After a rough January marked by weekly declines, the major averages were spared this week and instead managed to stage a partial comeback, ending the week with strong gains. The Dow Jones Industrial Average gained 536 points, to cut its year to date loss to 3.9%. The technology heavy Nasdaq followed with a gain of 87 points, bringing its year to date loss to 9%. The S&P 500 rose 4.9% or 65 points, cutting its year to date loss to 5%. The Russell 2000 had the biggest percentage gain of 6.1% or 42 points, paring its year to date loss to 4.6%.
For the most part, market participants were in rescue mode all week, coming to the aid of battered stock prices, primarily in the financial and retail sectors. The prospect of further rate cuts, and then the rate cut itself, fueled the bullish bias that had been missing for most of January. Yahoo!, Google, Boeing, Bristol-Myers and Starbucks reported disappointing earnings results and new home sales fell to a 13-year low. Yet the market digested this news with relative ease, preferring instead to focus on the positives like reassuring earnings news from 3M, Burlington Northern, UPS and Verizon, a report that durable orders rose 5.2%, a jump in the manufacturing sector’s ISM Index to 50.7, and the Microsoft buyout offer for Yahoo!. The proposed acquisition dominated the news, likely due to the 62% premium to Yahoo’s previous closing price.
What should investors look for in the upcoming week? The earnings calendar will continue to be busy with Archer-Daniels (NYSE: ADM), Humana (NYSE: HUM), TEPPCO Partners (NYSE: TPP), Anadarko Petro (NYSE: APC), News Corp. (NYSE: NWS), Principal Financial (NYSE: PFG), and YUM! Brands (NYSE: YUM) will all make announcements on Monday. Avon Products (NYSE: AVP), Duke Energy (NYSE: DUK), Emerson (NYSE: EMR), Tyco (NYSE: TYC), Whirlpool (NYSE: WHR) and Walt Disney (NYSE: DIS) will follow with announcements on Tuesday. CIGNA (NYSE: CI), Devon Energy (NYSE: DVN), Time Warner (NYSE: TWX), Time Warner Cable (NYSE: TWC), Tyco Electronic (NYSE: TEL), will make earning announcements before the bell on Wednesday. They will be followed by announcements after the close from Cisco Sytems (NASDAQ: CSCO), EDS (NYSE: EDS), MetLife (NYSE: MET), and Prudential (NYSE: PRU). AES Corp. (NYSE:AES), Aetna (NYSE: AET), Apache (NYSE: APA), Arrow Electric (NYSE: ARW), AutoNation (NYSE: AN), Bunge (NYSE: BG), Intl Paper (NYSE: IP), PepsiCo (NYSE: PEP), Express Scripts (NASDAQ: ESRX), and Genworth Financial (NYSE: GNW) will all make announcements on Thursday. The week will finish on Friday with announcements from Alacatel-Lucent (NYSE: ALU), Coventry Health Care (NYSE: CVH), and Weyerhaeuser (NYSE: WY).
Next week’s economic news and data will once again take a back seat to earnings announcements, but investors will likely be interested in some of the key reports and events. The week will begin with the December Factory Orders announcement on Monday. The January ISM Services Index will be released Tuesday mid-morning. Investors can expect to see the Q4 Preliminary Productivity and Unit Labor Costs reports before the market opens Wednesday. Weekly Crude Inventories will also be announced mid-morning Wednesday. Thursday brings the Weekly Initial Unemployment Claims announced before the bell and December Pending Home Sales announced later that morning. December Wholesale Inventories will close out the week mid-morning on Friday.
The conference schedule for next week will again be on the lighter side. The week will kick off with the five day Credit Suisse Group Energy Conference and the two-day Thomas Weisel Partners 2008 Technology Telecom Internet Conference. Tuesday will be highlighted by the Goldman Sachs Consumer/Retail Leveraged Finance Conference. Merrill Lynch with host its 19th Global Pharmaceutical Biotechnology on Wednesday.
CytRx Corporation (NASDAQ: CYTR)’s subsidiary RXi Pharmaceuticals Corporation, filed its third amendment to the S1 registration statement, under which CytRx, which is the majority shareholder, plans to take RXi public. Given the relatively minor level of revision, the registration could be close to being declared effective, which would allow CYTR to dividend shares in RXi to CyrRx shareholders, a move we believe could be a catalyst for shares of CYTR. Notably, the most recently amended registration statement excludes from resale any shares that are expected to be owned by CytRx post-effectiveness. Shares ended the week at $2.03, down 2 cents.
Generex Biotechnology Corporation (Nasdaq: GNBT), a company that engages in the research, development, and commercialization of drug delivery systems and technologies for metabolic and immunological diseases, announced that the European Patent Office has granted the company a new European patent, titled “Mixed Micellar Delivery System and Method of Preparation. The patent will be validated in eleven European countries including the U.K., France and Germany. The patent contains process and formulation claims to a pharmaceutical formulation for delivery through the mucosal membranes. Generex continues to expand its patent portfolio in Europe, which is part of the company’s European and global growth strategy. The company currently holds an aggregate of 123 patents worldwide and has an aggregate of 92 patent applications pending in various jurisdictions. Share rose 2 cents, to close the week at $1.36.
