New World Investor – 3.21.24

Michael Murphy
2024-03-21
21
Mar 24

Dear New World Investor:

The Fed met and said the economy is much stronger than they expected but they still expect three quarter-point reductions in the Fed funds rate this year. I think they’re wrong on both counts. You could obsess over the gory details or you could just look at all you need to know:

Wednesday’s daily price action. Click for larger graphic

It’s hard to find undervalued stocks in this market, but I’ve found one that can pull off a turnaround. Yeah, yeah, I know the old joke: “When management says it’s a turnaround, they are about to turn around with your money and walk out the door.”

What I’ve learned is turnarounds only happen with an excellent new CEO, usually after they have replaced most or all of the C-suite and fired the underperformers. Which brings us to PayPal Holdings (PYPL). Almost nine years ago, PayPal spun out of Ebay and the stock ran from $35 in 2015 to $308.53 on July 23, 2021. That was followed by a 78.5% decline to $66.14 today.

The former CEO of PayPal grew through constant acquisitions, over-paying for many and integrating them poorly. The new CEO, Alex Chriss, came from Intuit on September 27, 2023. The Board was looking for “a next generation leader with extensive global payments, product, and technology experience, capable of driving growth across the PayPal platform for years to come.” They got it.

Chriss is a 19-year veteran of Intuit. From January 2019, he was Executive Vice President and General Manager of Intuit’s Small Business and Self-Employed Group, responsible for more than half of Intuit’s revenue. During his tenure, he grew its customer count at a compound annual growth rate (CAGR) of 20% and its revenues at a CAGR of 23%. In 2021, he led Intuit’s successful $12 billion acquisition and integration of Mailchimp, significantly expanding the capacity of Intuit’s platform and its customer base.

He installed a new CFO and a new Chief Technology Officer in early November, a new Chief People Officer from Walmart in mid-November, an EVP & General Manager of a newly-formed Small Business and Financial Services Group who was Chief Marketing Officer of Verizon in mid-November, an EVP & General Manager of a newly-formed Consumer Group and Global Marketing & Communications organization who was SVP: QuickBooks Money Platform at Intuit (also in mid-November), a new President of Global Markets in December, a new Chief Marketing Officer in February, a new Chief Corporate Affairs and Communications Officer in early March, and a new EVP: Chief Enterprises Services Officer in mid-March. He reorganized and cleaned house.

With the mid-November appointments, Chriss said: “To establish clear accountability in how PayPal serves end-to-end customer needs, the company is establishing three new business units aligned to the customers it serves: Consumer, Small Business, and Large Enterprise. By organizing our teams into defined business units, we focus on what’s most important to our customers, leverage the power of our data and platform to deliver with increased speed, and package our innovation in a way that differentiates us in the market. This will position us to drive meaningful growth for the company.”

He clearly wants to get rid of several of the acquired peripheral businesses and invest in product innovation, which theses days means – AI! There are companies that will run with AI and companies that will be run over by AI, and PayPal now has a good chance of being a beneficiary. The new Chief Technology Officer was SVP and Chief Information Officer at Intel before joining PayPal in March 2022 as EVP and CIO.

PayPal has competition from Apple and Google, with their own payment services, as well as smaller companies like Block (Square) and Stripe. But the opportunity is huge – global online payments will be a growth market for years – and Chriss looks to me like the right person to pull this off. With over 400 million active users, PayPal’s network effects are substantial. The future for PayPal is no longer all about increasing the number of users, but rather about increasing user engagement via AI.

The company has nearly $30 billion in annual revenue. It grew revenues 8% in 2022 and 2023, with 7% growth expected in 2024. Their pro forma profit from operations in 2023 was 22%. They had a 17% decline in free cash flow to $4.2 billion in 2023, but I expect free cash flow to grow by double-digits over the next three to five years. As of December 31, their $11.3 billion in debt was more than offset by $17.3 billion in cash.

They are buying back shares aggressively – $5 billion in 2023 and another $5 billion planned for 2024.

Click for larger graphic

Wall Street hates the stock because the number of active accounts has been slowly – but not significantly – declining for the last year.

