Month: December 2009

News from Christmas eve.

“Link: https://www.etrade.wallst.com/v1/stocks/…
2:58 PM ET 12/24/09 | Dow Jones
DOW JONES NEWSWIRES

Sunesis Pharmaceuticals Inc. (SNSS) registered to offer up to $50 million in a combination of securities to fund further development of the biopharmaceutical company’s lead product, voreloxin.

The company–which said in a Securities and Exchange Commission filing that it could offer common stock, warrants or units–plans to use proceeds to fund working-capital needs, capital expenditures and other general corporate purposes.

Sunesis is planning for a Phase III development for the compound. Voreloxin is an anti-cancer quinolone derivative–a class of compounds that hasn’t been used for cancer treatment.

Last month, the company, which was founded in 1998 as Mosaic Pharmaceuticals, said the Food and Drug Administration had granted voreloxin orphan-drug designation for the treatment of acute myeloid leukemia, or AML. Sunesis expects to launch a pivotal trial for AML next year, and it may seek a partnership to maximize commercial potential of the compound.

Last month, Sunesis reported its third-quarter loss narrowed on a 35% decline in operating expenses. Revenue also tumbled 97% to $12,500.

Shares were down 2.3%, or 3 cents, to $1.25 in after-hours trading. The stock has rebounded in recent months, but is still under the all-time high of more than $7 set in 2006.”

What’s going to happen next?

December 24, 2009- the security reached $1.28 and $1.24 in after hour trading.
December 28, 2009- it closed @ $1.15

What is to be understood from the above article: share dilution.

What I have learned from past experience with other security I took position in- namely CVM Cel-Sci Corp is that this is the kiss of death short term. CVM went through the same kind of scenario and currently is depressingly low, at below $1.(Update: on December 28, 2009 it closed at $0.93)

When they filled out the shelf offering, some people predicted the drop in share price and immediately brandished as being shorts. Others came up with the theory that something really, really good is just around the corner, just about to be announced and the company came up with the offering just in case. Guess what? The ‘shorts’ were right. Since the offering the security is in free fall.

Opinion from the SNSS message board:
“From what i have seen, it’s a shelf offering so the $50 million of shares have not been issued and there is nothing to say they will be either…at least not all of them.

Why is this somewhat positive? First, it increases SNSS’s leverage when negotiating a partnership. If companies think they are out of cash, they can either buy SNSS for cheap or make a deal with them that is not advantageous to them because SNSS would be viewed as desperate. Second, having money in the bank is always a good thing. The stock price is much higher than its been so why not raise additional capial? I rather they have working capital than none at all. Again, this is not a bad thing. The shorts are just trying to scare you and they aren’t very bright. I’m surprised how ignorant the shorts/bashers are here.”

As it can be seen, it follows the same path as CVM.

Holders of the SNSS should better brace themselves for a drop.
Even more proof: short interest increased a whooping 1168%!!!!

Short Interest (Shares Short)
570,700
Days To Cover (Short Interest Ratio)
0.0
Short Percent of Float
1.69 %
Short Interest – Prior
45,000
Short % Increase / Decrease
1168.22 %

Brendan Ryan | Mon, 14 Dec 2009 12:40
[miningmx.com] — JP Morgan analysts Steve Shepherd and Allan Cooke have turned even more bullish on platinum and gold, as well as South African platinum and gold equities.
That’s despite the numerous challenges faced by the SA miners. These include rand strength, the concerning outlook for electricity and water supply and the impact of various types of government involvement in the mining arena.
On gold, they said: “We see upside in the rand gold price and in our SA gold share picks, despite the challenging near-term operating environment in South Africa. We expect our gold share picks to outperform the gold price over the next six months.”
JP Morgan’s SA gold share picks are AngloGold Ashanti and Gold Fields. The analysts have also just upgraded DRDGOLD, changing their recommendation from “underweight” to “overweight” for investors’ portfolios.
They pointed out the most vulnerable stocks are Harmony and DRDGOLD, which had a high gearing to the rand/dollar exchange rate and cost inflation.
On platinum, Shepherd and Cooke summed up the situation as one of “solid demand and constrained supply outlook. Game on.”
They said: “We believe the ingredients may well be in place for the platinum group metals (PGM) basket to overshoot mid-cycle prices in the next couple of years and, if history repeats itself, equity prices should perform strongly in response to this.
“JP Morgan’s SA equities strategy to be overweight on platinum in 2010 reflects our expectations for this.”
Turning to the platinum shares, the analysts said: “Our top major pick remains Anglo Platinum, followed closely by Lonmin which we have upgraded from neutral to overweight.
“This said, we continue to expect the smaller names such as Northam (overweight) and Eastern Platinum (overweight) to be the top performers in 2010 due to a compelling valuation and the prospect for quantum production growth over the next five to 10 years.
“We are cautions on Impala Platinum (neutral), where we see some concerning management issues at its huge Rustenburg mine. Despite a good management team, we remain underweight on Aquarius Platinum due to its less favourable relative resources position and our valuation work.”
The analysts expected platinum demand to show progressive recovery, driven by a gradual recovery trend in global growth with emerging markets leading the way.
On the supply side, they believed a number of factors would adversely affect South African PGM production levels.
These included sharply reduced levels of capital expenditure; loss of production because of enforced safety-related interruptions to mining operations; concerns over future electricity supply from Eskom; worries over future water supplies and “developments of a political/taxation/ BEE [black economic empowerment] nature.”
Shepherd and Cooke said: “There appears to be an increasing risk that state interventions/involvement will tend to slow the rate of new PGM capacity investment in South Africa, which over time could add to PGM market tension.”
They said: “Given that the issues we highlight above pan out, we can only foresee that investors in commodities will continue to be attracted to PGM, adding further tension to the market. In this scenario we see the potential for prices of the metals to spike.”
On the gold sector, the analysts said they increased their near-term gold price forecast by 36% to $1,288 per ounce for 2010 and $1,225/oz for 2011.
They also strengthened their rand/dollar exchange rate forecast by 11% to R7.73/$1 in 2010 and R8.2/$1 in 2011.
They said: “Our outlook for the sector’s key drivers is much improved, with the rand gold price forecast to average around R320,000/kg over the next two years.
“If we are on the money, this will be good news for SA gold producers’ top lines that have sagged in 2009 under the weight of a stronger rand and lower production due to safety stoppages.”
Shepherd and Cooke commented the South African gold share ratings remained subdued and “quite frankly, are disappointing give the recovery in the rand gold price as the gold price has breached the $1,000/oz level.
“Our base case numbers continue to reflect multiples at around a 40% discount to the major North American gold miners. Relative to their ratings history and North American peer spot multiples, the shares continue to look inexpensive to us.”

