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, the SP500 took a dip on Wednesday which gave me a scare that the market might follow the theme song of “Sell in May and go away.” Notice that Wednesday (see blue arrow) also exhibited a daily bearish engulfment candlestick bar. I bought $SPXU on Wednesday but got stopped out on Thursday when the SP500 rebounded from the low to close the day with a spinning-top bar.
However, I do not think we are out of the wood yet. From the weekly chart below, I believe the SP500 needs to stage a strong rally next week to refute the possibility of “Sell in May” pattern. The weekly bar barely made it back slightly above all-time high resistance. Next week market action will be telling. I think it will depend on how the quarterly earnings from thousands of companies come to light.
This week, I made and missed a few trades. Missed the $TEUM day trade on the long side because I jumped the gun to buy the put options early in the week thinking that the stock would correct before next week May 7th earnings update. By the end of the week, I closed the $TEUM put options because I felt putting the risk money into $CARA call options would be a better bet. I closed the $CARA near term call options and bought back the August call options to give it more time in case the Phase III result comes out after the June call option expiration date. I also bought, sold, and then bought back $CRBP during the week which I will explain below.
$CRBP – This was originally a play on the technical bounce which failed, and I bailed for a small loss. In the above daily chart, last Friday green bar (before the boxed bars) showed an uptick above the 79 & 89 MA support, so I bought on Monday to bet on a bounce happening this week. Unfortunately, as seen on the second red down bar (Tuesday) inside the box, I was stopped out for a loss. Thursday bar dipped below the 89 MA support, and I was about to give up on the stock ’cause it might start a downtrend below the 79 & 89 MA support. However, Friday bounce negated my sentiment and I bought the stock back. I’m even more encouraged that the price closed above the 79 & 89 support.
On the longer term weekly chart, there is still another hurdle to fight through. Notice the symmetrical triangle with current price leaning on the upper edge. Thursday down day made me believe that it could break to the downside of the symmetrical triangle; hence my almost giving up on it. But Friday bounce shows that there is a possibility that it may break to the upside next week.
Since this is a pure technical play for the moment, I will not waste time discussing the fundamental side of the company unless the breakout is on the upside of the symmetrical triangle by the end of next week. As usual, there are bullish as well as bearish arguments on the drugs Corbus Pharmaceuticals are working on.
$IBIO – Last two weeks, I’ve discussed the deal iBio signed with CC-Pharming of China is under-rated. This week, I like to opinionate that not only is the deal under-rated, but the valuation is severely undervalued as well.
First of all, the company market cap is a mere $17.15 million based on Friday closing price per Yahoo Finance.
Below is a cut/paste of the Total Assets of iBio per recent 10Q ended December 31, 2018.
Basically, the market cap of $17.15 million is only about $3.79 million over the cash balance of $13.36 million @ December 31, 2018. This $3.79 million was already below the value of other assets based on “book” value. The REAL asset is in the IP behind the plant-based technology. Right now, the market cap placed zero value to the IPs behind iBio’s plant-based technology since the market cap is below the current total assets of $40 million in the book.
So, where is the intrinsic value of iBio’s plant-based technology?
But let’s define intrinsic value first.
Below is an excerpt from Valuespreadsheet.com:
Let me summarize the key points from the above excerpts:
- Intrinsic value is the discounted value of the cash that can be taken out of a business during its remaining life
- Value investors make money by buying good businesses at a price way below the intrinsic value.
- In the short term, the market often produces irrational prices; but in the long term, the market will on average price the stocks correctly.
So, what is the discount value of the cash per item #1 above?
This one is probably why iBio is severely undervalued at the moment. However, it won’t be long before the market begins to take notice when the plant-based facilities in S. Africa, Brazil, and soon-to-be China began to flood the iBio’s cash vault with its shares of the revenues when they start production of biosimilar biologic drugs to sell to their populations.
Point #2 is basically referring to the investors (myself included) who have been accumulating $IBIO at the current bargain price since we all believe current market price is severely below the intrinsic value of iBio.
Point #3 highlighted the action of those who shorted and sold $IBIO to its current irrational low price. So, investors here (myself included) are simply taking advantage of the price severe deviation away from the intrinsic value of iBio, and look forward to the market to restore equilibrium in the valuation when plant-based tech becomes prominent.
In my humble opinion, I’ve only just begun to calculate the potential intrinsic value of iBio based on deals already signed from S. Africa, Brazil, and China. But what about the potential proliferation of plant-based production of off-patent biosimilar biologic drugs that have yet to materialize since the plant-based technology is STILL in its infancy stage? Now, just picture (or imagine) that biotech companies around the world, including the BPs in the U.S., begin to catch on the idea of plant-based technology and decide to join the plant-based bandwagon using iBio’s technology. When that happens, in my opinion, the word “severely” does not do justice to current irrational low market value.
In summary, my opinion is that the definition of intrinsic value as defined above is providing any value investors, who chance upon the stock $IBIO, an opportunity of a lifetime to climb on board a rocket that is about to blast off to the blue sky and beyond when the market begins to “adjust” the price of $IBIO to reflect market acceptance of plant-based technology.
In my opinion, as I’ve repeated for years, $IBIO is a true buy, accumulate, and hold stock.
LRAD – This stock is all about its distinguished direct sound technology, It literally beams sound like a laser for a much longer distance than the legacy siren or bullhorn. The problem with siren or bullhorn is that it relies on being LOUD to reach distance. But the loudness also disrupts and affect people already in the vicinity of the siren and bullhorn, and the distance isn’t that great either. LRAD’s technology is designed to beam the sound for a long distance in a narrow sound beam such that people in the vicinity outside the sound beams are not being affected. This is the design of the LRAD (long-range acoustic device) which is perfect for the military (army and navy) and law enforcement use to initiate communications when potential hostile enemies are still far away.
The design of the mass notification system, customizable 60°– 360° audible mass notification coverage over areas up to 14 sq. km, being high up in the air. allows the sound beams to reach the public even at a distance that legacy siren and bullhorn cannot reach.
This tech may sound “boring” but I see great potential when countries and cities around the world start to adopt this new tech to replace their legacy mass notification system to save lives. Anyone interests to know more should check out their website.
Technically speaking, the weekly chart below looks bullish!
Thanks to uptake on $LRAD and $IBIO, my port gained nicely for the week.
Current positions (in alphabet order):
Stocks = CRBP IBIO LRAD
Call options = CARA TRXC
Up 29.5% YTD
My 2 cents
From my camera: