Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Tuesday, September 13, 2005: The
merger business is booming. This says loads about buoyant business optimism.
I'm personally not big on most mergers. They rarely work. I can't see Oracle's
latest deal -- its deal for Siebel Systems -- succeeding. Imagine you're Oracle.
One year you buy PeopleSoft for $10.3 billion. The next year Siebel Systems
for $5.85 billion. Then you quietly pray that all the newly-rich executives
will stick around for the seriously hard work of getting them all to work harmoniously
together. At the first sign of Larry Ellison's fabled quirkiness, I'd be out
of there. Meantime, you can't expect to get rich on Oracle's stock. It's going
to see InSite Vision (ISV) present this morning: It's at 11:30 AM
at the Friedland Investment Events' Undervalued Equities 2005 Conference, held
at the DoubleTree Suites Times Square Hotel in New York City today. I know nothing
about Friedland except that, according to their web site -- click
here -- they put on a huge number of free investment conferences
all over the country, i.e. somewhere near you. Meantime, my readers are
sending me conflicting opinions on InSite. One doctor reader likes to stay away
from putting excessive drugs in the eye. In answer to my question as to whether
InSite is cheap, another reader writes:
undervalued Harry. We should have the preliminary results of the the Azithromycin/tobramycin
arm of the phase 3 trial prior to the end of the month. Shortly thereafter,
look for a partnering deal with big pharma providing a cash infusion. Of course
the cash situation is currently effecting the stock price. Kumar is looking
for reimbursement of the AzaSite trials expense, upfront payment , milestone
payments and financing of ongoing R&D. Look for a royalty in the 25% area.
I'll know more today
after I attend management's presentation. InSite closed last night at 63 cents,
up from the 50 cents when I first looked at it.
Consider that Alcon's revenues for Q2, 2005 on its inflamatory and infection
products were 171 million, annualized, 684 million. Add to that their otic anibiotic
revenue of 200 million.
AzaSite sales are estimated to be in excess of 200 million annually. This has
been collaborated in a study by Navigant Consulting. Then we have the rest of
the AzaSite franchise, AzaSite plus, the combination inflammatory/ ineffective
drug, ISV's answer to Alon's combination drug, Tobradex, annual sales of 200
million. Then the otic antibiotic, Alcon's sales, 200 million annually. Then
add the veterinary market.
Knowing that investors in biotech are influenced by a falling share price thinking
that someone "knows something", the stock has been under attack by
naked shorting the past year and a half. That will cease with good trial results
and a decent partnering deal and cash infusion.
In my opinion, the stock should be valued at $1.50 currently and $3.00 after
trial results and a decent partnering deal. Hopefully, the fair value of the
stock will be reflected soon.
The Big Easy is drying out. This is good news.
in China: Shi Tao, a former news editor for
the Contemporary Business News in Hunan province, was sentenced in April to
10 years' imprisonment for leaking "state secrets". He was
convicted on charges of emailing foreign-based websites with the text of an
internal message circulated to Chinese journalists last year about dangers surrounding
the 15th anniversary of the Tiananmen Square massacre in 1989. The Chinese government
considers the Internet to be a hothouse of subversive thought. About 40,000
government officials are believed to be assigned to monitor emails, websites
and cut off access to websites. Since the end of last year the Chinese Communist
Party's propaganda department is believed to have stepped up operations at the
organization known as "Office 1106", which trawls through cyberspace
for signs of subversion. Companies who do business in China have to toe the
local line. For example, Microsoft's China-based Internet portal blocks the
words "democracy", "freedom" and "human rights".
to fully destroy an economy: There is a growing
madness in oil-rich Venezuela. Item: : This recent piece from the Financial
Chávez set to extend government control over big banks:
Venezuela is preparing to extend political control of private banks operating
in the country as part of a drive to spread "revolutionary" government
control over the economy of the world's fifth-largest oil exporter. Venezuela's
banking superintendent has privately told the heads of several of the banks
that President Hugo Chávez wants to place two government representatives
on the institutions' governing boards.
The move would
affect Banco Santander and BBVA, the Spanish banks, which own Banco de Venezuela
and Banco Provincial respectively, two of the largest financial institutions
banks that are expected to be targeted include Banco Mercantil and Banesco.
A bid to extend government influence over the banks by installing official
representatives, rather than by taking equity control, is part of Mr Chávez's
drive to introduce what he describes as the "socialism of the 21st
across Venezuela are being asked to introduce "co-management" as
the preferred model of corporate governance. Approval of new loans from state
banks requires companies to formalize a minimum of 20 per cent worker representation
government is also in the process of implementing a program to redistribute
land from large estates to the rural poor. However, a move to extend political
control over banks would mark a new stage in what analysts see as the creeping
"socialization" of the Venezuelan economy under Mr. Chávez,
a close ally of Cuban president Fidel Castro.
that government representatives on bank boards would act as "political
commissars" whose role would be to ensure that credit flows are determined
by political rather than by financial factors.
has a revolutionary project and by necessity that has to go through controlling
the flow of credit," said Francisco Faraco, a banking specialist and
consultant based in Caracas. "Government representatives will act as
political commissars deciding who should and who should not receive credit."
Two months ago,
a central bank law allowing the government to withdraw and spend part of Venezuela's
almost $30 billion in international reserves was passed.
Boudreaux staggered home very late after another evening with his drinking
He took off his shoes to avoid waking his wife, Clotile.
He tiptoed as quietly as he could toward the stairs leading to their upstairs
bedroom, but misjudged the bottom step.
As he caught himself by grabbing the banister, his body swung around and he landed
heavily on his rump.
A whiskey bottle in each back pocket broke and made the landing especially painful.
Managing not to yell, Boudreaux sprung up, pulled down his pants, and looked in
the hall mirror to see that his butt cheeks were cut and bleeding.
He managed to quietly find a full box of Band-Aids and began putting a Band-Aid
as best he could on each place he saw blood.
He then hid the now almost empty box and shuffled and stumbled his way to bed.
In the morning, Boudreaux woke up with searing pain in both his head and butt
and Clotile staring at him from across the room.
She said, "You were drunk again last night weren't you Boudreaux?"
Boudreaux said, "Mon cher, why you say such a mean thing?"
"Well," Clotile said, "it could be the open front door, it could
be the broken glass at the bottom of the stairs, it could be the drops of blood
trailing through the house, it could be your bloodshot eyes, but mostly..... it's
all those Band-Aids stuck on the hall mirror.
Italians shouldn't be paramedics
Luigi and Salvatore are out in the woods hunting when suddenly Salvatore grabs
his chest and falls to the ground. He doesn't seem to be breathing; his eyes
are rolled back in his head.
Luigi whips out his cell phone and calls 911. He gasps to the operator, "I
think Salvatore is dead. What should I do?"
The operator, in a calm soothing voice says, "Just take it easy and follow
my instructions. First, let's make sure he's dead."
There is a silence...... Then a shot is heard.
Luigi's voice comes back on the line,
"Okay, now what?"
Recent column highlights:
+ Manhattan Pharmaceuticals: Click
+ NovaDel Biosciences appeals. Click
+ Hana Biosciences appeals. Click
+ All turned on by biotech. Click
+ Steve Jobs Commencement Address. The text is available:
Click here. The full audio is available. Click
+ The March of the Penguins, an exquisite movie. Click
+ When to sell your stocks. Click
This column is about my personal search for the perfect
investment. I don't give investment advice. For that you have to be registered
with regulatory authorities, which I am not. I am a reporter and an investor.
I make my daily column -- Monday through Friday -- freely available for three
reasons: Writing is good for sorting things out in my brain. Second, the column
is research for a book I'm writing called "In Search of the Perfect
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