T.S. Eliot Wave

Cramer loves Diamond Foods (DMND)

2012-02-08T18:15:00.003-05:00

Diamond Foods (DMND) just imploded after hours. Accounting scandal, executives whacked, the whole gamut. P&G about to yank the Pringles deal per reports....brutal.

Stock is down from $36 to $20, after trading at $80 not too long ago.
And here, you can get a eyeful of Jim Cramer telling you how much he loves it.

Awesome. DMND was $73 when he broadcast this. "I'm a believer!"

Cramer loves DMND! (CNBC Video)

$PNRA Panera Earnings, Price Target

2012-02-07T17:27:00.000-05:00

Panera Bread (PNRA) earnings are out.

- Revenues & eps met consensus.

......................Q4 2011 Estimate* Q4 2010

Revenue $496m $499m $428m

EPS..................$1.42 $1.42 $1.21

- Forecast Q1 eps $1.33 - $1.35 ( was $1.28 consensus, slight raise), but....

- Forecast 2012 eps $5.50 to $5.55 (was $5.52 consensus, so not a raise)

- Margins are down substantially.....to 12.6% from 14.2%.

- Same store sales increased 5.9% at Panera-owned locations.... 3.2% at franchisees

Even at a rich 20 forward PE, this gives price target for the stock well under $120.

I believe analysts will downgrade the stock in the morning across the board. They were looking for blowout numbers, as were investors who have bid the stock up to an all-time high with a very high earnings multiple.

Here's the Wedbush analyst on CNBC who will whack it on a downgrade giving you a heads-up just before the report came out. His target was $130 before the report with 18% growth. Nothing in the report indicates an improvement on that growth.

Trading at $156 after hours, and I believe vulnerable to a $145 support until the next report, on downgrades in the morning. Great chain, no China play, huge run up.

And.... almost forgot: the CFO just announced a lateral move to IACI. While he's not being walked out by security (in fact he's on through March), this is not a vote of confidence.

Sell the stock and buy at $120 later this year.

$VRTX Conference Call

2012-02-02T16:47:00.002-05:00

Today's conference call link (5pm EST) for Vertex Pharma Q4 2011 earnings report....only company I know that has its Stock Symbol as it's WWW address...Wow they are focused on shareholder value!

- New CEO has started the spiel.. Incivek now in 9 EU countries as well as N. America
- Touting Hep C long term pipeline...Kalydeco...[just me or is that way too happy a name for a CF drug]
- Hope to start data submission for Kalydeco label expansion studies in 2013... [stock back over 40 as Jeff's dulcet tones sooth the savage twitter beasts]...CFO now going into the GAAP. Get yourself a beer.

--Q: Guidance.....seems to be slightly down (smart guy!)...5 questions, 1 guy, no cup.
--A: CFO quotes verbatim the guidance from PR (good boy!)...we may give further guidance on line items later....Incivek trajectory...initial high vol of patients that were waiting....confidence of achieving guidance [my note: let's say they beat slightly and get $1.8B 2012]

--Q: Flynn from Goldman up...Kalydeco 808 trial enrollment?
--A: on track
--Q: 809 design
--A: both homo and heterozygous...

--Q: From Sexiest Analyst so far (did not catch who)...can I take your temperature (on cap allocation)?
--A: run rate of EU royalty to pick up substantially in 2012....comfortable on hcv portfolio..."broadest and deepest" [yes, sexual tension high on this Q&A round]

--Q: Meachem from JPM (oops Mike in for Meachem)....
--A: Tip towards naive patient group....still patients from all types of backgrounds still coming in
[OK that sucked, sorry bout that]

--Q: Schoenbaum stand-in...[the big guy has better things to do]..[totally missed that Q, you get what you pay for, readers!....softball question of no importance]

--Q: Can you buy back royatlies from CF Foundation? + tax rate Question....
--A: "No comment" on CFF....non-GAAP info in PR shows true tax rate

--Q: (Leerink)....question garbeled....+ any sales from clinical supply?
--A: Majority of sales due to patients [lame, L-Swann!]

