Weekly thought on $LRAD, $IBIO, $DFFN, $AEMD

Corrections had been on a lot of people mind for quite a many months and yet we feared missing the ride if we planned ahead too soon to exit positions.  A few minor broad market corrections and I would have abandoned positions to prepare for the BIG FALL only to see them sped ahead without me on board. This happened a few times last year and I lost some big opportunities.  The result changed my trading mindset which discouraged me to abandon position too quickly due to a few minor broad market corrections.

Alas, the change I made put a dent into a well-placed “safety precaution” protocol and it costed me plenty the last two weeks when the market made a free fall not seen for quite a while. Instead of raising cash in anticipation of the BIG FALL, I became reactive to the fall.  Although reactive pale in comparison to proactive in protecting the port, it does stop the damage from getting deeper.  This is more apparent in my $MARK trades.  Although I got lucky bailing before the hit piece from JCap surfaced, I took quite a few hits due to my aggressive doubled-down routine.  If I’d held through the JCap ordeal, I would have doubled my losses.  The SP-500 drop on Jan 30th “could” have been a warning sign of a major market correction and I would normally have lightened up based on my standard “safety precaution” routine.  Yet I brushed it off because last year proved me wrong to be so cautious. Lesson, never change your time-honored routine based on a few bad results

However, there are positions I would never dream of disposing and they are $LRAD, $IBIO, $AEMD, and now $DFFN because they embody the germination of a start-up companies with better than 50/50 probability of success (in my humble opinion, of course!) with price being so low already to begin with.  On the other hands, for those stocks where price already rallied long and hard such as $PI, $DRMC, $HIMX, and now $MARK, they should be the first one I abandoned the moment I sensed the possibility of market correction coming.  While my observation above sounded like a “should’ve, could’ve” kind of talk, it is also a reminder that I must adhere to an established safety precaution routine that allowed me to survive and prosper for so many years.  As part of being reactive, I decided not to get back in $MARK for long-term hold in order to wait out the confusion created by the JCap hit piece and the current broad market bearish momentum.  I will wait for $MARK earnings report before making a commitment to stay long.  Meanwhile, I may daytrade or swing trade $MARK for quick gain/loss only.SP-500_DailyThe above daily SP-500 chart showed a nice bounce back on Friday. What I like to see is that there is a follow-through to the upside from here before I consider the bull is back; otherwise, Friday bounce could as well be a dead cat bounce (similar to last Tuesday bounce) and the market may continue to fall further.

After $LRAD earnings conference call on Thursday, I added even more shares to my already over-weighted position.  In my opinion, the growth path of $LRAD has never been stronger and I couldn’t believe I could pick up shares at $2 bucks!  Although I added before price dropped to $2, I simply must added more at $2 for what I think is a price we may never see again if we hear more news on sales next week and beyond.

Below are some of the key points from the conference call that made me even more confident about its future potential:

  1. LRAD’s fiscal 2018 opened with a strong first quarter with $7.6 million an increase of 159% of the 2.9 million in the first quarter of 2017.
  2. notification was up nearly 300% and directional products were up 128%
  3. Gross profit was up 223%, operating income increased to 175% excluding the remeasurements of the non-cash deferred tax asset
  4. In fiscal 2018 we expect the U.S. Army to release a competitive RFP for a multi-year program.
  5. The mass messaging service combined with LRAD’s attention commanding sirens and the industry’s most intelligible voice broadcast provides mass notification solutions that are targeted as scalable.
  6. The capability to integrate audible voice mass notification and mobile phone emergency messaging services puts LRAD in a terrific position to significantly grow LRAD’s mass notification business.
  7. FromQ&A:
    1. Unidentified Analyst

      Great. Also when it comes to Genesis and the LRAD the company or the [indiscernible], how many other companies are there that have the both the software and the hardware for self?

      Richard Danforth

      I believe the answer to that is none.

LRAD, the company that make the superior mass notification system with the highest speech clarity rating even at long distance, is the only company that sell both the mass notification hardware system as well as the software that allows mass notification by phone messaging which can be targeted to precise location(s).  It’s a powerful combo that provided incentive for customers to sign up with LRAD.

Why are you so gung-ho on LRAD that you are swinging a big one to the fences.

I think it is pretty obvious that all the old bullhorns and legacy loudspeakers must be replaced sooner or later when a much better technology is available that is nth times more productive and effective in its true intention- to reach maximum targeted population as quickly and efficiently as possible for any urgent situations such as earthquake, tsunami, pandemic attack, etc from natural disasters.

Not only that, I truly believe our earth is heating up alarmingly due to years of carbon dioxide (CO2) releases.  With a hotter crust, earth’s plates (aka tectonic plates) are going to shift more easily creating earthquakes and tsunamis more frequently. Don’t believe me? Below are some articles discussing the possibilities:

  • How climate change triggers earthquakes, tsunamis and volcanoes
    • Now, the weight of evidence looks to have come down on the side of a broad and significant increase in hurricane activity that is primarily driven by progressive warming of the climate. For many, the bottom line is the sea surface temperature, which is a major driver of hurricane activity and storm intensification. Last year saw the warmest sea temperatures on record, so it should not be a surprise.
    • Now, global average temperatures are shooting up again and are already more than one degree centigrade higher than during preindustrial times. It should come as no surprise that the solid Earth is starting to respond once more. In southern Alaska, which has in places lost a vertical kilometre of ice cover, the reduced load on the crust is already increasing the level of seismic activity. In high mountain ranges across the world from the Caucasus in the north to New Zealand’s southern Alps, longer and more intense heatwaves are melting the ice and thawing the permafrost that keeps mountain faces intact, leading to a rise in major landslides.
  • Global Warming May Trigger Greater Seismic Activity
    • The melting of glaciers driven by global warming portends a seismically turbulent future. When glaciers melt, the massive weight on the Earth’s crust is reduced, and the crust “bounces” back in what scientists call an “isostatic rebound.” This process can reactivate faults, increase seismic activity, and lift pressure on magma chambers that feed volcanoes.
  • The Weird Way That Climate Change Could Make Earthquakes Worse
    • Not all geologists agree about to what extent, and how often, human activity affects seismic activity. In fact, there have to be natural risk factors—specifically, unstable fault lines—for an earthquake to occur. However, the evidence is there that humans are creating situations that can agitate, lubricate, and put pressure on these plates. In fact, a book called Waking the Giant by Bill McGuire documents the science behind climate change creating ideal conditions for tsunamis, volcanic eruptions, and earthquakes.

The list goes on and on if you google global warming and natural disasters. My point is that when natural disasters appeared more frequently in the future, the need for better mass notification systems to reach the maximum population as quickly and efficiently as possible will become more prevalent.  And I like to load up the truck on $LRAD before cities, governments, private and public organizations feel the need to upgrade their legacy mass notification systems.

I expect the simulated dialogues (below) to become more common after a few more natural disasters rocked the sun baked earth.

Ring! Ring! Ring!

“LRAD”

“I heard you are the guy that sell the superior mass notification hardware system and the software that allows us to send mass phone messages based on affected areas?”

“You got that right!  How can I help you?”

LRAD may sound like a “boring” company that sell a new type of long-range speaker; but it is holding technologies that can reinvent the way mass notification is being done.  By combining hardware that generates clear mass notification voice at distance far beyond any legacy speakers and bullhorns could do and the software that allows mass phone messaging to the affected area, LRAD has a combo package that allows any cities, governments, private and public organizations to reach MOST of the affected citizens.  My 2 cents is that LRAD has the MOST EFFECTIVE tools to notify the mass of any imminent dangers quickly and efficiently!

And here is the beauty, we are still at the early stage of the mass notification transformation.  It is my 2 cents that we will be seeing more mass notification systems sales coming into LRAD.  Per item #2 above under CC calls excerpt, mass notification (sales) was up nearly 300%

Here is how I depicted the accelerating rate of the LRAD mass notification systems:

Drip…  (early years)

Drip, drip, drip  (recent years)

Drip, Drip, Drip, Drip, Drip, Drip… (2017)

Drip, Drip, Drip, Drip, Drip, Drip, Drip, Drip, Drip, Drip, Drip, Drip, Drip, Drip, Drip (2018)

Starting with light persistent rain and evolved into pouring rainfall… (2019 and beyond)

Now you know why it is now the largest position in my port.

Before I move on, I like to cut/paste an excerpt from the recent CC Q&A that offer another tell-tale sign of future growth:

Unidentified Analyst

Yes, I’ve been a long time stockholder and I’m very excited about the current news. I hope we can ship huge amounts of hardware. My question is about the manufacturing capacity, in view of all the huge increase in demand, has the company prepared to meet that demand, has enough manufacturing capacity to meet the anticipated demand?

Richard Danforth

Well to address that increase in demand and increase in capacity we have signed a lease for a larger building. In fact I think it’s about twice the size from a manufacturing floor perspective. We expect to make that move sometime this summer.

To summarize my other positions, I’m going to list their coming catalysts:

As time passed, my port changed according to new information I received. I could be excited about a company, loaded big, and eventually, it disappeared from my radar.  This happened because of new information that I felt did not support my original thesis.  However, when new information arrived that erased my doubt about the company, I have no problem buying back the position.  $LRAD is a perfect example.  I used to swing for the fences with $LRAD (formerly $ATCO) until I lost faith with the former management team.  However, with the new management team and the progresses I’ve seen so far, I immediately accumulated a position even though I did not get in under $2.  Recently, the attack on $MARK by JCap created doubt among investors and I did not want to be part of a battle b/w the shorts and the bulls. I feel I need to wait for the next earning report to provide more transparency on revenues before I decide to commit for long term.  $TRXC’s CFO selling massive amount of shares after CEO stock sales shook my resolve to hold the stock as well.  To survive, I must act on information that I felt is relevant.  I must always be aware that I’m making bet on stocks I hold.  If I see good odd, I will hold.  If new information appeared to make me change the odd of success, I’ll modify my holding as well. In summary, every position I hold is based on my opinion (my 2 cents) only.  And as we all know, opinion can be wrong from time to time so I must adjust, modify, and change my portfolio if my opinion changes as well.

Due to the extreme bearish week in the broad market as well as corrections from my stocks, my port gave back quite a chunk.

Current positions:

Main port: LRAD  IBIO  DFFN  AEMD  & cash (down 4% YTD)

Trading port: MENXF IBIO

My 2 cents

From my camera:

Wednesday Morning 018



Categories: Daily trading Journal, trading journal

Tags: , , , ,

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  1. Weekly thought on $AEMD, $DFFN, $IBIO, $LRAD, TRXC – Trading my two cents

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