Wednesday, February 25, 2009

5 Stocks That Could Triple With Next Bear-Market Rally

The market is poised for another intense bear market rally. So I scoured the penny stock panorama for 5 mega-poppers: those stocks that can easily pull a 3-bagger in a very short time. And, those that have a history of blowing up in sympathy with broad market short-squeezed-fueled exuberance.

1. Beazer Homes USA (BZH): This one has been punked down along with the homebuilders. Big short-squeeze potential. The homebuilders run up big as a pack, just as they have fallen as a pack. Beazer has been beaten down to a Wednesday February 25, 2009 close of 56 cents. This one can easily jump to $1.70, where it was at only a short while ago.

2. Russ Berrie & Co. (RUS): During the close of 2008's bear market rally, this stock exploded from $1.11 to the $4.50 range in a couple of weeks (and tripled in 3 days). Russ Berrie also happens to be a very solid company. They make infant and juvenile products.

3. Las Vegas Sands (LVS): Yes, Vegas is dead (will the last conventioneer out of Wynn-town, please turn out the lights). But, LVS is just one of those stocks that loves to run if given the rigbt broad market pop conditions. It closed today at $2.16. It was in the mid $6's only 4-5 weeks ago. Enough said.

4. Libbey Inc. (LBY): Libbey is somewhat on the rocks, given the recent market meltdown part 2- but its popper potential is valid. This one's an easy double, but it could triple with a little momentum. It likes to jump on a dime.

5. Bank Of America (BAC): I expect this Little Big Man Bankaroo to be the next true runner in the financials- an easy double decker. Thank Countrywide and Merrill for the ride. Yet, if the bear market rally has claws, BAC could head back to its December 2008- $15 range- in style.

GT McDuffy

(Disclosure: Author holds no positions in any of the stocks mentioned in this article. He's too busy trying to get the Uptick Rule restored and Mark-To-Market modified)

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Thursday, February 19, 2009

Stock Traders March On Washington

With global markets continuing to fall, hitting new lows not seen in many, many years, no buyers in sight, companies being obliterated- stock traders around the world finally got fed up and headed to Washington, D.C. today for the 10 Million Man March.

It had begun last week with CNBC's Rick Santelli calling for a Chicago Tea Party- a taxpayer revolt- and quickly escalated into traders heard screaming out their windows- "We're mad as hell, and we're not going to take it anymore!"

Not to be outdone, Larry Kudlow, CNBC's King Of The Hill, launched an out-and-out crusade against Bailout Nation, engaging Wall Street and Academic friends and foes in a bipartisan coup d'etat, to march on the Capitol.

Then, Jim Cramer, not to be outdone by Kudlow, jumped into the fray, quickly organizing his millions of Mad Money followers to join in on the March- imploring his throngs to "Boo-Ya" all the way along Pennsylvania Avenue.

Word of the march spread like wildfire- and traders near and far, already upset at the new Prez, his advisors, Congress, the SEC and FASB for being unbelievably inept and destructive- descended on Washington by the hundreds of thousands. Then, by the millions.

All longs. No shorts.

Chants were heard filling the air, "You want change Obama- we got your change right here!" (grabbing their groins in unison).

The Press flocked to the scene- camera's rolling- as the march headed toward the White House, finally settling at the Great Lawn.

Then, to everyone's amazement, JP Morgan's Jamie Dimon drove up to the show on a plain old beaten-up bicycle, carrying Girl Scout cookies and a very large bag. In front of the entire world, Dimon proceeded to dump 25 billion dollars (in thousand dollar bills) on the Lawn. Suddenly. a strong angry wind kicked up out of nowhere- and blew all that taxpayer money violently over the crowds.

Absolute Madness broke out as traders scrambled for the Free Money. Screw Bailout Nation. This is better than a 4-bagger!

Chaos ensued.

Warren Buffett was seen fist-fighting with Jim Chanos, growling that most of the money was his- and only his- flailing around, trying desperately to fend off the lowly day-traders battling for the cash.

Then, Michael Moore came piling into the melee. A true heavyweight. Yelling about some movie he was making about Wall Street that would shock people. He was there with his long-time agent, Ari Emanuel. But, wait! Ari Emanuel's brother is none other than Rahm Emanuel- the guy that got President Obama into the White House- and is now (ahem) the current White House Chief Of Staff. This was going to be a very interesting movie, indeed.

Just as suddenly, the wind stopped. There was an eerie silence.

A man appeared. He wore a black hooded robe- sickle in hand. Everyone stopped fighting- and stared.

The man turned solemnly to the masses and said, "Gentlemen- what, in God's Good name, have we here? Is this what we have become?"

And, a lone voice rose up from the herd and replied, "We are the Lost Souls Of Wall Street. We are Angry. We are Greed. We are Stardust. And we've got to get ourselves back to the Garden."

I shuddered.

The world had stopped. It was long past absurd. Was this all really happening? What had happened to the Markets I once knew- something had gone so terribly, terribly wrong.

Yet, this was how it finally came to pass. Greed and ineptitude had finally done us in. I was speechless.

They were speechless.

No one understood. But, everyone understood.
No one cried. No one moved.

It had just turned 4 o'clock. The markets had closed, forever.

Born alone. Breathe alone. Die alone. It was the End Of Days.

Well, kind of. You see, after-hours had now begun...and everyone was piling into a brand new stock- Eschaton Corp.

God had just upgraded it to "Outperform."

Ticker: (ESCH)

by GT McDuffy

(Disclosure: Author is short on Eschatology)

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Wednesday, February 18, 2009

SIRIUS XM Radio: Reverse-Split Realities

(April 2009 Update - NASDAQ has just extended the bid-price suspension date again- this time through Friday, July 17, 2009- so apply this to article below)

On October 16, 2008, NASDAQ implemented a temporary suspension of the $1 bid price rule. This temporary extension, which was originally set to expire on Friday, January 16, 2009, has now been extended through Friday, April 17, 2009. Beginning Monday, April 20, 2009, NASDAQ will start a fresh clock ticking in regard to any company's stock whose bid price then closes below $1/share (from that trading day onward).
(NASDAQ Temporary Rule Suspension)

In other words, if before October 16, 2008, a company was still compliant (was not deficient) with the $1 bid price rule, and, prior to, or during the rule's October 16, 2008 through April 17, 2009 suspension period, that company's share price fell below $1/share- none of that would be counted toward the 30 consecutive trading day period NASDAQ clocks before notifying the company it is bid price deficient.

Case in point: SIRIUS XM Radio Inc. (SIRI) closed below $1/share beginning September 22, 2008, and has closed below $1/share for 102 straight trading days through February 17, 2009 (the date of this article). If NASDAQ had not suspended the $1 bid price rule, SIRIUS XM Radio would have already been bid-price deficient as of October 31, 2008, and, as such, would had already been notified by NASDAQ promptly after that date. But the rule suspension nixed all this- a freebie for SIRIUS through April 17, 2009. NASDAQ would only begin counting any 30 consecutive trading day deficiency beginning April 20, 2009.

In other words, in SIRIUS XM Radio's case:

September 22-October 16, 2008: company was not yet bid-price deficient- even though stock price had closed below $1/share for 19 straight trading days-- none counted.
October 16, 2008-April 17, 2009: suspension period. Any consecutive trading days below $1/share-- not counted.
April 20, 2009 onward: 30 consecutive trading-day bid-price clock begins (unless NASDAQ announces another bid-price suspension extension).

However, in regard to those to companies who WERE already bid-price deficient prior to the October 16, 2008 suspension date- beginning April 20, 2009, these companies in the compliance period will pick up where they left off. So for example, if, prior to the rule suspension, a company had 120 days remaining on its 180 day compliance period, beginning April 20, 2009, that company will then resume having 120 days left to comply.

NASDAQ implemented the bid price rule suspension back in October 2008 citing "extraordinary market conditions," noting:

"Given current market conditions, Nasdaq proposes to provide issuers of common stock, preferred stock, secondary classes of common stock, shares or certificates of beneficial interest of trusts, limited partnership interests, American Depositary Receipts,and their equivalents temporary relief from the continued inclusion bid price5 and market value of publicly held shares requirements."

