Special thought on $TRXC which I believe echoed other committed long-term investors

If there is ever a time to test my conviction, yesterday was the day.  The stock market is not made for everyone to get rich easily and painlessly.  Sure, plenty of people are getting rich lately because the stock market has been up for the past nine years BUT only if you hold on to the “right” stocks.  Even if you only bought the SP500 index fund, it was not a smooth ride.  There were plenty of turbulence along the way that made you pause.  Just like those sudden drops when your commercial flight hit the air pockets that made your heart dropped. Eventually the flight landed safely and you were on your merry way.

Yesterday my $TRXC position went into an air pocket and price dropped severely which I did not expect to see happening.  However, instead of panicking and dumping the shares as plenty seemed to be doing, I looked to sell other positions to raise money to buy more $TRXC.  Gone are the day I panicked and dumped only to see the stock bounced back furiously without me on board.   Someone* once said that “those who cannot remember the past are condemned to repeat it.”  For some reason, this phrase is forever stuck in my head and it surfaced yesterday which prompted me to start allocating more money to buy more $TRXC.

*George Santayana was a philosopher, essayist, poet and novelist

So what was the past that you were trying to avoid repeating?

It was $LNG.  Back in 2010, my research suggested that $LNG was THE stock to buy and hold ’cause liquefied natural gas was abundant in the U.S. due to fracking and there was big money to be made shipping them outside U.S.  $LNG has huge facility to store liquefied natural gas for loading to tankers.  I loaded up the boat at less than $3 per share and told myself to hold for three years minimum.  Unfortunately I panicked out with a double.  While a double wasn’t so bad but missing the boat to $85 in September 2014 was bad enough.  Below is a 2010 $LNG weekly chart that eerily resembled the $TRXC drop this week:LNG_2010See the similarity?  Even though I’m comparing $LNG weekly chart to $TRXC daily chart, the logic is the same.

What happened with $LNG was that the shorts were yelling “fire” regarding the refinancing of the loan that was due soon.  Suddenly, everyone was dumping because they thought a failure to get refinancing would destroy the company.  And that was exactly what the shorts wanted the investors to think. I thought I was “lucky” to get out near the top ’cause I was quick in taking my profit.  After listening to the yelling of fire for the first two weeks, I stopped checking the chart daily and only checked once a week when I remembered to do so.  As you can see in the chart above, the downtrend last six weeks and then consolidated at the $2 to $3 range for a good five months before heading back up.  By July, I stopped checking $LNG entirely and forgot all about it.  Obviously by the time I checked again in 2011, $LNG was already trading above $10 so I thought I missed the boat.  And did I MISS the boat!  If I had stuck to my original thesis of holding for long-term, I would most likely ride it to $50 or $60 if not all the way to $85.

This week, the shorts attacked $TRXC and threw the kitchen sink at it as well.  This was a successful attack because price dropped about 25% from Thursday high.  What made this week very interesting was that from Monday to Wednesday, I was actually in a “trading” mode on $TRXC ’cause I wanted to sell and buy it back at lower price. I even had an idea that price could reach as low as $2.80. But then on Wednesday night, I re-read the 1st and 2nd quarter $TRXC earnings reports and found that the laparoscopic surgeons in Europe used the Senhance system more frequently.  In other words, awareness of the Senhance robotic system in the laparoscopic surgery community increased.  It is gaining momentum and CEO Pope was not kidding when he said the plan is to target the Senhance to the laparoscopic surgical market. CEO Pope’s plan is to have the laparoscopic surgeons embraced the Senhance robotic systems because its haptic feedback system, eye control, fast docking time, and cost effectiveness give them the “close connection” to the patient and the convenience they coveted.  From then on, I was sold. I just didn’t want to let go of my $TRXC shares anymore.  When price broke down suddenly from $3.05 to $2.80 on Thursday afternoon, instead of getting out like I normally would do, I bought more.  Then on Friday, I added when a new level of interim low materialized. I added at $2.70; at $2.65;  at $2.55. And at $2.35 I completed my final purchase to get the size I wanted. Contrary to the panicky sellers, I saw a gift being presented and I gladly accepted.

Why are you so confident about this company?

It’s ALL ABOUT THE FUTURE.

$ISRG success is proof that robotic assisted surgery is gaining acceptance worldwide; but its reach has limit due to lack of haptic feedback, long docking time, and expensive parts replacement.  Surgeons in the laparoscopic surgery wanted to feel what they are working on. ISRG’s Da Vinci lacks the ability for the surgeon to receive tactile feedback to what they are doing, that is why most of laparoscopic surgeons are still performing the surgeries without robotic assistance. Senhance has the opportunity to change all of that.  Like the Da Vinci, it’s going to take some time for traditional laparoscopic surgeons to become aware of Senhance capabilities which included the ability to:

  1. have haptic feedback
  2. have “3rd hand” via 3DHD vision controlled via eye-sensing
  3. have open view of operating room
  4. perform hybrid surgery with open source ports which allow robotic and traditional lap instruments work simultaneously
  5. use 5mm and 3mm instruments architecture
  6. have Trocar placement like standard laparoscopy
  7. have easy and quick docking time
  8. easy change of instruments without changing trocars
  9. easy and quick patient repositioning
  10. allow 22 reusable instruments (5-10mm) which contributed to responsible economics
  11. have lower per patient cost compared to the Da Vinci system
  12. be compatible with hospitals’ existing technological system
  13. accept other technologies to enhance surgical procedures
    1. Here is an excerpt from 2nd quarter earnings transcript that provided a perfect example:

