Weekly thought on $IBIO, $LRAD

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.

There is no question that this week was a volatile week for the SP500. However, I’ll take volatility over a continued drop.

Weekly SP500 Chart

As seen on the weekly chart above, the SP500 closed slightly over the blue uptrend line. The bounce from Friday helped quite a bit. Although I mentioned about the predictive nature of the “technical divergence” last week, it is only a probability. The SP500 price action of next week may determine whether this probability will hold or not.

Fundamentally speaking, the SP500 significant drop on Wednesday was due to the fear of the yield curve inversion. I’ll let the excerpt below explain this dilemma.

The above is cut/paste from “White House trade advisor Navarro: ‘Technically we did not have a yield curve inversion’

So, I guess it is safe to say that we should monitor the yield curve to make sure it stays flat and not continue to on a big spread on the inversion.

This week was also a volatile moment for my port as well. As a result, I made a change to my portfolio that included closing out my $INSG position to cut my losses.

Why?

First, I’m continued to be baffled by the persistent drop despite the excitement over the 5G launching in the second half of 2019. So far, price penetrated the lower support of the flag pattern but recovered to close at the support. I’m not sure if this lower flag support line will hold; therefore, I’m going to see how the coming weeks’ price action plays out on $INSG before I jump back in. What bothered me the most is that $NOK also gave back most of its gain from the week ended July 26th.

$INSG weekly chart

Notice the blue arrow is pointing at the 79 & 89 MA supports (brown & blue dash lines). That’s around the $3.70 price range. I like to see some support there if the price action gets there. It is also possible that the price may start bouncing next week. If that’s the case, I’ll have to chase it back as well.

I also bought back some $AEMD to put in the corner of my portfolio. It is currently a relatively small position in my port. However, if $AEMD ever climbs back over a buck, it will become a decent size position. Because of the small size, $AEMD will not be part of my weekly thought unless some substantial development comes into the picture to jump-start the stock.

Btw, the main reason I bought back $AEMD is purely technical, which is the technical divergence.

$AEMD weekly chart

Notice the two yellow lines (the one above in the price chart, and the one below in the MACD oscillator). It is showing a positive divergence.

Cut/paste from, “Divergence Definition and Uses

For such an oversold low price, I think $AEMD is a bargain with TWO Breakthrough destinations issued by the FDA.

$IBIO –

To begin this week discussion of iBio, I like to cut/paste the following excerpt from a recent issue of Pioneers Magazine.

Page 3 of Pioneers Magazine (In the Cape Health Tech Industry)- Edition 1

I’m going to spell out the above highlighted (yellow) paragraph below in a larger font size for easy reading:

“we have patents granted and we have signed an exclusive agreement with the largest plant-made pharmaceutical facility in the world to produce a biosimilar version of the anti-cancer drug, rituximab, for the African continent.”

Can anyone guess the name of the company AzarGen is referring to in the article?

Did you say, “iBio?”

Right you are! Read this article, “iBio, Inc. (IBIO) Announces US Patent Granted to AzarGen Biotechnologies for Synthetic Promoter Technology,” as proof of AzarGen collaboration with iBio, Inc.

I seem to take it for granted that iBio is the leader in the plant-based protein expression business. As a result, I forgot that iBio also has the exclusive right to utilize the largest plant-made pharmaceutical facility in THE WORLD. Investors have Kenneth Dart’s Eastern Capital to thank for making it possible.

What is the value of the CDMO with the LARGEST PLANT-MADE PHARMACEUTICAL FACILITY IN THE WORLD worth to a BP? Especially the ones who want to beat the competition with affordable biologic drugs? Not to mention that the facility is built under a well-protected underground construction that included highly automated systems that minimize human interaction to reduce contamination.

The more information that is releasing on biosimilars and the biologic drugs industry, the more excited I am about the future of iBio.

I also believe that iBio did not hire Thomas Isett, an M&A consultant, and pay the CFO generous monthly bonus for doing something insignificant. I’m betting that there is something big happening. Our years of waiting may finally be over. In my opinion, of course.

$LRAD –

LRAD released earnings on Monday, and the conference call included new information that opened my eyes to the explosive future of the company.

Let me jump right into the KEY ELEMENT that, in my opinion, is going to spark the trend in adopting the LRAD’s hardware and software relating to the two categories of public safety and security solutions- Emergency and disaster management, and public address and general alarm.