"In the past several weeks, U.S. and world financial markets have faced almost unprecedented turmoil, and the Commission has acknowledged in several recent emergency Orders that this turmoil has resulted in a crisis in investor confidence and concerns about the proper functioning of the securities markets.7 As a result, the number of securities trading below $1 has increased dramatically. For example, as of September 30, 2007, there were 64 securities trading below $1 on Nasdaq. By September 30, 2008, that number had increased to 227 and by October 9, 2008, there were 344 securities trading below $1 on Nasdaq and over another 300 Nasdaq-listed securities trading between $1 and $2.8 Nasdaq believes that during this time there was no fundamental change in the underlying business model or prospects for many of these companies, but the decline in general investor confidence has resulted in depressed pricing for companies that otherwise remain suitable for continued listing. These same conditions make it difficult for companies to successfully implement a plan to regain compliance with the price or market value of publicly held shares tests."

All very well and good. NASDAQ-listed companies caught a 180 day break.

Which leads me to the point of this article.

The real problem for investors who own (or are thinking of buying) NASDAQ stocks, such as SIRIUS XM Radio, that have been consistently under a buck- is that there is the underlying risk that a company whose stock remains under a buck for 30 straight trading days is ultimately going to do the dreaded reverse-split upon expiration of the 180 day compliance period, in order to cure this deficiency (barring appeal or an additional 180 day compliance extension granted- see below). Once deemed deficient (eg- a company has been notified that it is deficient), a NASDAQ-listed company would have had to then have the stock price trading at a buck or more for 10 or more (not to exceed 20) straight trading days by the final day of the compliance period. And. if this had not yet occurred through "natural" trading, the company is then sent a determination letter by NASDAQ informing them that their stock is subject to de-listing. NASDAQ can then grant another 180 days to comply, but only if the company now meets initial listing requirements (prior to the expiration of the compliance period, the company was required to meet the less stringent continued listing requirements, such as the $1 bid price) - which are much steeper. And, if the company does- this fends off the need to reverse-split for another 6 months.

If, however, the determination letter that shows up at a company's "doorstep" also includes a determination that the company does not now meet the stricter initial listing requirements, the company's only options are then to accept de-listing, to reverse-split immediately (within days-assuming shareholder approval has already been granted) or to appeal (roughly a 2 month affair)- which is a process whereby the company notifies NASDAQ it is appealing, and an appeal date, once set, allows the company, in person or in writing, to present/submit materials with an initial-listing compliance plan to a NASDAQ-independent panel, which, if approved, could result in NASDAQ granting additional time to comply, say an additional 90 days, and, perhaps set requirements to hit certain milestones toward ultimate initial listing compliance.

At the point that all available options and extensions have been exhausted, and with shareholder approval, and assuming he company isn't (or won't be) also deficient in other regards, and, of course, assuming the company wants to stay listed, the "reverse-split" then becomes the one sure-fire method for the company to "get" (and sustain) their stock price over $1 for that "10 not-to-exceed 20 trading-days" requirement. In other words, if the stock price didn't get over a dollar for 10 straight trading days as a result of "normal" trading, the company is allowed to use "artificial" means to do it- and to reverse-split to a high-enough stock price so the stock doesn't quickly drop back under a buck! After all, NASDAQ doesn't simply want that stock price over at a dollar or more. It wants it to stay over a dollar or more. So the higher the reverse-split, the better, so to speak. At least in theory- and with all good intentions.

Keep reading.

This "artificial" method by which a company is allowed to regain compliance, to say the least, is an ill-conceived (and bizarre) part of the rule.

Keep reading.

As most traders know, stocks that reverse-split to their higher share price most often sink right back down again- after all, on the one hand, any underlying negative company/financial issues that may have contributed to the stock price going under a dollar in the first place are still there- these don't magically disappear just because the stock price takes on a shiny new reverse-split "happy-face."

And on the other hand, most short-sellers lick their chops waiting for a stock to reverse-split anticipating a bear-raid on the stock. And most savvy investors potentially thinking of buying the stock long, post-reverse split, know the shorts are going to pile in, so potential-longs aren't going to jump in any time soon.

In other words, the reverse-split, most times, turns out to be a cosmetic, artificial and temporary fix, that's it.

So, if the reality is such that a company's stock price is going to sink or be pounded right back down, sometimes to exactly where it was pre-reverse-split (or even below where it was), those long investors who seek to hold their positions pre-reverse into the reverse get "tanked" all over again once the share price drops. And it does not help the exchange on which the company is listed, in regard to achieving the obvious goal- which is to have companies maintain continued listing compliance.

Finally, of course, it certainly doesn't help the company that actually cares about its stock price (versus those companies- and you know who you are- who decide to use (abuse) a low stock price to initiate a share buyback- on the cheap, who first begin buying back shares under a buck, then use the reverse-split to proportionally reduce the number of publicly held shares, then wait for the stock to tank again post-reverse, and continue to buy back the reduced number of shares all over again on the cheap).

If, in the ideal stock market world, bear raids and short-seller manipulation didn't exist (see- A Remedy for Short Selling Manipulation), and companies didn't abuse the ethical considerations and rules of the stock buyback (SEC- it's 10 o'clock- do you know where your Safe Harbor children are?), then reverse-splitting wouldn't be as dreaded as it is by longs. And the company that reverses might have a fighting chance to regain its dollar cut-off.

But, until the SEC actually effectively deals, on a sustained basis, with existing market manipulation and unsavory companies, the under-a-buck cut-off should be eliminated.


This way, the stock price can exist under a dollar- shorts are much less likely to pile in under a buck- and if and when the company itself actually provides investors with solid financial reasons to justify a rise in the stock price to over a buck and beyond- the stock may well hit its mark. Those who have been holding the stock which fell under a dollar won't get "double-tanked" because of a cosmetic reverse-split share price that sinks back down again. And as importantly, if potential long investors know the stock won't be facing a reverse-split because of deficiency/compliance rules, they will be far more likely to buy in under a dollar- which may have the effect of actually getting the stock back over a dollar- the very thing the exchange wanted in the first place!

But, really, this whole thing about stocks under a dollar is all about "appearances." The buck cut-off is simply an elitist creation to separate the "haves" from the "have-nots." The stock market's own caste system, if you will.

And speaking of elitism: as for institutions being barred from owning exchange-deficient stocks or stocks that are under $5/share- this should be done away with altogether. The negative connotation of owning "penny stocks"- which are defined as stocks trading under $5/share- is now an outdated and inappropriate notion in 2008.

It's time to get this whole thing cleaned up once and for all. Its time has finally come. Whether a stock is under $1 or under $5, in this crazy economic environment, or in the future, should no longer matter. It is, without question in the best interests of ALL investors, companies, the exchanges and the taxpayers (although not so good for short-sellers). The exchanges shouldn't be in the business of worrying about whether or not a company's stock price is at any particular level, or that the company maintains a certain ongoing market cap. They should accept companies into their exchanges that qualify on the basis of initial listing requirements, but, once they're in- let them play ball! Make de-listing only the result of serious infractions committed. And, as such, the SEC should then ensure such companies cannot re-enlist anywhere else.

As for the OTCBB- let the them continue to be the AAA farm club league for developing companies that need to qualify for initial listing requirements of the major exchanges before being able to bump up. Let the Pink Sheets (AA league) exist for companies that are in chapter 11 bankruptcy or are not yet ready for the OTCBB or the major leagues.

And, at the very least, do way with the dollar bid price rule. That would, surely, be a start.

GT McDuffy

(Disclosure: author holds no positions in any of the stocks mentioned in this article)

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Monday, February 16, 2009

Congressman Ackerman Introduces Bill To Re-Instate The Uptick Rule

As some traders are already aware- on January 8, 2009, Rep. Gary Ackerman [D-NY] introduced Bill HR 302 IH in the House Of Representatives to "require the Securities and Exchange Commission to reinstate the uptick rule on short sales of securities."

