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

Before you read on, please be aware that the analysis below is my opinion only and may include flawed assumptions and inaccuracy of logic; therefore, caveat emptor applies here.  Furthermore, all emphasis (color-coded, boldness, and underlined) on the excerpts are my own.

This week bounce added to the strength of the previous week bounce, and solidify the support of the lower parallel line (of the two parallel lines that contained most of the uptrend since 2009). sp-500_weeklyNotice that the weekly 79 & 89 MA resistances are still above the current level and the 89 MA line (brown dash line) is in danger of turning lower; thus, it is vital that the bull keeps on trekking back to higher ground.  Perhaps, the January effect will kick in as we advance into January, and the price may climb back above these two MAs.

I am glad to see that on Monday, December, 31st 2018, all my core holdings $AEMD, $IBIO, $LRAD, and $SOLOW closed higher which allowed my 2018 YTD to end with a gain of 9.68%.  Although I had expected a much higher gain for 2018 due to the strong performance in the first nine months, the eventual broad market collapse during the fourth quarter took back a chunk of my gain, mainly from $LRAD since I did not take profit after it reached the high of $3.58 in August.  Lower price from $IBIO and ill-timed entry into $SOLO and $SOLOW also contributed to eating away my gain which peaked at 34% in the first week of October.  My most significant wins in 2018 were $TRXC and $CGC.  And my biggest loser was my stubborn multiple re-entries to long $MARK during its descent which I eventually gave up with a big loss.

Nevertheless, the biggest bungle of my life was the bailing out of my $AMRN long trade before the Reduced-it trial result.  Of course, in hindsight, it’s easy to call me a fool for missing such an opportunity.  However, I also believe that in every mistake, bungle, or loser, there is a lesson in them that I’ve to learn.  Hence, my most important and the most expensive lesson (in term of missed opportunity) is this:

“I must trust my own instinct, and not allow other opinions to affect my conviction and create doubt.”

Having learned a valuable and expensive lesson, I’m even more convinced that my main holdings of $AEMD, $IBIO, $LRAD, $SOLO, and $SOLOW are going to do very well.  Yes, I added $SOLO this week to supplement my $SOLOW.  Originally, I bought $SOLO and $SOLOW on a Friday in early November but the immediate decline of $SOLO on the following Monday spooked me silly, so I sold it quickly to buy more $SOLOW instead.  My rationale was that the warrant might not be as volatile as the stock.

Here is why I bought back $SOLO this week to supplement my warrants. A couple of weeks ago, $SOLO released a video showing the Zongshen factory where the Solo is going to be manufactured.  At the time, I didn’t know if the factory was an old factory refurbished to make the Solo or a brand new factory.  Although I speculated it could be a new factory, I did not know for sure.  This week, an article, “Electra Meccanica Ramping Up Production At New Zongshen Factory (Video)” confirmed that the factory is a brand new factory built by Zongshen specifically for the Solo.  This is a strong commitment from Zou Zongshen, and it also embodies his belief that the Solo will succeed in the long-run.  Per wikipedia.org, Zou Zongshen is a self-made man who turned the Zongshen Group into one of the five largest motorcycle manufacturers in China.  Per my 2 cents, that means Zou Zongshen has the vision and the essential risk-taking element to succeed in a competitive business environment.  In other words, if Zou Zongshen is willing to build a brand new factory to manufacture the Solo, then I don’t mind increasing my bet by buying back $SOLO since it is trading at a much more attractive price than I sold it in November.  And yes, I also added to my $SOLOW as well.

Another reason I bought back $SOLO and added to $SOLOW is that I also believe that Zongshen may be building a new factory for the Tofino as well. Although I do not have any evidence to show that Zongshen is building a factory for the Tofino, the recent secondary offering of $SOLO made me believe that he is.  When I think about it, the Tofino chassis is completed (see photo below), the only thing left to do is to finish the rest of the design before the factory can manufacture it.  Out of the blue, an unexpected dilution came out in November with the following statement, “Electra Meccanica intends to use the net proceeds from this offering for the further design and development of its Tofino two-seater electric sports car.” Thus, it is my logical deduction that $SOLO is accelerating the design of the Tofino to match the pace of the new factory that Zongshen may be building for the Tofino in 2019.  In other words, if the Tofino is to be ready for shipment in late 2019 or early 2020, the factory has to be ready as well.

Below is a picture of the Tofino’s chassis:

Electrameccanica Vehicles Corp--Electra Meccanica Reveals Tofino

In a nutshell, I am more confident that my $SOLO and $SOLOW investment will pay off in spade by the end of 2019 and beyond.

$AEMD – This one corrected a bit at the beginning of the year, but it is no surprise after six trading days of the uptrend. I am still waiting to see what kind of event that caused the change to an “interim” CEO that came with a generous stock options plan to go along with it.

I also believe the recent FDA breakthrough device designation for the metastatic cancer is a game-changer that is worthy of getting attention from the medical community as well as from the BPs.  My 2 cents is that the metastatic cancer is a more common occurrence than the patients infected with the deadly viruses.  In other words, the hemopurifier can be put to use almost immediately to run trials or to be used for “right to try” or “FDA expanded access provisions” by existing patients with metastatic cancer.  I believe (aka my 2 cents) the hemopurifier for metastatic cancer has a ready market that is attractive to the BPs.

Technically speaking: aemd_dailyFrom the daily chart above, there is a cup & handle formation, and the recent correction is forming a handle. So, there is a possibility of a breakout to the upside when the upward momentum comes back.