      Two other factors growing trends in surgery today are the use of Fluorescence Imaging and micro-laparoscopic using 3 millimeter instruments. In our open architecture strategy has allowed us to make tremendous progress this year incorporating these trends in the Senhance experience. In our last Investor call, we discussed our progress with incorporating two leading Endoscopic Fluorescence Technology, the Novadaq Pinpoint imaging system and the Stryker 1588 AIM platform. I’m pleased to report that the Pinpoint Fluorescence system has now been used clinically in conjunction with the Senhance platform in multiple general surgical and gynecologic procedures. Through this program, speed into perspective, we progressed from validation activities to clinical utilization of the Pinpoint in less than 6 months.

When you put together all of the above and float it on the river of the future, you know it is going to sail mightily and will not sink.  It’s that kind of confidence that prompted me to liquidate all my $MCIG and part of $SEED to add more $TRXC. To me, it is a once-in-a-lifetime opportunity to buy an FDA approved robotic surgical system company near the bottom of the price range AFTER news of FDA clearance and before sales of the Senhance robotic surgical system started to roll in.  There is no stopping the technological advances that thrusted upon the human race when it comes to applying minimally invasive surgery to fix us up.  NOBODY wants to deal with pain from traditional big incision and the longer healing time.  EVERYONE prefers laparoscopic surgery with smallest incision if available.  Senhance has the opportunity to expand on laparoscopic surgery by assisting them with robotic precision and accuracy.  Haptic feedback makes it much safer because surgeons did not have to give up the direct feel while sitting comfortably in front of the cockpit controlling the robotic arms.  The ability to perform hybrid surgery (see item #4 above) allows surgeons the flexibility and option to IMPROVE safety.

In a nutshell, buying $TRXC is like buying a piece of the future you KNOW will happen. It is not a IF but WHEN.

So, when is WHEN?

Every momentum has a beginning.  I think we are at the beginning of a momentum that CANNOT be stopped.  I don’t care if the shorts threw the kitchen sink at us, my 2 cents is that they will fail.  It is like trying to discredit the innovation of automatic transmission in favor of staying with stick-shift transmission in automobile.  Shorts would be like yelling, “automatic transmission doesn’t work! Look at all the malfunctions we heard!” Ha! Look where we are now with automatic transmission.  Sure stick shift has its advantage but automatic transmission makes driving easier and safer for the greater population. And Senhance’s haptic feedback makes robotic laparoscopy easier and safer for both surgeons and the patients.

Just when sellers think the end is near for $TRXC on Friday meltdown, $TRXC IR released a video that enhanced my commitment for long-term hold.

Click here to see the supporting presentation in PDF format

The above video is from Senhance Robotic Surgery Lecture Program in San Diego, CA October 24, 2017.  Per the video, Dr. Stephan has done more than 20,000 laparoscopic procedures in his 25 years of performing laparoscopy.  According to Dr. Stephan, a little bit in his mind, Senhance is the robotic laparoscopy.

If this is not a validation of Senhance advantages, I don’t know what is.

Yes, I know.  I’ve been known to stop out of my “long-term” position due to general market dynamic ($PI, $HIMX, and $DMRC are good examples). This time, I’m going to put $TRXC into the same category as my other true long-term hold which are $IBIO and $LRAD.

Buying stocks are inherently risky but also extremely rewarding if you “found” the right stocks to hold.  So what is the right stocks?  How do we know which one is the next Amazon, Apple, Microsoft, etc?  We will never know “for sure”; but we do have an imagination to see what the future will look like.  As from what I can see with the available data and superior technological developments in the Senhance robotic system mentioned above, I don’t believe it is a stretch to see more and more laparoscopic surgeons adopting the use of robotic assistance provided by the Senhance robotic surgical system.  If there is a lesson to be learned from missing AMZN, AAPL, or even TSLA, it is the willingness to commit to the future we expected to see beyond the current fundamental status of the company.  Yes, it is VERY RISKY but at the same time VERY REWARDING as well.

Btw, giving the millions of laparoscopic surgeries performed worldwide, if Senhance is able to gain a large following from the laparoscopic community of surgeons, believe it or not, it is my humble opinion that $TRXC will become much bigger than $ISRG in the long run (with the assumption that $ISRG could not come up with a new system with Senhance’s capabilities to compete with Senhance in time.)

Of course, it is only my 2 cents is that we have a WINNER in our hands regardless of all the noises from doubters.

Thanks for reading and may fortune blesses all who invested in $TRXC.

My 2 cents

From my camera:

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Categories: Daily trading Journal, trading journal

Tags: ,

6 replies

  1. Come back and read this every time you get tempted to sell for whatever reason!

Trackbacks

  1. Weekly thought on $AEMD, $HTGM, $IBIO, $LRAD, $SEED, $SIGO, TRXC – Trading my two cents
  2. Special thought on $TRXC which I believe is the bargain of the century – Trading my two cents

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