of first FDA approval: 2025
Probable time of next financing: Late 2025
Arch Therapeutics (ARTH – $4.63) VP of Sales, Dan Yrigoyen, resigned. Just as well – he was expensive and ineffective. ARTH is a Hold for a buyout.
Primary Risk: AC5 fails to sell or the internal trial fails.
Clinical stage of lead product: External approved. Internal trial 2024
Probable time of first FDA approval: External done. Internal 2025
Probable time of next financing: December 2023 quarter
Invitae (NVTA – $0.64) spun out its Ciitizen patient-centric consumer health tech platform to a VC-backed new company with the current management. Invitae kept a minority stake,
They also did another workforce reduction and other cost saving initiatives. In combination with the Ciitizen transaction, these initiatives are expected to result in annualized cash savings of approximately $90 million to $100 million. A lower cash burn is what this new management promised and what Wall Street wants. Buy NVTA under $10 for a first target of $50 and eventually $100+ when they become the Amazon of genetic testing.
Primary Risk: A competitor starts taking significant market share.
Clinical stage of lead product: NM
Probable time of first FDA approval: NM
Probable time of next financing: Mid-2024.
Inflation MegaShift
Gold ($2,046.60) dipped below $2,000 but quickly recovered, and then jumped after the Fed meeting. Kuppy wrote:
“Headlines You Don’t Want to See at Breakouts”
“Gold is trying to work off one of the nastiest wicks and technical damage I’ve seen in a while as traders went stop hunting on last Sunday night. KEDM started getting bullish on the pet rock on October 1 when GC was in the low 1800s.
“While the fundamentals still stand with CBs (i.e. China) hoovering it up, caution must be heeded after this week (even if we aren’t chart monkeys!)…and especially as it received the kiss of death on Barron’s this week…”
Click for larger graphic
The gold fractal dimension is just about to fall through 55, signaling a multi-month uptrend that will attract the Commodity Trading Advisers and other momentum players. New highs a-comin’.
Cryptocurrencies
Cryptocurrencies are a diversifying asset that offer a unique opportunity to make (or lose!) a lot of money quickly. You can easily buy bitcoin and other cryptocurrencies at Coinbase, Block, or Robinhood.
Bitcoin (BTC-USD on Yahoo – $43,075.75) seems solidly ensconced above $40,000 as we wait for the SEC to approve a spot exchange-traded fund. Tick-tock….
Click for larger graphic h/t Bullion By Post
BTC-USD, ETH-USD, GBTC, and ETHE are Strong Buys.
Primary Risk: Bitcoin falls due to over-regulation or is surpassed by another cryptocurrency.
Grayscale Bitcoin Trust (GBTC- $34.90) remains a Buy under net asset value.
Primary Risk: Bitcoin falls due to over-regulation or is surpassed by another cryptocurrency.
Commodities
Oil – $71.58
Oil dropped below $70 on Tuesday after some feared that the Fed will not be cutting rates as soon as many hoped. That reversed quickly after Wednesday’s dovish-sounding Fed meeting. The oil market shrugged off reports from the BBC that Yemeni’s Iran-backed Houthi rebels hit a Norwegian tanker with at least one missile, leading to a fire.
To my surprise, crude inventories declined for the second week in a row with a 2.35 million barrel drawdown, double the expected draw. However, gasoline stocks were higher and Cushing stockpiles rose for the eighth straight week. Record production in the US, Canada, and Brazil is colliding with a weakening economy in China, raising concerns among traders that the market is oversupplied.
But China wants to grow again (see below) and Saudi crude exports are dropping:
Click for larger graphic h/t @HFI_Research
The July 2026 Crude Oil Futures (CLN26.NYM – $67.14) are a Buy under $70 for a $200+ target. Only buy futures for all cash; do not use margin.
The United States 12 Month Oil Fund, LP (USL – $35.61) is a Buy under $40 for a $100+ target.
EQT (EQT – $38.82) is suffering from high US natural gas production and an usually warm winter here and in Europe. Contract prices are down 25% over the past month, and about 40% lower year-to-date.