The bill has now been referred to the Committee on Financial Services, and is co-sponsored by:

Rep. Carolyn McCarthy [D-NY]
Rep. Anthony Weiner [D-NY]
Rep. Carolyn Maloney [D-NY]
Rep. Michael Thompson [D-CA]
Rep. Nita Lowey [D-NY]
Rep. Michael Capuano [D-MA]
Rep. Ed Perlmutter [D-CO]

Here is the text of the bill:


To require the Securities and Exchange Commission to reinstate the uptick rule on short sales of securities.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,


Within 90 days after the date of enactment of this Act, the Securities and Exchange Commission shall--

(1) reinstate rule 10a-1 of the Commission’s rules (17 CFR 240.10a-1);

(2) rescind rule 201 of regulation SHO (17 CFR 242.201); and

(3) take such other actions as may be necessary to reinstate the price test restrictions that applied to short sales of securities prior to the Commission’s action in the proceeding entitled ‘Regulation SHO and Rule 10a-1’, adopted June 28, 2007 (Release No. 34-55970; File No. S7-21-06).

On January 27, 2009, Congressman Ackerman wrote a letter to the SEC urging them to restore the uptick rule.

“The best solution would be for the SEC to reinstate the uptick rule on its own” said Ackerman. “But if the agency fails to do so, Congress will force them to restore the regulation by passing our legislation.”

This is a bill to which all "longs" should immediately take the opportunity to write or email the aforementioned sponsors and your Representatives en masse and state your full support.

As traders are fully aware- the uptick rule's rescission in June 2007 contributed directly to short-sellers (including funds) being able to relentlessly "pin the bids" of stocks, such as financials- forcing stock prices lower and lower- causing massive damage to long investors. To date- shorts have conducted endless bear raids with impunity (and will continue to do so- unless and until the uptick rule is restored).

The fact that the uptick rule had not already been restored in the first place throughout the entire market crash- is downright absurd (and suspicious). Regardless, now there is finally a bill on the table...and it is every "long" trader's responsibility to do his or her part- and get Congress off its butt to finally do something relevant for the stock market. And the more the bill's sponsors and/or your Reps hear from you all- the better.

This is the time to help effect real change in D.C.

Contact Information:

Rep. Gary Ackerman [D-NY]-

Washington, DC
2243 Rayburn House Office Building
House of Representatives
Washington, DC 20515
Phone: (202) 225-2601
Fax: (202) 225-1589

Bayside Office
218-14 Northern Boulevard
Bayside, NY 11361
Phone: (718) 423-2154
Fax: (718) 423-5053

Write or Email your Representative here.

Keep track of how this proposed bill progresses (RSS Feed).

Let's roll...

GT McDuffy

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Friday, February 13, 2009

How To Play The Mark-To-Market Suspension

As everyone following the financial markets knows- every time a "rumor" or "sound-byte" surfaces that the FASB 157 mark-to-market provision might be suspended (or modified), the stock market runs like the wind. Recently, for example, rumors led to a giant comeback rally in the financials and other sectors. And, on February 10, more mark-to-market rumors flew in after-hours in regard to a modification possibility to be included in the Obama Financial Stability Plan- and again, the market was stoked. The market rallied into, and through the next trading day as the "TARP Accountability" hearing limped onward.

TALF- good. TARP- not so good.

Democratic Representative and Chairman of the House Financial Services Committee, Barney Frank, recently said, "One of the things I think we should be exploring is the extent to which you can retain mark-to-market but make the consequences discretionary with the regulators rather than automatic."

There are several elements of the current "M2M" model which need to be resolved, rather than using the "one size fits all" rules under FASB 157: marking certain assets at maturity, marking assets trading in illiquid/liquid markets, marking assets in regard to a company's model and marking assets not easily "discovered," etc - to which, if modified/resolved, would help companies become truly transparent and potentially show many companies to be stronger, less underwater and in certain cases, no longer insolvent.

In the words of Congressman Paul E. Kanjorski (D-PA), Chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, he wants "to find a way – within the existing independent standard-setting structure – to still provide investors with the information needed to make effective decisions without continuing to impose undue burdens on financial institutions."