--Q; RBC Cap.....congrats on Kalydeco....will patients come on quickly....
--A: Predictable number of patients, all show up for care quarterly [very known population]...Rumors of canceling routine clinic checkups to bring in these patients

-- Q: UBS...another substitute...[VRTX is not a hot stock apparently].....Partners on Phase 3's?
--A: Hard to get to Phase 3, if we get there, we have resources to run them...could be revenue growth in mid decade...no comment on biz transactions (partners I assume)

--Q: Piper ("very excited" explains his $56 target)....guidance question...milestone questions (don't think Ted read the PR fully)
-- A: read the PR....cash taxes will continue to be minimal...milestones recorded earlier 2011....Q3....Q4 was Mitsubishi, it's there in PR

--Q: Barclay's...."congrats"....warehousing of patients for interferon treatments
--A: too early to quantify if warehousing has occured, prolly minimal

--Q: JMP Sec......great quarter...growth to net for Kalydeco + changes in stocking Incivek
--A: minimal change in stocking Incivek, no impact......Kalydeco market split 60/40 commerc/govt...no discounting on commercial
--Q: more questions she should have asked on K call other day...

--Q: Morgan Stanley....gross sales Incivek?....combo CF study, any Pk related interactions?
--A: Q4 slightly above Q3 on Incivek...widening of gross to net 2012 (govt channel impact)...no data released around Pk.....study showed safety....

--Q: Think Equity...congrats...CF study questions....
--A: Can't speculate on regulatory views...endpoints will be standard....multiple dose levels in 661 combo study

--Q: Brean Murray (not Aschoff).....guidance questions on gross to net (again? oh Brean sub...)
--A: repeats earlier answers about commerc/govt split, discounting.....royalties going fwd....mitsu was a milestone not a royalty....no further $ from Mitsu

--Q: Cannacord squeezed in (bad boy!)....Phase 1 trial design (really? Yawn)
--A: Vee have veys of makiing dis happen (ok my translation...zzzzzzzz).....Incivek 222 data mid-year...exciting....more data to help you make good judgement (oh boy)

Call over. Laters.

Vertex (VRTX) Will Get Back to $50 Quickly

2012-01-31T11:57:00.002-05:00

Vertex (VRTX) just got an early approval for their new Cystic Fibrosis drug. Key points:

- only 1200 patient target population
- $294K per patient
- $350M peak annual US sales, which should add $2B to market cap, not counting EU
- Leads to more favorable chances of same drug being approved for combo therapies later this year

That $294K price can be justified by the targeted aspect. Unlike DNDN's Provenge at $93K and a 33% chance of "working", this high flyer will only be prescribed to a very specific group of CF sufferers with a particular genetic match. After the uproar about Provenge, this is welcome news.

VRTX is heavily shorted and already debatably undervalued based on 2012 sales of its Hep C drug, which should easily surpass $2B. Doubts exist about its shelf life past 2014 due to competition, but doubts exist for every drug in the FDA approval pipeline. The company should have a takeover value of $10B on Hep C alone.

Analysts have come out with targets over $55 this past week prior to the CF drug approval. VRTX is a good buy under $50, and there's that spectre of buyouts and short squeezes putting further upward pressure on it.

(Note: I am long VRTX common stock)

Kyle Bass's Lawyer Lays down the Twitter Law

2012-01-31T11:11:00.000-05:00

Kyle Bass' lawyer Chris Kirkpatrick has appeared on twitter as "@CKirkpatrickEsq" with a smackdown:

"@Ret_Earn I'm the real Kyle Bass' attorney. Immediately cease and desist from using Mr. Bass' name and likeness or I will take legal action"

Googling articles on Bass, sure enough this article from 2009 features Kirkpatrick defending Bass from a Forbes magazine negative mention.