Click for larger graphic h/t Yahoo Finance
European gas still is 3x to 4x the US price, which is why EQT has signed tolling agreements to convert their gas to LNG and sell it in international markets. EQT is a buy under $35 for a first target of $70 and a long-term hold for much higher prices.
Primary Risk:Natural gas prices fall.
Energy Fuels (UUUU – $7.77) will benefit as nuclear fuel brokers are now joining the spot uranium party, reporting a +$1.54 spike to a new 15-year high of $84.50/lb. UUUU is a buy under $8 for a $30 target.
Primary Risk: Uranium prices fall.
International & Other Recommendations
It is important to hold some non-US assets, especially in China. Last Friday, China’s top leaders pledged to strengthen fiscal support and emphasized the importance of economic “progress” that supported economists’ expectations for a growth goal of around 5% for next year. The Politburo, comprising the ruling Communist Party’s top 24 officials and chaired by President Xi Jinping, announced after the gathering that fiscal policy will be stepped up “appropriately.”
The Politburo’s introduction of a new slogan — 以进步促稳定 or “Use Progress To Promote Stability” — signals that next year’s growth target may be set at 5%, said Xing Zhaopeng, a senior strategist at Australia & New Zealand Banking Group. Economic targets for 2024 will be set at the Communist Party’s annual economic work conference, expected to be held later this month.
EMQQ Emerging Markets Internet & Ecommerce ETF (EMQQ – $31.26) is a Buy under $38 for a $66 target in 12 to 18 months.
KraneShares Bosera MSCI China A Share Fund (KBA – $20.68) is a Buy under $40 for a three- to five-year hold.
Morgan Stanley China A-Share Closed-End Fund (CAF – $12.20) is a Buy under $18 for a three- to five-year hold.
KraneShares CSI China Internet Exchange-Traded Fund (KWEB – $27.34) is a Buy under $40 for a double over the next three years.
Primary Risk of all four of these: China falls into a recession.
* * * * *
RIP Zahara
* * * * *
Your exploring The Forgotten Side of Medicine Editor,
Michael Murphy CFA
Founding Editor
New World Investor
All Recommendations
Priced 12/14/23. Check out the complete Portfolio page HERE.
Buys
These are the stocks everyone needs to own because transformative events are happening over the next year or two, and I expect to hold them long-term.
Tech Dominators
Apple Computer (AAPL – $198.11) – Buy under $150 for new iPhones
Corning (GLW – $30.57) – Buy under $33, target price $60
Gilead Sciences (GILD – $81.78) – Buy under $80, target price $120
Meta (META – $333.17) – Buy under $150, target price $400
SoftBank (SFTBY – $21.05) – Buy under $25, target price $50
Small Tech
Enovix (ENVX – $14.02) – Buy under $20; 4-year hold to $100+
First Trust NASDAQ Cybersecurity ETF (CIBR – $53.14) – Buy under $40; 3- to 5-year hold
Fastly (FSLY – $18.96) – Buy under $20; 2- to 5-year hold to $80+
PagerDuty (PD – $23.29) – Buy under $30; 2- to 5-year hold
QuickLogic (QUIK – $12.79) – Buy under $10, target price $40
Rocket Lab (RKLB – $5.17) – Buy under $13, target price $30+
Velo3D (VLD – $0.69) – Buy under $6, target price $50
$20-for-$1 Biotech
Akebia Biotherapeutics (AKBA – $1.13) – Buy under $2, target $20
Aptose Biosciences (APTO – $2.44) – Buy under $10, ultimate target $300
Compass Pathways (CMPS – $7.72) – Buy under $20, hold a long time for a 10x return
Inovio (INO – $0.38) – Buy under $7, hold a long time
Invitae (NVTA – $0.64) – Buy under $10, first target $50, then $100+
Medicenna (MDNAF – $0.33) – Buy under $3, first target $20, then maybe $40
ScyNexis (SCYX – $1.66) – Buy under $3, target price $20, then $50
TG Therapeutics (TGTX – $18.00) – Buy under $12 for buyout at $30+
Inflation
A Short-Sale or REO House – ($415,400) – Hold
Bag of Junk Silver – ($24.45) – hold through silver bull market
Sprott Gold Miners ETF (SGDM – $25.14) – Buy under $28, target price $50
Sprott Junior Gold Miners ETF (SGDJ – $29.02) – Buy under $39, target price $100
Sprott Physical Gold and Silver Trust (CEF – $19.02) – Buy under $18, target price $30
Global X Silver Miners ETF (SIL – $27.81) – Buy under $30, target price $50
Coeur Mining (CDE – $3.52) – Buy under $5, target price $20
First Majestic Mining (AG – $6.28) – Buy under $11, next target price $23
Paramount Gold Nevada (PZG – $0.36) – Buy under $1, first target price $10
Sandstorm Gold (SAND – $4.93) – Buy under $10, target price $25
Sprott Inc. (SII – $32.89) – Buy under $40, target price $70
Cryptocurrencies
Bitcoin (BTC-USD – $43,075.75) – Buy
Grayscale Bitcoin Trust (GBTC – $34.90) – Buy
Ethereum (ETH-USD – $2,291.02) – Buy
Grayscale Ethereum Trust (ETHE – $18.85) – Buy
Commodities
Crude Oil Futures – July 2026 (CLN26.NYM – $67.14) – Buy under $70; $200+ target
United States 12 Month Oil Fund, LP (USL – $35.61) – Buy under $40; $100+ target
EQT (EQT – $38.82) – Buy under $35; $70 first target
Energy Fuels (UUUU – $7.77) – Buy under $8; $30 target
Freeport McMoRan (FCX – $41.97) – Buy under $44; $65 target within two years
International & Other Recommendations
EMQQ Emerging Markets Internet & Ecommerce ETF (EMQQ – $31.26) – Buy under $38 for a $66 target in 12 to 18 months
KraneShares Bosera MSCI China A Share Fund (KBA – $20.68) – Buy under $40 for a three- to five-year hold
Morgan Stanley China A-Shares Fund (CAF – $12.20) – Buy under $18 for a three- to five-year hold
KraneShares CSI China Internet ETF (KWEB – $27.34) – Buy under $40 for a double over the next three years
Acreage Holdings (ACRDF – $0.17) – Buy under $2 for the Canopy Growth merger
Mongolia Growth Group (MNGGF – $1.04) – Buy under $1.30; long-term hold
Holds
These are holds but not sells – yet. They could get moved back to one of the buy categories if their prices drop or outlook improves, or they could become sell recommendations in the future.
Arch Therapeutics (ARTH – $4.63) – Hold for buyout
Publisher: GwynRose LLC, 5348 Vegas Drive, Suite 868, Las Vegas, NV 89108
New World Investor does not act as a personal investment adviser or advocate the purchase or sale of any security or investment for any specific individual. The recommendations and analysis presented to members are for the exclusive use of members. Members should be aware that investment markets have inherent risks and there can be no guarantee of future profits. Likewise, past performance does not assure future results. Recommendations are subject to change at any time. Nothing in this presentation should be considered personalized investment advice. No communication to you by Michael Murphy or any of our employees or contractors should be deemed as personalized investment advice.
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First.
what happened to Michael, though highly opiniated and blunt I appreciated his insights – did he end his NWI membership?
No, unfortunately I have a lifetime membership 🙂
I just don’t find any useful information here, just MM cheerleading penny stocks that have collapsed.
I am provided detailed insights for one of the few successful NWI names, TGTX. Chris has excellent medical knowledge and financial acumen. But in general, you are right that most people here don’t pay much attention to MM because he is only a shadow of his good old days.
tsla is doing ok
So where do you get your best insights? Share any newsetteres or websites you find worthy? Also, what is your bitcoin price projection and when? Thx Michael
true …
MICHAEL, you have been recommending NVTA forever and still saying it has enormous upside stock price but has had a tremendous downfall. Why are you still recommending the stock?
sounds like Fantasy ! yes it touched $ 60 one time and now 60 cents.
Because they are the absolute leader in providing useful genetic information to doctors at the lowest cost.
MM–on VLD, you continue to be merely a cheerleader for their hoped for defense business. Why haven’t they gotten more than a few defense orders lately, and what catalyst would there be for a big change in orders? You also ignore Chris’ and my observations that bookkeeping numbers are a mess. Come on, you have expertise in financial analysis, but you are not presenting your analysis on this.