Furthermore, while the government is trying to figure it all out, including the public/private partnership, some have also recommended suspending M2M altogether.

There is nothing wrong with M2M bringing transparency to investors as to a company's financial position- but, true transparency has proved to be quite complicated (and unfair in many cases) in the real world.

The powerful Paul Volcker, former Fed Chairman, and now one of Obama's key advisors, is a big advocate for modifications of the current M2M.

On certain finance television channels, there are TV anchors (who have very limited or no economic cred) who have said that suspending or modifying M2M won't "do anything"- which, of course, is utterly ridiculous, so take them with a grain of salt. In fact, at very least, there will definitely be some "tweaks" made- which will be game changers in themselves.

The next potential mark-to-market rumor catalyst will come shortly when the House Financial Services Committee holds a hearing spotlighting the matter on March 12, 2009.

Also on the table with the SEC is the potential reinstatement of the uptick rule (or a modified version of it)- another major market-moving event.

Section 132 of the Emergency Economic Stabilization Act of 2008 "Restates the Securities and Exchange Commission’s authority to suspend the application of Statement Number 157 of the Financial Accounting Standards Board if the SEC determines that it is in the public interest and protects investors."

Meantime, short-sellers have been pummeling financial stocks with utter impunity. Yet, in the front of every short-seller's mind (at least the smart ones), is the dread of a sudden announcement that mark-to-market has been suspended or modified- and causing a fast and furious short-covering stampede, in tandem with longs crashing into the financials with utter abandon.

This has to be causing shorts severe anxiety- eyes and ears glued to the news, fingers glued to the mouse, trade tickets already filled out- ready to cover-buy on a dime.

But what if an announcement comes overnight- or over a weekend, after the extended-trading session is over, or before the pre-market session begins? Could you imagine the sheer short-seller panic as they get caught with financials opening pre-market at something like a minimum of 20% higher- and then ratcheting up another 20% in the first minutes of trading?

So, how should longs and shorts play the strong possibility of a mark-to-market announcement coming any day now? Well, for one thing- it's probably not a good idea to be short overnight or over the weekend. And, longs would want to get in before after-hours closes, leading into the next trading day.

Of course, there are many shorts who are arrogant enough to believe that getting caught in a massive short-squeeze can never happen to them. Not with the media pundits trash-talking financials across the board. But- it is obvious that, if a mark-to-market rumor can cause a swift and large pop in the market- imagine what the real announcement will cause!

And, of course, as other details of the trillion dollar TALF come to the fore over the next few weeks- the markets will ultimately lock into incredibly bullish momentum...and not look back.

Longs don't want to get caught chasing financials once the announcement comes- not with all of that Big Money sitting impatiently in Treasuries and Money-Market funds collecting pennies- all suddenly piling into the equity markets for the long bull run. Bank stocks (C, MS, JPM, BAC, GS) and ETFs (XLF, UYG) are but a few of the beaten-down stocks that will be first out of the gate, leading the charge. Nothing worse than that sinking feeling longs get when they are kicking themselves for not getting in BEFORE the news hits the street.

So these are my St. Paddy's Day words of wisdom for all you traders:

If you are long on financials- hold your positions (and ride out any dips). Shorts- don't get caught short-squeezed overnight.

Be long. Be strong. And, be a champion...

Meantime- keep track of how proposed bill H.R. 607 ("To direct the Securities and Exchange Commission to issue guidance on the interpretation of fair value accounting") progresses (RSS Feed).

Also- click here on March 12, 2009 to hear the HFSC mark-to-market hearing live.

GT McDuffy

(Disclosure: author holds no positions in any of the stocks mentioned in the article above)

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Saturday, February 7, 2009

Wednesday, February 4, 2009

In Defense Of The SEC

It's far too easy to blame the SEC for the Bernie Madoff fiasco- or anything else. In fact, it's way too convenient. And, Rep. Gary Ackerman (D-N.Y.) today blaming the SEC for undermining the confidence Americans have in the financial markets is outrageous.

Mr. Ackerman. How dare you.

It is the SEC's job to investigate and enforce- yet they do so under, and within, the laws and regulations set forth by Congress. Period.