Click for larger graphic

Note that the number of Monthly Active Accounts increased slightly while the number of transactions and transactions per active account grew nicely.

The company recently reported December quarter earnings (SLIDES HERE and TRANSCRIPT HERE) and presented at both the Morgan Stanley Technology, Media and Telecom Conference (TRANSCRIPT HERE) and the Wolf Research Fintech Forum (TRANSCRIPT HERE). They also got a good writeup on Seeking Alpha: PayPal: The Clock Is Ticking For Its Meta Moment.

At today’s close, PayPal had an enterprise value of $82 billion – about 2.7x revenues. They guided very conservatively for 2024 pro forma earnings of $5.10 a share, so the stock is at a Price/Earnings ratio of only 13.0x. They expect $5 billion in free cash flow in 2024, which is after significant investments in the new strategy, so the stock closed at a market cap/cash flow ratio of only 14.2x. I want you to Buy PYPL up to $68 for a double to $136 in three years.

Click for larger graphic

Market Outlook

As I anticipated, the sideline cash is pouring into stocks. This is how temporary tops are made.

Click for larger graphic h/t @Michael__H1

The S&P 500 added 1.7% since last Thursday to a new record closing high – thank you Jpow! The Index is up 9.9% year-to-date. The Nasdaq Composite gained 1.5% and is up 9.3% for the year. The SPDR S&P Biotech Exchange-Traded Fund (XBI) climbed 0.7% which brings it to the same +0.7% year-to-date. The small-cap Russell 2000 won the week, up 2.7%, and is up 3.5% in 2024. There’s a lot of chatter about how cheap small cap is relative to large cap, so maybe the Russell is about to get a tailwind.

The fractal dimension continues its push into record deep territory. The inevitable correction probably will be sizable.

Top 5

Changes this week: Added PYPL to Long-Term

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
IBIT iShares Bitcoin Trust – Bitcoin is headed for $100,000
META Meta – a (the?) leader in the metaverse
PYPL PayPal – Online payments turnaround
RKLB Rocket Lab – #2 to SpaceX in space
SCYX ScyNexis –First new antifungal in 20 years
VLD Velo3D – Return manufacturing to the US

Economy

The Atlanta Fed’s GDPNow model forecast for March quarter real GDP slipped slightly to +2.1% due to a bit softer outlook for personal consumption expenditures growth and private domestic investment growth. The Blue Chip economists are up to the same level, so we probably are looking at an up quarter, but not a barnburner.

i>Click for larger graphic

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, March 22
ACRDF – Acreage Holdings – Unspec. – NECANN, Boston

Tuesday, March 26
Short Interest – After the close
APTO – Aptose – 5:00pm – Earnings conference call
VLD – Velo3D – 5:00pm – Earnings conference call

Wednesday, March 27
AKBA – Akebia – After the close – Vadadustat FDA decision

Thursday, March 28
December quarter GDP – 8:30am – Third Estimate

Friday, March 29
Markets Closed Good Friday
Personal Consumption Expenditures Index – 8:00am – Core PCE is Fed’s favorite!

Big Tech: The Biotech & Digital Dominators MegaShift

Why do investors want to own Big Tech? Because their net profit margin of 23.4% is more than double that of the rest of the S&P 500. (Big Tech is defined as Amazon, Apple, Google, Meta, Microsoft, and Nvidia.)

i>Click for larger graphic h/t @Barclays

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 – $171.37) Vision Pro users will have access to 3D applications developed on Nvidia’s Ominverse, a special computing platform that allows developers to use Nvidia’s global Graphics Delivery Platform to stream advanced 3D experiences to Apple Vision users. AAPL is a Buy under $150 for new iPhone rollouts and augmented/virtual reality products.