The stock is up 40% from its low in only a few days, based on no material developments, maybe just a relief rally and declining tax selling. How can you possibly keep droning on about a buy up to $6? There’s a good chance the stock will never get there. Someone on YMB thought private equity may be gaming to depress the stock in hopes of doing an IPO, with an eventual target of $175-200 market cap, or about $1 a share. Using your financial expertise, please evaluate this.
Thanks.
As I’ve said over and over, they recognized $200,000 of revenue, probably a service contract, that should have been deferred and recognized during the next 12 months. No big deal.
Yes, $200K is a trivial accounting issue. More important, where are the sales? Why are they so poor that management withdrew guidance which was already a continued decline from Q3? Please comment on recent disastrous news of ousting the CEO for poor management. The steady daily plunge in the stock suggests bankruptcy soon.
MM–on SCYX, it’s been almost 3 months since the manufacturing halt. How long does it usually take to resolve these problems? Since you listed SCYX as the first stock on your list to move up, you probably believe the problem will be resolved imminently. But until that happens, the stock will decline.
Anyone in the pharma field with insights?
Although I am not in the pharma field, I asked Bard AI what investment analysts have said with regard to the GSK Brexafemme manufacturing halt. The verbatum response provided by Bard is as follows:
“While GSK hasn’t officially disclosed a timeline for resolving the Brexafemme manufacturing issue, some investment analysts have offered their opinions based on the available information and their understanding of the pharmaceutical industry. Here’s a summary of their insights:
Generally bearish sentiment:
Mixed viewpoints on timing:
Overall, the analyst commentary reflects a cautious outlook on SCYX and the timeline for Brexafemme’s return. Most analysts acknowledge the significant setback and potential delays but vary in their estimates of the timeframe involved.”
[Note: I cannot vouch for the accuracy/reliability of Bard’s response to my question.]
Many thanks for your research. MM should have done all this and reported here, with the additional benefit of his perspective. Even the SCYX bears have a price target of $12 or more. But at $1.60, the potential manufacturing delay of a year or more means that the stock will continue to decline, perhaps by 50% from here, to well under $1. That means SCYX investors should accumulate more every few months, for a reasonable chance of an excellent long term return.
Six to nine months. During that time, we’ll get the results of four Phase 3 trials. I expect all to be positive.
The four phase 3 trials won’t contain anything we don’t know already. Brexa works, no doubt about it, but most of the revenue for VVC will be for GSK, not SCYX. The real key for SCYX is the phase 3 MARIO trial for invasive candidiasis. That will begin only after the manufacturing problem is corrected after 6-9 months according to your info, or 3-6 months from now. How long will MARIO take to be done and reported? Meanwhile we can expect further dwindling of cash and declines in the stock price. It will be an opportunity to buy more shares every 2-3 months at lower prices.
Chris–on ACHV, what did you think about the presentation yesterday? To me it was neutral to slightly negative. The drug works and is a great potential blockbuster, but the FDA obstruction is a big negative. The ideal outcome would be quick approval with a requirement for monitoring of side effects as phase 4 post-marketing. The big negative is a whole new trial. I don’t like the language of a new NDA, which would set the drug back a year or more. The timeline seems to be a decision about a new direction in Q1, with possible approval late 2024. Before this FDA crap, the stock was around $5.50. If we can buy at way under $3, it would be worth the wait.
Good news could cause shares to jump. It is possible there will be zero delay in the approval process and a longer term study will only be required after approval.
“Negotiations are ongoing with Big Pharma. There is an opportunity to get a transaction done within the first half of next year.” End of Phase 2 with vaping also next Q and looking for fast-track status as nothing else available for vaping cessation. P3 for vaping could start before end of 2024.
I bought more after Monday’s news wiped out all the gains over the past year. I believe shares will return to this year’s high of $10 and even higher. While it would be great to buy more under $3, the current price of $3.18 is nonetheless a bargain price for anyone who doesn’t own some.
Thanks, agree.
The vaping market is much smaller than the cigarette market, but would still provide a nice bonus 2 years later. What do you judge as to the odds of a significant delay in approval for cigarettes, and how much dilution would be required to raise enough cash?