It is Congress that created and engendered FASB 157 "mark-to-market" accounting- which is primarily responsible for crashing the markets- and which led to the Republicans getting crushed in the elections. (And this is an entirely other sordid matter- which I call "FASB-gate"...Republicans are you listening?)

It is Congress that still does not insist on re-instating the "up-tick" rule- a rule that would not enable short-sellers to easily conduct bear raids on stocks and pound their stock prices into the pavement. This was also an important part of the market crash. In fact, it would even be a better idea to disallow shorting on the bid. And, with great foresight- the SEC has already published my idea on their website. It's been up there for almost 10 weeks. Have you Congressional lawmakers even seen it?

It is Congress that has allowed generations of Wall Street executives and lobbyists to operate, unchecked, within a culture of greed and arrogance- arrogance that allowed the monolithic investment firms to gamble with taxpayers' money and lose billions due to incompetent trading and reckless investment decisions- only to then have these same firms come running back to the same taxpayers to be bailed out- and using their insider proxies on the Hill to do so.

It is Congress that, to this day, has never provided the SEC with sufficient funding and manpower to be able to effectively investigate and enforce the markets.

It is Congress that set up the rules for the mortgage market- and let their own mortgage children, Fannie Mae and Freddie Mac, wield havoc within the mortgage industry right under their noses.

It is Congress that let hedge funds run wild, manipulating every market on the planet. And continue to do so.

It is Congress that failed to regulate the un-Godly dark world of the derivatives market.

It is Congress that seems to only tackle any or all of the above once it becomes politically-correct to placate their tax-paying constituents- and only seems to even begin making a legitimate attempt at it- if there is a "TV-op" attached in the process.

And, it is Congress which loves to grand-stand on national television before taxpayers and levy blame on everyone but themselves for what is wrong.

I feel sorry for the SEC. All these years, they have done the best they can with what they've had to work with. They've been strangled all the way.

Just once- I'd love to see Congressional representatives sitting where the SEC was sitting today- and grilled repeatedly for all of the incompetent "ambulance-chasing"-style law-making they have effected- and continue to effect.

This great country is great despite Congress. And can be greater, if just once, Congress could act before a crisis occurs- and not only after a crisis occurs.

Congress: instead of pointing fingers at everyone else- investigate and enforce yourselves.

The taxpayers demand it.

GT McDuffy

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NovaDel Pharma: The Next Big Thing In Biopharma Microcaps

Novadel Pharma Inc.(NVD) recently received FDA approval of its Zolpimist™ (zolpidem tartrate) 5 mg and 10 mg Oral Spray.

Zolpimist™ is intended for the short-term treatment of insomnia characterized by difficulties with sleep initiation.

Zolpimist™ is now the second NovaDel product approved by the FDA that uses NovaDel’s proprietary NovaMist oral spray technology. Zolpimist™ contains the same active ingredient as Sanofi Aventis' Ambien®, the leading sedative hypnotic for the treatment of insomnia. Sanofi Anantis' patent for zolpidem tartrate expired on April 21, 2007, and the FDA subsequently approved the first generic versions of Ambien® (zolpidem tartrate) immediate-release tablets.

Mylan Pharmaceuticals (MYL), TEVA Pharmaceuticals USA (TEVA), Roxane Laboratories, Watson Laboratories, Ranbaxy Laboratories, Dr. Reddy's Laboratories, Apotex, Synthon Pharmaceuticals, Genpharm, Mutual Pharmaceutical Company, Caraco Pharmaceutical Laboratories, Carlsbad Technology, and Lek Pharmaceuticals were the 13 companies approved by the FDA to manufacture generic immediate-release tablets.

So, the December 22, 2008 announcement that the FDA approved NovaDel's oral spray version now puts NovaDel in powerful company. And, Novadel's Zolpimist™ should be a big hit amongst insomnia drug consumers.

NovaDel is currently engaged in commercializing Zolpimist™, which will surely attract big pharma partners. Additionally, NovaDel is currently finalizing commercialization plans for NitroMist™ - which was their first FDA approval. NitroMist™ offers acute relief for heart and coronary artery disease (acute relief of an attack or acute prophylaxis of angina pectoris due to coronary artery disease).