Looking forward to more of controversial public figures having their lawyers defend them on Twitter. It's the new savage battleground and legal pandora's box.

Now on to trying figure out why Bass is going long mortgage companies like PPH....hedging?

Overstock's Byrne Should Switch Careers

2012-01-30T23:39:00.000-05:00

One of my favorite business blogs is Deep Capture, a ragtag group of what appears to be volunteers, a couple of journalists on the run, and a force of nature CEO, Patrick Byrne.

Byrne has created quite a group of ardent fans amongst Wall Streeters and the scribes who feed from them. This fellow, who has devoted years and 90% of his recent journalism to Byrne, seems particularly enamoured with him. Deep Capture is over the top, as many expose' blogs try to be, although this one was recently shut down by a Canadian court decree, so it has that going for in the drama department.

I've watched Byrne over the years become a political pundit on television, as well as in his local papers. I can't say I agree with his politics, or invest in his current company, Overstock.com, which appears to be on cruising speed on a service road next to the Amazon highway.

Byrne has been breaking even for quite some time; perhaps it's time to move on to something he appears to be enthusiastic about: investigative journalism. I'm sure Overstock is a nice little business providing a good living for hundreds of fine Utah folk. But this season's left-over ski goggles can be peddled by someone a lot more boring.

(Note: This blogger has no investments in any of the companies mentioned here)

Salt: A World History. Must Read for Commodities Traders

2012-01-30T11:34:00.004-05:00

Must read for Commodities investors and anyone else with any historical curiosity whatsoever. Or if you ever wondered where "worth his salt", jerky, or your dad's nasty sardines habit came from. It was once the Gold of the civilized world.

Salt: A World History

WTF - Jimmy Kimmel & Marc Maron talk

2012-01-28T11:01:00.000-05:00

WTF - Jimmy Kimmel & Marc talk diets (click here, WTFbuddies)

Marc Maron's come back from oblivion to have the best interview podcast out there. While he interviews almost always comedians, these interviews are not morning radio shock jock material. They're more like "In Treatment"....although Maron is a bit less stoic, or Irish, than Gabriel Byrne.

Hopefully he gets into Kimmel's Own Private Idaho, his narcolepsy....which is not what happened to G.I. Jane the other night. It's that hilarious habit of falling asleep anytime anywhere. Kind of like your drunk Uncle Bob but without the bitch beater t-shirt.

Actual photo from Maron's interview of Kimmel

Facebook Facebook Facebook. IPO, meet shark ramp....

2012-01-27T20:58:00.000-05:00

The financial media is quite excited about the pending Facebook IPO. While I believe its timing is ideal, for current Facebook shareholders, it won't be for buyers of the stock when it goes public.

If you're a Facebook user, you've probably noticed your "friends" list is growing more slowly these days, and the kids you know aren't very happy about parents and grandparents taking it over. They've moved on to Google +, or some other social network you don't know about. Probably back to MySpace, which was Facebook before Facebook.

You've also probably noticed yourself growing a bit tired of Facebook use. Sure you post the occasional family photo, or talk smack during the big game. but you find yourself using it less and less if you've already been using it for more than a year.

I don't recommend buying Facebook stock on IPO day. If you must, flip it as soon as you can. Ask your teenagers - Facebook has jumped the shark. Just don't ask them what they're using instead of Facebook now (pssst, MSNBC says it's probably Twitter)... Or if they know who Arthur Fonzarelli is...

Facebook IPO heading for the ramp

Kyle Bass & Don't Believe the Stock Market is Back Hype

2012-01-27T20:04:00.000-05:00

So lately the stock market is "melting up". Before you think about throwing your entire 401k back into shark infested waters, take an hour, yes an hour, and watch this....I present Mr Kyle Bass.

Seriously, it will cause you to start questioning the "all's well" siren song being put out by CNBC and other mass media lately....