Rio Vista Energy Partners L.P. (NASDAQ: RVEP), an energy services master limited partnership, announced that it has scheduled a cash distribution to its common unit holders. The distribution, covering the fourth quarter ended December 31, 2007, is expected to be in an amount equal to $0.25 per common unit. Shares rose $0.77 for the week, to close at $15.25.
Hythiam, Inc. (NASDAQ: HYTM), a healthcare services management company that offers solutions for patients suffering from alcoholism and substance dependencies, said that healthcare services executive Ian Worden has joined the company as Senior Vice President, Disease Management Operations. The move suggests that the company’s marketing efforts, which have been refocused on managed care, may beginning to gain traction, as Worden had extensive operating experience at privately-held LifeMasters. Shares ended the week at $2.55, up 18 cents.
CEL-SCI Corporation (AMEX: CVM), a company that engages in the research and development of drugs and vaccines used in the treatment of cancer, released a letter to shareholders which highlighted the following milestones that the company achieved in 2007: FDA clearance of Multikine for Phase III clinical trial in head and neck cancer, $15 million capital raise, Multikine receiving Orphan drug designation in U.S., the commencement of the build-out of a manufacturing facility for Multikine to support the upcoming Phase III study and commercial sale, and planning and pricing of the global clinical trial designed to lead to marketing approval for Multikine. Shares rose $0.12, to finish the week at $0.59.
Access Pharmaceuticals (OTCBB: ACCP), a biopharmaceutical company that engages in the development and commercialization of products for the treatment and supportive care of cancer and other diseases in the United States, announced that it has executed agreements for $2.7 million in new equity. The company has entered into agreements with institutional and accredited investors to purchase an aggregate of $2.7 million in gross proceeds of the company’s Series A Convertible Preferred Stock. This equity is in addition to the $9.5 million in gross proceeds announced in November 2007. The additional new capital will enable it to fund a number of key objectives including pursuing and expanding the clinical trial program for Access’ anti-cancer compound, ProLindac, a novel, proprietary DACH platinum which is currently in Phase 2 development. The stock rose 5 cents for the week, to close at $2.80.
Volume Alert: Shares of Intellect Neurosciences (OTCBB: ILNS) surged 21 cents on more than eight times average volume, after the company said in a regulatory filing that it was in discussions with pharmaceutical company Elan on a licensing deal. Shares ended the week at $0.57, up 20 cents on more than 10 times average volume.
MSTI Holdings, Inc. (OTCBB: MSHI), a carrier class communications technology company that specializes in providing “quad play” services consisting of video, voice, Internet and Wi-Fi to multi-tenant unit and multi-dwelling unit residential, hospitality and commercial properties, announced that its wholly-owned subsidiary, Microwave Satellite Technologies, Inc., has expanded its current customer base by offering its services to 216 apartment homes in the new South Tower of the Shore Condominium Residences at Newport. MSTI was selected due to its strong customer reception and the high level of satisfaction with its data and video products. Newport is a high-profile complex, developed by the Lefrak organization, located in New Jersey. Shares rose $0.18, to finish the week at $0.63.
Advanced Cell Technology, Inc. (OTCBB: ACTC), a biotechnology company that engages in the development and commercialization of human stem cell technology in the field of regenerative medicine, said last week that it completed discussions with the Food and Drug Administration regarding its retinal pigmented epithelial cell therapy through a type B, pre-Investigational New Drug meeting concerning the regulatory pathway and requirements to file an IND to initiate human clinical trials. The successful completion of the meeting represents another step closer to bringing second stem cell therapy to patients in need. The stock rose 2 cents to finish the week at $0.22.
Calypte Biomedical Corporation (OTCBB: CBMC), a developer, manufacturer and marketer of HIV diagnostic tests, launched its latest product, Aware Messenger, an oral fluid sample collection device for collecting high-quality oral fluid specimens for high-throughput laboratory testing. The company developed the Aware Messenger device in response to inquiries from several of its U.S. and international customers who requested a safe, simple and cost-effective alternative to currently marketed sampling devices. In addition, the device will meet the sample collection needs of potential customers who are seeking an alternative to blood testing but still prefer the advantages of high volume batch testing provided by traditional diagnostic methods. Aware Messenger is consistent with the company’s growing product line which is aimed at improving the ease with which sample collection and testing can occur. The design of the product provides great potential for current and future expansion into diagnostic product opportunities in the U.S. and international markets. The stock rose a penny for the week, to close at $0.13.
ProLink Holdings Corp. (OTCBB: PLKH), a leading provider of Global Positioning Satellite golf course management systems and digital out-of-home on-course advertising, announced that Eagle Glen Golf Club now features the ProLink Solutions GPS system used at many of the world’s most famous golf courses. ProLink GPS has the ability to make a direct impact on Eagle Glen’s bottom line thanks to the food-and-beverage and cart-management functions. It can also attract more tournament play because the scoring capabilities are a tremendous draw. The stock remained unchanged for the week at $0.60.