More crap on VLD.
https://finance.yahoo.com/news/velo3d-announces-leadership-transition-commencement-130000297.html
They are getting rid of the CEO and making desperate moves, but they won’t announce any moves forward until they are consummated.
MM–please evaluate.
MM —I’m a little confused about AKBA. Is this the one that is supposed to get final approval in Q1 24 while already approved in other countries? If so, it almost seems like a no brainer investment to me. Am i wrong?
I am hopeful about AKBA. MM suggested it is a no brainer. I took a risk in recommending my office manager tell her daughter about it. What could go wrong? A corrupt FDA which decides at the last minute they want more info, the way they just did with ACHV.
That is correct. March 27.
NGENF — any new info on this?
Expect news within the next week. Chronic SCI expects full enrollment in January, results in May or June.
Check this out: https://u2fp.org/get-educated/our-voice.html/article/2023/12/14/regenerative-clinical-trial-director-do-it-for-the-science
MM, I haven’t seen any updates on INO since earnings last month. They have since proposed a vote in January for a R/S as high as 1 for 50. What are your thoughts on this? They have until April to get compliant. Thanks!!
Vote against all reverse splits.
VLD is guaranteed to do a reverse split. Another negative for VLD.
Continuing baseless support of various names without any margin, leverage, ROI, ROE, PE, PS, growth rate, inventories, receivables, working capital, capex, cash flow, price to cash flow analyses is no where to be seen in the investment letter. In part this understandable as many names because they are not profitable and depend on continuing access to capital (dilution) to survive. Even the profitable names get no financial analysis. Every rec I have bought has lost money and several serious amounts.
As to fractals and the bull market scenario, many think this market as at record insane valuations. Here is one.
https://x.com/tavicosta/status/1735320414925078595?s=12
Correct. MM used to do all that financial analysis 20 years ago which was useful. He had an interesting price/growth flow analysis which was more informative than P/E for growth stocks that used earnings for growth expansion.
Please, MM go back to this. Otherwise your NWI is nearly useless. I have to depend on informed YMB posters to get crucial info.
Tarlton – It is easy to focus on things that are not important. Virtually every company I’ve recommended requires one thing: Revenue Growth. When I’m right on that, nothing else natters. When I’m wrong on that, nothing else can save them.
wtf guys give MM a break. I have been hear (CTSL days) long enough to have a free life time membership, and in that time I did vary well on MM’s leads and learned a lot. first take responsibility my own mistakes, be grateful for my opportunity and have some gratitude for the people that helped me along the way.
hopefully bio bear is gone into hibernation
DYODD
As I said, in the old days of CTSL and Technology Investing, MM had many more outstanding winners than today. I am still holding Taiwan Semiconductor, a 13 bagger over 20 years. You can take responsibility for your own mistakes, but only if you have proper informed info, which of late MM doesn’t offer. Any newsletter writer making recommendations has a responsibility to be informed and provide analysis that goes way beyond perpetual cheerleading. A skilled investor like Chris said that VLD is uninvestable because the bookkeeping is incomprehensible. It is MM’s responsibility to provide the best analysis possible. It would take a 20 bagger from here to break even to his original buy price of $10.
Agreed with doing your own dyodd Samuel,this is a paid newsletter,if you pull up the archives for 3.11.21 nvta was trading 42.92 the recommendation was to buy up until 50.00 alot of us believed in this recommendation,we are now sitting at 60 cents, ino was 10.57 it sits at 40 cents,it’s hard to be positive,that’s all have a nice day,my losers outweigh my winners,Already was into crypto,arth..the list goes far
i got in NVTA around 10 held to top and sold on the way down @27 happy i got out when i did. CML pro, (MTSL and BIO/PUB in the past), and woods ark all have good ideas. but the final call is all mine
my biggest holdings TSLA, ET, TGTX, =>50%
only stumbled on one on my own.
my unstated thesis is that were all getting older and this pony ran hard and long. when MM is right he is right on, and the other side on that is also true. i had some arth, ino, cybr and the like, but jest like it was in the 80/90 its an idea generator, thats why you held TSM and did not dump it for Global crossing VICL. yes the detail is no longer what it was, were in a 2.6y bio bear, and some of this stuff has been foolish to hold at all or – through a rate hike cycle. but if your unhappy with your choices make different choices.
and dont forget to vote?