Small Tech

QuickLogic (QUIK – $16.33) did a private sale of 222,500 shares at $16, a zero discount, raising $3.56 million. 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 – $4.09) CFO presented at the Roth Conference on Tuesday (AUDIO HERE). There was nothing new. They completed their fourth Electron launch this year and 46th overall with this morning’s National Reconnaissance Office mission from the Virginia launch site. It was their fourth launch from Virginia and the fifth for NRO since 2020. 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 – $0.55) will announce December quarter results next Tuesday. The one publishing analyst is expecting $19.5 million in revenues and an eight-cent loss. It probably will be worse than that as some orders shifted from the December to the March period. Even so, I expect the new CEO to guide conservatively. Any stock weakness is a buying opportunity. 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.

AbCellera Biologics (ABCL- $4.71) presented at the KeyBanc Capital Markets Life Sciences & MedTech Investor Forum (AUDIO HERE). At this point, I think people need to see progress on their partners’ drugs to start the stock moving higher. That’s coming, but there’s no way to tell when announcements will be made, which is why ABCL is a buy and hold for the long-term. Buy ABCL up to $6 for a long-term hold to $30 or more.
Primary Risk: Partnered and owned drugs fail in the clinic.
   Clinical stage of lead product: Partnered: Various Owned: Preclinical
   Probable time of next FDA approval: 2027-2028
   Probable time of next financing: 2026-2027 or never

Akebia Therapeutics (AKBA- $2.04) is running up in advance of the FDA decision next Wednesday after the close. I still think vadadustat approval is close to a 100% bet. Buy AKBA up to $2 for the vadadustat launches in the EU, UK, and (after FDA approval in March 2024) the US.
Primary Risk: Vadadustat not approved in the US.
   Clinical stage of lead product: Vadadustat PDUFA date 3/27/24
   Probable time of next FDA approval: March 27, 2024; TDAPA October
   Probable time of next financing: Late 2024 or never

Aptose Biosciences (APTO – $1.57) reports next Tuesday. The’ll update us on the interim results of their clinical trials, which should be good news – more enrollment, more responses. 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

Inflation MegaShift

Gold ($2,183.80) exchange-traded funds are showing the second-largest outflow year-to-date, even though they yellow metal is at all-time highs. There’s lots of sideline cash to drive gold higher. (And note the commodities and energy outflows, too. The contrarian in me is delighted to see this.)

Click for larger graphic h/t @EricBalchunas

A lack of faith in traditional investments has fueled a new China gold rush into gold beans.


Click for larger graphic h/t @chigrl

Overall, I think gold is headed higher into the next 30-week cycle high in early July. Based on seasonality, the next multi-week temporary top should happen in early May around $2,300. The fractal dimension again is flirting with signaling a new trend, but we’ve learned to wait until it clearly happens to call it.

Miners & Related

Paramount Gold Nevada (PZG – $0.39) said the Bureau of Land Management filed a Notice of Intent in the Federal Registry, initiating the preparation of an environmental impact statement in compliance with the process to bring Grassy Mountain into production. PZG is a Buy under $1 for a $10 target as gold moves higher.
Primary Risk: Prices of precious metals fall due to US dollar strength.
   Probable time of next financing: 2023

Sandstorm Gold (SAND – $4.98) updated their outlook on several assets, including the Hod Maden incident that has been pressuring the stock.

SSR Mining had a February 13, 2024 incident at one of that company’s producing Turkish assets, in which Sandstorm has no interest or royalty. But as a result of this incident, SSR Mining retracted all previously issued guidance for all its Turkish assets, including the Hod Maden gold-copper development project where Sandstorm holds a gold stream and net smelter returns royalty. SSR Mining holds a 10% interest in Hod Maden with the right to acquire an additional 30% interest via structured earn-in payments linked to construction and commercial production milestones, so they will develop the mine. Sandstorm currently estimates a delay of one year.

CEO Nolan Watson dd another investor meeting:

SAND is a Buy under $10 for a $25 target.
Primary Risk: Prices of precious metals fall due to US dollar strength.

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 – $65,487.91) is backing off a bit after the spectacular run from the spot exchange-traded fund approvals. The April halving should power the next leg up.