Furthermore, NovaDel is also involved in looking to ultimately enterprise an oral-spray version of a generic form of Pfizer's Viagra® (active ingredient: sildenafil), something that Pfizer (PFE) itself has already been looking into doing. To this end, it therefore may make sense for Pfizer to hook-up with NovaDel. There had previously been rumors of the two teaming together, which both companies denied at the time, but, with NovaDel's star power now rising- and with Pfizer, now more than ever, looking to partner up with companies big and small- the Novadel dance could, indeed, be viable.

In the world of biopharma microcaps- a world in which there seems to be a small company on every street corner looking to strike it big and rich with just the right pharma product, NovaDel certainly stands out from the pack. That's not to say that there aren't a few others, but NovaDel is clearly onto something with their "oral-spray version of big name drug" niche.

And it will not be long before big pharma comes calling- especially now that the FDA has firmly accepted NovaDel into their brotherhood- which as every biopharma/biotech investor knows, is an incredibly impossible thing to do. And NovaDel did it.

Novadel has graduated to the major leagues. And this small company out of Flemington, NJ is poised for big things. In fact, given all the recent and emerging developments surrounding the strong NovaDel drug pipeline, I wouldn't be at all surprised if a major pharmaceutical comes along and simply buys out NovaDel Pharma lock, stock 'n "oral-spray" barrel.

(GT McDuffy does not hold any positions in NovaDel Pharma Inc.)

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Tuesday, February 3, 2009

The Monthly Big 5: Stocks To Watch

February 2009

NovaDel Pharma (NVD): Company recently received FDA approval for its Zolpimist™ 5 mg and 10 mg Oral Spray. NovaDel is currently engaged in commercializing Zolpimist™, which will surely attract big pharma partners. Additionally, NovaDel is currently finalizing commercialization plans for NitroMist™ - which was their first FDA approval. Logic dictates that, with two FDA approvals now under their belt, NovaDel's niche in offering oral spray versions of big name drugs that are currently available in tablet (or non-spray) form- is a bonafide and potentially very-lucrative market. Particularly interesting at this point in time for companies such as NovaDel Pharma, is recent M&A activity from large pharmaceuticals looking to partner up big and small. EDGAR filings, just reported (February 2 and 3), are extremely interesting as well.

GTC Biotherapeutics (GTCB): Company is awaiting approval from the FDA per its transgenic goat-based ATryn® drug. In an historic move, an FDA advisory committee recently endorsed the drug. The FDA decision is due by February 7, 2009. Pharma drugs made from/with genetically-engineered animals is a hot topic, and related final guidelines from the FDA have recently been issued- in anticipation of the Obama administration's pro-stem cell agenda.

Las Vegas Sands (LVS): Casino sector has recently sold-off in tandem with some negative sentiment amongst a few Wall Streeters, however, LVS is now oversold- and with its 20% short-interest squeezing into the coming February broad market rally- this stock is poised to run like mad. Stock came down from a January 6, 2009 high of $9.15 all the way to a low today of $3.89. 52 Week High: $95.26!

Tenet Healthcare (THC): Company has just received a few analyst upgrades- and the stock price has pulled down from a January 9, 2009 high of $1.49 to a close of $1.07 today. As with LVS, this stock can rally 30-40% in a flash with a broad market pop.

Alkermes Inc. (ALKS): Company, fresh off a January 20, 2009 JP Morgan "highest-score" upgrade, has also attracted a lot of other Wall Street proponents. Particularly as healthcare and bio pharma stocks are in favor per defensive strategies in a weak stock market in conjunction with President Obama's healthcare and stem cell pedal-to-the-metal agendas. Company boasts such partners as Johnson & Johnson (JNJ), who are also awaiting an FDA decision due by Valentine's Day 2009 in regard to an sNDA for Rispredal Consta™- an adult bipolar disorder treatment (say that 5 times fast)!

GT McDuffy

(None of the above stocks are recommendations to buy or sell. The author has no positions in any of the stocks mentioned in this article).

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