I read VLD’s last 10-Q easily. It’s not incomprehensible. It’s a simple sales-and-service business. Try it for yourself:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1825079/000182507923000044/velo-20230930.htm
This is from 9/30/23–outdated, not reflective of the tatest disastrous events. Please interpret the numbers. Is VLD going bankrupt soon or when? The stock is acting like it is going BK with daily straight line plunges. Why haven’t defense sales been going on lately? What is the catalyst for defense sales to pick up? How do you interpret the ouster of the CEO?
This 10-Q INCLUDES the effects of the $200,000 revenue adjustment. The company finished the quarter with $71.5 million in cash. They used about $56 million in the quarter so they will need to raise money. Again, the whole story is revenue growth.
MM – this is not a hypothetical, its real question Ill act on: which stock should I buy for the biggest near term return in next 3-6 months; TGTX? SCYX? Other?
tgtx
TGTX, without a doubt. See the excellent post by taos_red above on SCYX, and my response.
Thx – whats the catalyst and your est price point?
TGTX is becoming a low risk high return company. We can speak about catalysts for risky companies who are doing badly, so any good news serves as a catalyst to dramatically boost the shares. With TGTX, the expectations are that Q4 (2023) sales will be even better than expected. But even if that’s confirmed in early Feb 2024, the rising PPS discounts all that, and don’t be surprised if PPS retraces to $12-15 or so. I was lucky to buy more on Oct 31 at $7.25, but I haven’t bought since. YMB has plenty of posts that say a target price is $60-120 in 1-3 years. I even posted here that if Briumvi captures 35% of the CD20 drug market, the target PPS will be about $400. I am just quoting a wild YMB poster. Anyone who buys at $18 today might still do very well, but it is based on FOMO (fear of missing out).
Thank you for the detailed reply, much appreciated. Im in big need to 2X or 3X some funds in the next 6 months, do you have an equity that you believe has a high probability of doing so?
I don’t think there’s much of an upside in TGTX in the next 3-6 months. I should have bought some at the 6-7 dollar range like JGMD did, but was worried it would collape further like many of MM picks lately.
In late Oct, I was also worried that the savage bears on YMB would short TGTX down to $5. But it bottomed about $6.50, and I saw the tide was turning. But I was still nervous, and only bought a fraction of what I ultimately wanted, figuring that if Q3 revenues were as bad as the bears thought, tax selling would give me a gift of more cheap shares. It never happened. One more example of the wise advice to buy when you’re nervous, not when you feel good. Maybe the best current example is VLD. I want to back up the truck and buy when I feel nervous about it, but the firing of the CEO is a signal that things truly are bad. If VLD truly is a viable company, it may be the best opportunity of all, although shrewd people like our Chris think that it is a bad situation in reality, not just bad sentiment.
MM has been silent about recent developments.
Except, of course, for the weekly updates.
Your weekly updates have been brief and contain little new info, esp for VLD. That’s why I have been posting much more than usual, asking you questions which you have not responded to. Hopefully you will give detailed analysis and answers in tomorrow’s RR.
Thx – whats the catalyst and your est price point?
im not that smart . they have approval of 3 drugs. 1 on the market so no catalyst but proven tec and ability to get approvals as to TGTX if they keep doing good Q# and that’s what counts Bph will scoop them up the question is it a franchise – or a one off i say prior dont know if JNJ ABBV ect. will step up. I trimmed 20% of my position and its still 17% of my trading account. BUT thats my risk not yours and it could be dead $ till buyout rumors leek or might grow with Q sales groth%
My few successes with NWI have been trading as you are doing, not buying and holding. With TGTX, I failed to sell recently at $30+. I was under the spell of wanting to hold for much higher prices, and being afraid of selling and being unable to get back in at lower prices. But back then, the PPS was based only on overoptimism by the CEO, with few sales to justify the high PPS. Today, it’s different. (Yeah I know the cliche that this time it’s different.) Sales are booming, with reasonable expectations that Ocrevus will lose a significant fraction of sales to Briumvi. YMB poster Very just said that if Briumvi exceeds Ocrevus in sales, TGTX will be over $150–his numbers are true. Only a few months ago Very had tons of shares bought in mid single digits, and he felt compelled to take profits at $10. But he got back in at higher prices, but only with a relatively modest number of shares. I’m sure he now feels he will miss the huge wave to $60-100.