Click for larger graphic

BTC-USD, ETH-USD, IBIT, and ETHE are Strong Buys.
Primary Risk: Bitcoin falls due to over-regulation or is surpassed by another cryptocurrency.

iShares Bitcoin Trust (IBIT- $37.15) is the easiest way to Buy bitcoin for the 2024 and 2028 halvings.
Primary Risk:Bitcoin falls due to over-regulation or is surpassed by another cryptocurrency.

Commodities

Oil – $80.85

Oil touched $83.85 after Saudi Aramco’s CEO gave the world some tough love, saying global oil demand will not peak for some time, so policy makers need to ensure sufficient investment in oil and gas to meet consumption and abandon the fantasy of phasing out fossil fuels. 

The July 2026 Crude Oil Futures (CLN26.NYM – $69.24) 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 – $39.27) is a Buy under $40 for a $100+ target.

Energy Fuels (UUUU – $6.24) got a nice bump on Seeking Alpha: Energy Fuels: Uranium And Rare Earth Minerals Production Ramp-Up Is Well-Timed. UUUU is a buy under $8 for a $30 target.
Primary Risk: Uranium prices fall.

* * * * *

Click for larger graphic h/t @WinfieldSmart

* * * * *

In 1800, the global child mortality rate was above 40%. Today, it’s 3.4%. The world’s best-scoring country back then (Belgium: 33%) suffered from child mortality twice as high as the worst-scoring country today (Angola: 17%). In 1800, Belgium had the world’s highest life expectancy, at 40. In 2024, no country has a lower life expectancy than 40.

Click for larger graphic h/t @OurWorldInData

* * * * *

Your Editor,

Michael Murphy CFA
Founding Editor
New World Investor

All Recommendations

Priced 3/21/24. Check out the complete Portfolio page HERE.

Portfolio Protection
  April 30 SPY $505 put (SPY240430P00505000 – $2.09)
  April 30 SPY $410 put (SPY240430P00410000 – $0.17)

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 – $171.37) – Buy under $150 for new iPhones
  Corning (GLW – $33.13) – Buy under $33, target price $60
  Gilead Sciences (GILD – $73.09) – Buy under $80, target price $120
  Meta (META – $507.76) – Buy under $345, target price $400
  PayPal (PYPL – $66.14) – Buy under $68, target price $136
  SoftBank (SFTBY – $30.74) – Buy under $25, target price $50

Small Tech
  Enovix (ENVX – $8.68) – Buy under $20; 4-year hold to $100+
  First Trust NASDAQ Cybersecurity ETF (CIBR – $56.81) – Buy under $40; 3- to 5-year hold
  Fastly (FSLY – $12.87) – Buy under $20; 2- to 5-year hold to $80+
  PagerDuty (PD – $22.73) – Buy under $30; 2- to 5-year hold
  QuickLogic (QUIK – $16.33) – Buy under $10, target price $40
  Rocket Lab (RKLB – $4.09) – Buy under $13, target price $30+
  Velo3D (VLD – $0.55) – Buy under $6, target price $50

$20-for-$1 Biotech
  AbCellera Biologics (ABCL – $4.71) – Buy under $6, target $30+
  Akebia Biotherapeutics (AKBA – $2.04) – Buy under $2, target $20
  Aptose Biosciences (APTO – $1.57) – Buy under $10, ultimate target $300
  Compass Pathways (CMPS – $9.50) – Buy under $20, hold a long time for a 10x return
  Inovio (INO – $10.98) – Buy under $14, hold a long time
  Medicenna (MDNAF – $1.16) – Buy under $3, first target $20, then maybe $40
  ScyNexis (SCYX – $1.40) – Buy under $3, target price $20, then $50
  TG Therapeutics (TGTX – $15.25) – Buy under $12 for buyout at $30+