IAS Energy, Inc. (OTCBB: IASCA), an oil and gas exploration company seeking to establish new business, announced that its subsidiary Video1314.com reported record traffic on its web site for the month of January, 2008, as more than 10 million hits were registered on its site, reflecting growing interest in the site’s ability to offer video, photo and audio sharing experiences to its users, similar to YouTube.com. The activity in January represented a 300% increase compared to 4 million hits recorded in November 2007. As the company enhances the features and functionality of its web site, the traffic continues to increase. The company believes that once it begins to aggressively market the site that traffic will grow significantly, allowing it to reach 100 million hits prior to year-end. Shares fell $0.2, to close the week at $0.35.
Infosmart Group, Inc. (OTCBB: IFSG), a leading recordable digital versatile disc manufacturer in Hong Kong and Brazil, announced a 10-year exclusive Strategic Partnership with AboMem Technology Corporation, a leading provider of portable memory products in Taiwan. This partnership will allow Infosmart to utilize its distribution channel throughout Brazil and Hong Kong to sell AboMem’s various memory products. This will further enhance Infosmart’s strategy of having a diverse product pipeline to help mitigate margin risk associated with technological obsolescence or competition associated with any one product. The company expects to begin recording revenues from this agreement by March 2008. The stock remained unchanged for the week at $0.31.
On The Wires: Ceragenix Pharmaceuticals, Inc. (OTCBB: CGXP), a biopharmaceutical company focused on infectious disease and dermatology announced that Michael S. Niederman MD, FACP, FCCP, FCCM has joined its scientific advisory board. The Board of Managers of Rio Vista GP LLC, the general partner of Rio Vista Energy Partners L.P. (NASDAQ: RVEP), an energy services master limited partnership, elected Bruce I. Raben and Nicholas J. Singer as additional members of the Board of Managers of Rio Vista GP. Neutron Enterprises, Inc. a global provider of web-based, interactive consumer entertainment, business and education simulation products, amended its Articles of Incorporation to change its name from to Stock-Trak Group, Inc. (OTCBB: STKG).
SPECIAL SITUATION:
CityView Corporation (OTCBB: CTVWF) $0.15
With many U.S. micro-cap equities generating poor returns for investors, we thought we would look beyond the borders for a promising investment opportunity. CityView Corporation is an Australian-based resource company, widely traded on the Australian Stock Exchange (ASX) but largely unknown in the U.S. Its primary focus is in Western Africa, where it has base metals projects in Angola and an oil and gas property in Cameroon. The company is also seeking onshore oil concessions in Angola’s Kwanza Basin and in the Niger Delta in the Cameroon.
The turnaround in the company’s prospects has been dramatic. Technically, the company was insolvent in 2006, as it owned two Indonesian oil projects in defunct projects. Under a new management team and board, the company has refinanced its operations, with Aus$12.1 million in cash as of December, 2007 (around $11 million) and a growing portfolio of promising projects in Western Africa. The company acquired the right to purchase a 40% share in the Cameroon Oilfield, where it recently completed a feasibility study of the North Matanda PH72 field. Cameroon is Africa’s sixth largest oil producer.
While the Cameroon Oilfield represents a significant opportunity, Angola is equally exciting, as the country has an untapped wealth of energy and minerals. Companies enjoy favorable tax and work conditions, and major energy companies are already pumping more than 2 million barrels of oil/day offshore. CityView’s owns its metal projects through Fortitude Minerals Limited, which controls nine concession areas totaling more than 15,000 square kilometers of prime mineralized areas in Angola. Five copper licenses running for several hundred kilometers along the western seaboard of Angola and encompass the greater part of the Upper Cuvo formation.
Copper mineralization has been reported along the entire length of the Upper Cuvo formation, with potential to be a new copper province. Included amongst the copper licenses is Cachoeiras de Binga on which over 6,000 meters of core has been drilled. Fortitude’s immediate objective is to bring this resource to a JORC standard.
The company also holds licenses for gold and diamond CityView’s has been granted the exclusive right to acquire 100% of Canzar Resources plc, the holders of a 41% interest in three kimberlitic diamond concessions: Caufo, Luachisee and Nheffo. Endiama, the Angolan National Diamonds company, has confirmed that if any of the kimberlite concessions are not commercially viable, they will be replaced with other commercially viable kimberlites. Endiama has also agreed to enter into a long term operating agreement with Canzar on certain properties and will guarantee for the first four years a minimum annual net income to Canzar of $12.5 million per annum.
The company has a number of potential near-term catalysts, including the granting of a key license in the Kwanza Basin which could occur during the current quarter and opportunities to prove up or acquire additional properties with abundant resource potential. Despite these opportunities, the stock has lost more than half of its value since mid-November, where it made a new 52-week high of $0.36. The last time the stock was at this level, in mid-October, it surged to a new high within one month. In November, the company raised $3.45 million at $0.31, suggesting that somebody believes the stock is undervalued. If history repeats itself, investors in CityView at today’s prices could quickly reap significant rewards.