I recommend we learn from the mistakes of traders and hold the few speculative stocks like TGTX that are behaving like the great blue chips. Ten baggers occur in a few blue chips over 10 years, but TGTX will take only 1-3 years. If you want to trade at $30-50 that’s fine, but not at this level. Even at $19, find me a lower risk stock that’s more likely to double in a year than TGTX.
i have held my TGTX since i got out of PCYC and the one,ect back to CORR in 97. a > half dozen biotec that i was there for and a bunch of losses like vicl isis ect i dont call that trading the trading was shorting the yen and going long on the usd, shorting the banks in 2007 2008 that was trading.
the 2.6 year bio BEAR has been nojoy for me. and my risk tolerance is getting more conservative as i age hence the ET at somthing like 9%
As Michael said, really hard to do without options. Last summer I took a flyer on SLNO, which had a binary event coming up that would either make or break the company. I bought some shares under $5 and unfortunately sold when it popped a few months later around $25. It is now around $36. I did well and left a good bit on the table, but I could have just as easily lost 95% of my investment.
Right before SLNO announced success, ACXP had announced early termination of its Phase 2b trial in its drug which the market misread as bad news. I went in big under $2 and took some profits around $8.
Both of those happy trades worked because they were rare cases where you have a rough idea when data will be released and bad news would be very bad for share price, but good news would be great for the share price. With ACXP, the good news was announced and the share price fell until the market realized days later that the news was actually good..
I think ACXP and ACHV will both be at least 3x higher, but I don’t know if it happens in less than 3 months or more than 6 months.
If I had to bet on any of my holdings tripling in 6 months, I ‘d say the most likely one would be TTLHF.
Also, NGENF will way more than triple if its Phase 2a trial in chronic Spinal Cord Injury shows any significant improvement, but I think the data might not come after the next 6 months.
APTO – MM, in your 11/9 note on APTO’s Q3 you wrote the following:
The company finished the quarter with $17.7 million in cash, which can only carry them through the March quarter.
But you also list the following in your APTO notes:
Probable time of next financing: Late 2025
I’m assuming the next financing note is incorrect as I haven’t seen any financing news come through.
While I’m hopeful for a partnership or merger in the next few months, they are in such a weak negotiating position due to their low cash position that it’s likely to impact the terms. And no partnership or merger in Q1 will likely result in significant shareholder dilution like the Hanmi deal, in order for APTO to fund any move forward movement.
This request goes to all posters. Im in big need to 2X or 3X some funds in the next 6 months, does anyone have an equity that you believe has a high probability of doing so?
AKBA is due for FDA approval in March 2024. MM implied that the FDA told them how to dot their I’s and cross their T’s for their resubmission. But why did MM drop AKBA from his top 5 list of near term movers? I am getting a little nervous, although it might start moving up in Feb.
MM?
It’s not likely to take a big jump until the Add-On payment is approved in September. But little risk until then.
Add-On payment for what, and how much? You don’t see a big jump after FDA approval in March 2024?
The only way I know to get that kind of return is with options. The problem is that you can very easily lose your entire investment.
Michael – are you still a believer in bitcoin? Whats your best guess on a price bybend of 2024, and beyond?
Yes. At one point I had 50 BTC but trimmed that substantially over the years. I’m down to an amount I’m comfortable with now. No idea where it’s going but very confident it will be up. Who knows how high .. I’ve heard everything from 0 to a million. The next halving event should push it .. perhaps to 100k but who knows.
some activity in Arth- hope a long awaited fantasy & dream comes true !
MM–on UUUU, why has the stock been declining lately when spot uranium prices have been strong? On the balance sheet, how can revenues of $0.24 be less than EPS of $0.64? What am I missing?
We just received a Christmas present. RKLB after hours is up 19%. They signed a $512 million contract with an unnamed government agency.
New World Investor for 12.21.23 is posted.