Inflation
  A Short-Sale or REO House – ($415,400) – Hold
  Bag of Junk Silver – ($24.92) – hold through silver bull market
  Sprott Gold Miners ETF (SGDM – $23.97) – Buy under $28, target price $50
  Sprott Junior Gold Miners ETF (SGDJ – $29.75) – Buy under $39, target price $100
  Sprott Physical Gold and Silver Trust (CEF – $20.06) – Buy under $18, target price $30
  Global X Silver Miners ETF (SIL – $26.28) – Buy under $30, target price $50
  Coeur Mining (CDE – $3.40) – Buy under $5, target price $20
  First Majestic Mining (AG – $5.43) – Buy under $11, next target price $23
  Paramount Gold Nevada (PZG – $0.39) – Buy under $1, first target price $10
  Sandstorm Gold (SAND – $4.98) – Buy under $10, target price $25
  Sprott Inc. (SII – $36.20) – Buy under $40, target price $70

Cryptocurrencies
  Bitcoin (BTC-USD – $65,487.91) – Buy
  iShares Bitcoin Trust (IBIT – $37.15) – Buy
  Ethereum (ETH-USD – $3,487.52) – Buy
  Grayscale Ethereum Trust (ETHE – $26.79) – Buy

Commodities
  Crude Oil Futures – July 2026 (CLN26.NYM – $69.24) – Buy under $70; $200+ target
  United States 12 Month Oil Fund, LP (USL – $39.27) – Buy under $40; $100+ target
  Vermilion Energy (VET – $11.95) – Buy under $11; $24 target
  EQT (EQT – $34.36) – Buy under $35; $70 first target
  Energy Fuels (UUUU – $6.24) – Buy under $8; $30 target
  Freeport McMoRan (FCX – $46.24) – Buy under $44; $65 target within two years

International & Other Recommendations
  EMQQ Emerging Markets Internet & Ecommerce ETF (EMQQ – $31.25) – Buy under $38 for a $66 target in 12 to 18 months
  KraneShares Bosera MSCI China A Share Fund (KBA – $21.60) – Buy under $40 for a three- to five-year hold
  Morgan Stanley China A-Shares Fund (CAF – $12.02) – Buy under $18 for a three- to five-year hold
  KraneShares CSI China Internet ETF (KWEB – $26.44) – Buy under $40 for a double over the next three years
  Acreage Holdings (ACRDF – $0.23) – Buy under $2 for the Canopy Growth merger
  Mongolia Growth Group (MNGGF – $1.06) – 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 – $1.92) – Hold for buyout
  Invitae (NVTAQ – $0.02) – Hold for April 17 auction

Publisher: GwynRose LLC, 5348 Vegas Drive, Suite 868, Las Vegas, NV 89108

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First

MM – Can you update the next financing needed on PZG from 2023.
I’m still holding this one – if I recall correctly they only have a handful of employees and it seemed they would sell the company rather than attempt to mine the projects.

Me too…was in murphys 20x stocks, along with NVTA where I lost my shirt…I really believed in it and went overboard…note to self.

Chris–what do you think of my YMB post on NGENF’s just announced private placement for over 8 million shares at $2.35 Canadian (USD $1.74) plus warrants for half the number at $3.00 C for up to 36 months?

Chris,I saw your comment on last weeks radar report that you made a good decision to move funds into NGENF and NAT – what did I miss, the prices have been flat?

See my comments this AM on NGENF YMB. The plunge to $1.65 on significant volume corroborates my points.

NGENF will have results of its Phase2 trial in Q3 which I believe will push the stock over $10 (and, at the risk of sounding like Michael Murphy, over $100 in a few years). I am overweight NervGen but at $1.75 I couldn’t resist buying more and then after the raise was announced I doubled down and bot another tranche at $1.66.
NAT went ex-div Wed and was cheap so I grabbed shares and got the dividend and will sell calls against my shares to get a little more cash. The tanker business is booming now and I expect an even higher dividend next Q.
I like buying when things are on sale (like AAPL this week).
I could be wrong, but I now think ACXP is not likely to announce anything in the near term to push its share price higher.

NGENF–I wonder how much it costs to do the trials. The SCI patients are being cared for at Shirley Ryan. Once daily subQ injections in the abdomen are easy. Electrophysiology monitoring of nerve and muscle function are probably only once a week. All this shouldn’t cost too much for NGENF since Shirley Ryan is doing the basic care anyway. How long will this capital raise of $20 million Canadian last? Probably for several more SCI trials, at least through the open label extension when the placebo patients will be offered the peptide. If these phase 2’s are promising, then on to a much more expensive phase 3 for SCI. Or, do you think they will do phase 2 for MS, Alzheimers, Parkinson’s or acute SCI, and save the expensive phase 3’s until numerous phase 2’s show promise?