WASHINGTON (Commodity Online): Politicians in the United States are coming out in the open demanding constitutional remedies to curb manipulation and rampant speculation in gold prices. Congressman Ron Paul said that the US Federal Reserve and the Treasury department have been manipulating gold prices to deflate the price of gold.

Congressman Ron Paul of Texas this week introduced legislation designed to curb the ability of the President or the Treasury Secretary to manipulate worldwide gold prices. The “Monetary Freedom and Accountability Act” restores proper congressional authority over gold policy by requiring that body to vote its approval before the President or Secretary buys or sells gold.

“The Constitution grants authority over monetary policy specifically to Congress alone, not to the executive or the administration,” Paul stated. “Yet Congress has neglected its duty for decades, and now our foolish fiat money system is run without challenge exclusively by unelected Treasury and Fed bureaucrats. As a result, the Treasury has been able to engage in the buying and selling of gold to manipulate the worldwide market price. Gold is very important to markets and investors in America and across the globe, and Congress should not allow the administration to interfere in the gold market behind closed doors.”

The private Gold Antitrust Action Committee held a press conference this week to discuss federal manipulation of gold markets. The group has uncovered evidence suggesting that the Federal Reserve and the Treasury department, operating through the Exchange-Stabilization fund and in cooperation with the International Monetary Fund, have been systematically working to deflate the price of gold.

Because rising gold prices are seen by investors as a barometer of inflation, the Fed has purportedly suppressed prices to disguise the true nature of the financial bubble of the 1990s.

“The Fed wants all of us to think the stock market is not overvalued, and that credit and monetary expansion can create lasting prosperity,” Paul concluded. “My bill will make it harder for the Fed and the Treasury to manipulate gold prices, which should always serve as an unbiased indicator of the true health of world markets.”

As per December 10, 2009, let’s see what are the short sellers playing in the near future, courtesy of Douglas A. McIntyre from 247wallst.com

Short sellers sharply increased their gamble that financial stocks would fall based on short selling data from NYSE and Nasdaq on the last day of November.
Shorts pushed into Citigroup (NYSE:C), increasing their positions by 11% to 216 million shares making the bank stock the most shorted among all US companies. Bets against Bank of America (NYSE:BAC) rose 13% to 75.5 million shares and 2% against Wells Fargo (NYSE:WFC) to 77.2 million.

Short selling made very large gambles against the big companies in the retail sector probably based on the belief that holiday sales will be weak. Shares short in Wal-Mart (NYSE:WMT) rose 37% to 28.2 million. The short interest in Macy’s (NYSE:M) was up 13% to 40 million shares. Shares short in Barnes & Noble (NYSE:BKS) rose 15% to 17.1 million The short interest in Office Depot (NYSE:ODP) was higher by 20% to 21.7 million, and shares sold short in Nordstrom (NYSE:JWN) were up 15% to 21.8 million. However, shares short in e-commerce leader Amazon (NASDAQ:AMZN) dropped by 13% to 17.1 million.

Short sellers appear to think that the results for airlines and hotels will be good in the near term. Shares sold short in Southwest (NYSE:LUV) fell 9% to 26.1 million. The short interest in Marriott (NYSE:MAR) was down 7% to 33.2 million. Shares short in Delta (NYSE:DAL) fell 15% to 24 million.

Among big tech stocks, shares sold short in Dell (NASDAQ:DELL) rose 35% to 37.9 million. Most other changes in hardware and software stocks were modest. Share short in Microsoft (NASDAQ:MSFT) fell 18% to 64 million. The short interest in Intel (NASDAQ:INTC) fell 4% to 52.6 million. Shares sold short in Cisco (NASDAQ:CSCO) rose 2% to 42.4 million. The short interest in Nvidia (NASDAQ:NVDA) rose 3% to 34.3 million. The short interest in Symantec (NASDAQ:SYMC) was down 1% to 21.7 million. Shares short in RIM (NASDAQ:RIMM) rose 1% to 22.3 million.
The short interest in Oracle (NASDAQ:ORCL) fell 14% to 21.6 million ahead of the EU decision on the company’s buy-out of Sun (NASDAQ:JAVA). The market reacted well to the restructuring of Electronic Arts (NASDAQ:ERTS) as its short interest was up only 2% to 21 million shares. Investors are betting that Palm (NASDAQ:PALM) will have a rough fourth quarter sending shares short up 19% to 56.5 million.
Among tech giants, shares short in Apple (NASDAQ:AAPL) dropped 14% to 13.5 million ahead of the holiday sales period. Shares short in Google (NASDAQ:GOOG) fell 11% to 3.8 million.