What is the key element here?

Let me begin with the cut/paste from the earnings conference call.

While the above excerpt disclosed that LRAD is responding and pursuing these EU country opportunities, it is the EXISTENCE of such directive that is the KEY ELEMENT I mentioned above. In other words, the EU is acknowledging the need to establish emergency warning alert systems to protect citizen and travelers by June 2022. (Btw, it has been confirmed by users sharing in the Stocktwits that the year should be 2022, and not 2020.)

The ability to inform the public IMMEDIATELY through long-range acoustic devices with superior voice clarity and instant text messaging to the affected areas is extremely critical. LRAD’s tech allows local governments to reach a significant part of the population INSTANTLY than by radio and television. These advantages, in my opinion, are what will give LRAD the edge to beat out the competition.

How big is the public safety and security solutions market?

I’m going to paste the excerpt from the 2018 article, “Global public safety and security market growing: North America expected to be largest market share” by Spencer Ives.

Let me spell out the yellow highlighted paragraph in a larger font for easy reading.

“North America is expected to hold the largest market share and dominate the public safety and security market from 2017 to 2022, due to the high number of early technology adopters in this region. Specific budget allocations and mandated public safety and security policies are expected to make North America the most lucrative region for vendors,” Moundekar said.

There you have it, besides the European market, per the article, it seems North America also has a mandated public safety and security policies in place.

Although the global market size of The Public Safety and Security solutions are estimated to reach $532.39 billion by 2022, the solutions comprise of the following categories:

  1. Critical communication network
  2. C2/C4ISR system
  3. Biometric security and authentication system
  4. Surveillance system
  5. Scanning and screening system
  6. Emergency and disaster management
  7. Cyber security
  8. Public address and general alarm
  9. Backup and recovery systems

The hiring of the VP of Software Sales and the acquisition of Genasys software allow LRAD to compete for the Emergency and disaster management category. With $532.39 billion market size spreading over the nine categories; in my opinion, there is plenty of money for LRAD to take a bite from two of the nine categories to transform itself into a mid-to-large cap market size company.

So far, we know about the installation of the LRAD mass notification system in Mill Valley, CA. And in the CC, we also found out LRAD mass notification system is installed in the city of Laguna Beach as well.

On a google search, I found the California State Budget – 2019-20. And below is a copy/paste from page 13:

Link to California State Budget

With Emergency preparedness, response, and recovery as part of the California State budget, it does look like LRAD is in a position to help California fulfills a part of the requirements. Don’t forget that LRAD’s management expects new orders from cities near wild-land urban areas in the next fiscal year.

Let me summarize what we expect to hear from LRAD from the earnings conference call:

  • FEMA (Federal Emergency Management Agency) is well aware of LRAD technology. It won the FEMA award to provide LRAD tech to Puerto Rico. The company anticipates further FEMA funded business opportunities.FEMA
  • The new VP of Software Sales (Paul) is currently overseeing several SaaS only proposals pending in the U.S. and two other countries. The proposals include city, regional, and national installations.
  • LRAD is well-positioned to compete for the EU alert directive & the global unified critical communication market. The EU mandates all 31 economic zone countries to establish emergency warning alert systems to protect citizens and travelers by June 2022. The company’s divisional staff at Madrid are also engaged in pursuing these EU country opportunities.
  • LRAD is working on several other public safety and emergency warning opportunities in California. The company expects new orders from cities in the next fiscal year.
  • LRAD is expecting a second LRAD 450XL army order under the program this quarter and increased sales to the army and other branches of the U.S. military in subsequent fiscal years.
  • LRAD has visited the two Asia Pacific countries (previous orders got delayed) as recent as two weeks ago. The company expects the two customers to come back with even bigger orders in FY 2020.
  • LRAD is working with the Navy Yard in Washington to establish a program to replace the older LRAD products systematically.

There are a LOT of irons in the fire for LRAD. The year 2019 may be a pivotal point for LRAD to grow out of its micro-cap status and embark on exponential growth in 2020 and beyond. In my opinion, of course.

Due to corrections on $LRAD and losses from $INSG, my port gave back some more this week.

Current positions (in alphabet order):

Stocks = $AEMD $IBIO  $LRAD

Call Options = $TRXC

Up >15% YTD

My 2 cents

From my camera:



Categories: Daily trading Journal, trading journal

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