In August, when NervGen had $12M, they projected the cost of this P2 trial to be $9M and they would get $3M in grants from Wings for Life. With an administrative cash burn of about $2M per Q expected to rise, they were cutting it close on cash before this raise. If you have a Canadian brokerage account and can take advantage of last week’s raise, even at about US$1.74 per share you should buy in your Canadian account rather than pay the current market price of US$1.61 because you will also get a warrant for a 1/2 share exercisable at US$2.22 for 3 years. I believe that good trial results will make each share worth over $10 and each warrant over $5.

Thanks. So it appears that $20M C will get them through at least the open label extension where placebo patients will be offered the drug. Hopefully they can get more angel grants from Wings of Life or others to take care of administrative salaries for several more years. If the results are decent for a % of patients, more angel donors will come forward.

The real question is how good the success rate will have to be to get the pop to $10. If only 10% respond significantly, that will be good. The protocol can be tweaked to get more improvements. The drug is safe, and probably wouldn’t be too expensive, since anyone can inject the drug subQ in the abdomen daily for a short period of time. How do you view this?

We’re getting a bit ahead of ourselves, but look at AXSM’s valuation after about 1 in 4 people with narcolepsy experienced a better life while taking their drug. Definitely an apples to asparagus comparison, but analysts upped their expected mkt cap by a few hundred million dollars. I think the real significance of any success in Phase 2 will be not so much in the drug’s value in the SCI space, but in the fact that it improves nerve function in humans (full stop). If it works in SCI in humans, then it should work in other conditions in humans where it has been successful in animal models of stroke, MS and ALS. Not only are the markets for MS and stroke bigger than the mkt for SCI, but all 3 of those indications have more grant money available for research than is available for SCI research. Between additional non-dilutive funds for other indications and a major capital raise with uplisting to NASDAQ at a much higher share price shortly after data release (which will include information on re-myelination) NervGen can conduct whatever clinical trials are necessary in other indications as well as in SCI.

Good points, thanks. I forgot the reason they started trials for SCI rather than the much larger markets such as MS, Alzheimer’s. Maybe because there is no current treatment for SCI, whereas there are excellent simple treatments for early MS. Alzheimer’s doesn’t have any drugs that improve the patient, only ones that slow down the rate of decline. But where are the non-dilutive funds coming from? I guess through partnerships–but then the price to be paid is sharing the profits with the partner. Also, there is lots of competition for grant money.

Chris, thank you for the excellent research and insight on NGENF, what do you think would be the fallout and impact to the stock if Sept results are not as expected, what’s the risk to this investment?

MM- We would appreciate an update on the consequences of the DOJ case against Apple and your views on the stock.
Thanks- Pierre

Not MM, but I think the Biden administration just gifted you a great buying opportunity.

Hello Chris.
This is not part of the portfolio.
I have been carrying WU stocks for years since i worked for the company. Do you have any insight on the industry and WU’s future prospects?
Thank you.
Pierre

I have no insight on the industry or WU, but will tell you what I was thinking as I read MM’s latest pick, PYPL. “Why would anyone invest in the payments industry right now when there are so many competitors from Square, Zelle, CashApp, Stripe and behemoths like Google and Apple?” I am not familiar enough with the various payments systems to know whether WU has any advantage in any niche like remittances or other international transfers, and the dividend is pretty good, but I think you can do better elsewhere.

Short of the year. DWAC which will trade as DJT in a couple days. Truth social boasts 5 million users and is hemorrhaging money. I’d wait a couple days for the FOMO to level off though.

Looks like a crowded trade.

Ya think? 🙂

AMC and GME meme part 2.

VLD Getting clobbered after hours – back down to $.39 cents.