$IBIO – There is a new SEC filing this week that lead to further speculation of what is about to happen to this stock. Before I get to the new filing, let go back and tally up the rumor and article before looking at the new filing:

  • First, there was a rumor from rumormurmursbuzz.blogspot.com that stated, “At The Last Minute_Sanofi $SNY CEO To Announce Advanced Acquisition Negotiations With iBio $IBIO In NYC.”
    • Remember, this is a rumor so, by itself, it can’t be taken seriously and should be taken with a grain of salt
  • Then came this article, “Watch out for the ‘scale and speed’ of transformation in China, says Sanofi exec.”
    • If Sanofi is aware of the “scale and speed” of transformation in China and that “Transformation in cell therapies is happening at an even faster rate than the US, suggests Christoph Heinemann of Sanofi.”, then the probability is high that Sanofi is aware of CC-Pharming contract with iBIO. Don’t you think?
  • So we have a rumor and a statement from Sanofi’s executive that may add to something
  • Now, let take a look at the latest SEC filings:
    • Form 4 Filing of Kenneth Dart disposing of his 1 share of preferred stock
    • From the Form 4 filing under the Explanation of Responses:
      • As of January 1, 2019, the Reporting Person indirectly owns 70.1% of an entity that holds one share of the Issuer’s Preferred Stock designated as iBio CMO Preferred Tracking Stock with a par value of $0.001 per share (the “Preferred Tracking Stock”)
  • Thanks to Kcmule from Stocktwits, I was pointed to Section 5.01 from CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS of the IBIO CMO PREFERRED TRACKING STOCK of IBIO, INC.
    • Section 5.01 Upon (a) the date and time, or the occurrence of an event, specified in a Mandatory Exchange Notice, or (b) a Change in Control of iBio CMO LLC, each outstanding share of Preferred Tracking Stock shall automatically be exchanged for 29,990,000 Units of iBio CMO LLC, subject to adjustment pursuant to Section 5.02 (the “Exchange Ratio”). An exchange effected pursuant to this Section 5.01 is referred to herein as a “Mandatory Exchange”. As used herein “Mandatory Exchange Notice” means a notice delivered by the Issuer to each Holder of Preferred Tracking Stock, or by a holder of a majority of the outstanding shares of Preferred Tracking Stock to the Issuer, stating the Mandatory Exchange Time and the procedures for effecting the Mandatory Exchange. “Mandatory Exchange Time” means the effective date and time or event specified in a Mandatory Exchange Notice for the Mandatory Exchange or the effective date and time of a Change in Control of iBio CMO LLC, as applicable. A Mandatory Exchange Notice may be delivered only (i) after March 31, 2018, or (ii) in connection with an iBio CMO Deemed Liquidation Event (whether or not such event occurs before or after March 31, 2018), or (iii) in connection with an Issuer Deemed Liquidation Event (whether or not such event occurs before or after March 31, 2018), or (iv) in connection with a Change in Control of iBio CMO LLC (whether or not such Change in Control occurs before or after March 31, 2018). The Issuer will send or cause to be sent to the Holders of the Preferred Tracking Stock (1) the record date for any dividend, distribution or right of the shares of capital stock of the Issuer or capital stock or other equity interests of iBio CMO LLC, and the amount and character of such dividend, distribution or right or (2) the effective date on which any reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up involving the Issuer or iBio CMO LLC (including, without limitation, any iBio CMO Deemed Liquidation Event, any Issuer Deemed Liquidation Event or any Change in Control of iBio CMO LLC) is proposed to take place. Such notice shall be sent at least 20 Business Days prior to the record date or effective date for the event specified in such notice.
  • Per my understanding, Kenneth Dart disposed his 1 share of Preferred stock and is now the owner of 29,990,000 Units of iBio CMO LLC and that “the Reporting Person indirectly owns 70.1% of an entity.”

So, if you put all that above together into a formula, you get this:

Rumor of Sanofi buying $IBIO plus

Article about China ‘scale and speed’ of transformation in China from Sanofi’s executive plus

Kenneth Dart converting his preferred stock back to common shares of iBIO-CMO, LLC per mandatory exchange rule

Equal to:  ???

Well, all I can say is that your guess is just as good as mine!

Remember, all the above is just pure speculation and is an exercise of a “what if” scenario, so take it with a grain of salt as well.

Regardless of the speculation of the “what if” scenario, the fact that Sanofi executive mentioning of “scale and speed” of transformation in China bodes very well for iBIO in term of its contract with CC-Pharming, so in a way, it’s all good. And I’m getting a good feeling that 2019 is going to be an excellent year for the owners of $IBIO.

$LRAD – Same thought as last week

This is a waiting game for the development of the following significant catalysts:

  • 2019 Army order is looking good to exceed $11 million
  • Country-wide mass notification sales opportunities range from $1 million to $25 million with some on the extremes as well
  • City and county officials in Northern and Southern California are looking into LRAD’s mass notification systems with the possibility of federal funding

I’ve no problem waiting here.

Thanks to the uptake on $IBIO, and my LEAP options on $CARA and $CGC, it is more than enough to offset minor downdraft from my other position to remain neutral for 2019 YTD.

Current positions (in alphabet order):

Stocks = AEMD  IBIO  LRAD  SOLO

Call options and warrant = CARA  CGC  TRXC  SOLOW (due to Apple warning, I closed out my $MU and $NOK LEAP options at breakeven)

Plus cash (up 0.2% 2019 YTD)

My 2 cents

From my camera:

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Categories: Daily trading Journal, trading journal

Tags: , , , ,

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