Velo3D (VLD) reported quarterly losses of $(0.29) per share which missed the analyst consensus estimate of $(0.08) by 262.5 percent. This is a 262.5 percent decrease over losses of $(0.08) per share from the same period last year. The company reported quarterly sales of $1.81 million which missed the analyst consensus estimate of $19.50 million by 90.74 percent. This is a 93.94 percent decrease over sales of $29.78 million the same period last year.



Everyone knew Q4 of 2023 would be bad, but it was more bad. Still, the major reason for hope is the new defense money approved last Fri. The new CEO, Brad Kreger said on the CC that since then new orders are coming in. Forget the past. Look to the future with the Bechtel endorsement. Those who bought at 20-30 cents will be happy.

MM, please re-evaluate your buy and target prices based on all this, especially considering the risky financial position at present. What is the technology worth in a liquidation scenario? Would we shareholders get anything in that case?

VLD–today’s trading was nerve-wracking. The scariest moment was early afternoon when a YMB bear posted what looked like a convincing notice of a bankruptcy filing in Delaware at 12:15 PM today. He wrote “2028” so I was suspicious. I asked whether he meant “2024.” He corrected it. I searched and couldn’t find any documentation of this notice. About 1-2 hours later his post was deleted. Someone else thought it was a lie. I regard this as FUD used by a short to scare everyone. Lazerator pointed out that VLD still has asset/liability ratio of 2 and they were still paying bills, so bankruptcy is not imminent, although it could happen later if they don’t get more orders. The stock had a nice finish and closed near the high of the day.

I believe the growth/recovery story is still intact. The only problem is cash, which could be handled through a reverse split and capital raise from institutions who could buy a stock over $5. I don’t accept the preoccupations of most investors with the supposedly bad consequences of reverse splits. If the new VLD management is fiscally responsible and is motivated to get orders and customer service going again, it won’t be like a bad situation like T Norchi of ARTH who just used reverse splits to milk that company into the ground to continue to pay his high salary for accomplishing almost nothing. While VLD is waiting to build enough sales to be cash flow neutral in later 2024, the capital raise with dilution will allow them to avoid bankruptcy. I won’t mind some dilution if it will enable the company to survive.

What was their forward guidance? Or did they have any in the earnings report? The problem with these stocks at these price levels is the volatility is easily amplified. Shorts can manipulate the price by putting the fear factor into the minds and hearts of current shareholders. And they make an emotional decision to exit the stock. MM says that a pull back in the share price is a buying opportunity. I can only assume that he has good reasons to believe that. What say you, MM? Thanks

In the CC of 2 days ago, their 2024 forward guidance was $80-95 million, down from $120 million given a few months ago. Today the stock has been very resilient. Quality bounces like a tennis ball, but eggs crack and splatter without bouncing. It’s premature to call VLD as a stock “quality”, but I think the growth story is still intact. Yesterday’s YMB board was extreme fear, gloom and doom, and I believed marked the low for the stock at 32 cents. Today the mood is much more positive, but still not irrationally exuberant. You can be an aggressive buyer below 40 cents. Read my YMB posts–you know my name there.

Anyone on this board taking a risk on AKBA pre decision today? Odds? If decision is bad how far down does this drop?

I’m in at 1.95 Steve,jgmd feels positive about it so I’m taking a chance,the editor of this newsletter feels it’s a 100 positive for getting the approval but take in mind his track record,it is still approved in China so they are still bringing in money,have a great day,so we should assume the drop shouldn’t be a total disaster

Thanks Ronald, do you see significant upside on the news?

Probably not until you start to see sales in the us,but if approved it should be safe to hold for the long term

MM–on AKBA, assuming VAD approval occurs and the stock goes to $3-4, do we hold for sales to come through in 6-12 months? Usually it is best to sell on approval, since sales uptake is speculative. (I failed to sell ARNA in 2012 on approval at $12-13. It fell to about $4 or less. Only later after a new drug estrasimod was approved, they got a buyout at $9 pre-reverse split.) VAD has been on the market in 36 countries, so there is a track record of sales and safety. So maybe it would be wise to hold for sales uptake and preferably a buyout. Is the TDAPA bonus payment in 6 months widely known and anticipated in today or tomorrow’s price?

In advance of news about approval, what do you suggest?

MM will TDAPA be a price catalyst and if so what’s your best, realistic projection for stock price by end of year?

Thanks. If the stock falls from today’s pre-approval price of $2.24 to $1.60-1.80, does that mean the market has not already factored in the TDAPA bonus? Investors tonight are looking for a close of $5 tomorrow, but you think it will remain in the $2 range? I would certainly be happy buying more later at $1.60, but only with the likelihood of a buyout. Without a buyout, AKBA might fail to market vada optimally, just as ARNA blew it in 2012 when it plunged from $13 on approval to $4 after 1-2 years. What is your estimate of the odds of a buyout, and at what price and when?

MM were you able to listen to the CC this morning? I missed it but am curious, especially now that the SP has dropped .30 since opening bell. Was actually looking for a little bump

I swear all of MM’s picks are cursed. It hit a high of $3 at 4AM in premarket and only hit a high of $2.47 in the regular session so far. It is currently trading around $1.97 and has hit a low of $1.89. I knew I should have sold in premarket. Did you also catch that the TDAPA approval is delayed until Jan ’25? POS!!

Last edited 7 months ago by Douglas Doyle

No, I have to give MM tremendous credit on AKBA. All the bulls on YMB were predicting a stock price of $5 today, buyout of $10-20 next week, etc. All wrong. They are short term traders who don’t understand TDAPA. They accuse CEO Butler of bad management. Butler actually learned from the mistakes by GSK with launching their competitor drug, Daprodustat. Butler knows that the TDAPA process takes 6 months, so it doesn’t pay to launch the drug now. And the bears complain about the label which says that quality of life and improvements in well being haven’t been proven for Valseo. To me, this is mere legal BS to cover your ass for the FDA. Any doctor knows that all of his anemia patients feel better when their hemoglobin is raised from low levels. There is a good fraction of a billion women worldwide with iron deficiency anemia from heavy menstruation, and all of them improve with iron treatment. For dialysis patients, more care is required to not overdose them with these erythropoeitin stimulating agents (ESA). All kidney doctors know to monitor the hemoglobin and keep it below 11. That is elementary school level basic medical care for these patients that I was taught as a medical student.

MM made the most accurate prediction of the stock price on approval, several months ago, and last night a decline to the high 1’s. Let the ignorant shorts create cheaper prices for longs like us who are confident in the value of Valseo. Before Jan 2025, I plan to add more, hopefully way below $1.50. I bought lots of shares 6 months ago at $1.15, which got my average cost basis down to $1.71 from $4.09 before. I only had a tiny position in KERX and then AKBA from the old days, which is why I was able to dramatically lower my average cost by buying many more shares at $1.15. My general advice for most speculative MM picks is to buy a small position if you like the story, then wait a few years to buy at much lower prices.

Congrats, MM. You were right on the money. See my post to Doyle below. Shorting AMGN is a great idea also. Valseo is slightly more efficacious and safer than AMGN’s darbepoeitin, and much more convenient as an oral drug. What % of AMGN’s sales is their darbepoeitin?

MM, tip of the hat as you were spot on with your call on approval and the resulting near-term price response. Nicely done.

I’m honestly surprised, and disappointed, to see a company with the setbacks that AKBA has endured experience an almost 20% drop in price on approval of a drug that will be transformative for the future of the company. But it is what it is.

MM or anyone –
any explanation as to why the discount on ETHE is increasing?
Anyone think it’s a good investment here, as opposed to ETH? Picking up the 20% +/- discount seems attractive.

MM what is Blackrock doing that makes them all in on ETH? Are you reffering to pursuing the ETH ETF?

Can you detail the discount? Where on the net can you monitor the discount?

https://ycharts.com/companies/ETHE/discount_or_premium_to_nav
I use ycharts, but there are other sources.
? Does anyone have any thoughts as to why the discount is increasing ? Steadily down since March 11 or so.