Companies featured in the current edition of the newsletter: ACCP, ACTCE, AMAR, AVGO, CBAI, CBMC, CETG, CLXS, NSMG, PLKH, PSTI, RVEP, SWVC
This week the focus was on the good news or, in many situations, the better-than-feared news. That disposition led to some robust gains for the major indices. For the week, the S&P 500 tacked on an impressive 4.3% gain worth 56 points, which is a bigger gain than it registered for all of 2007, reducing its year to date loss to 5.3%. It was the Nasdaq, though, that led the action. With a gain of 4.9% or 113 points, it registered its best one-week showing since August 2006, cutting its year to date loss to 9.4%. The Dow Jones Industrial Average gained 4.3% or 524 points, bringing its year to date loss to 3.1%. The Russell 2000 rounded off the week with a gain of 33 points or 4.8%, bringing its year to date loss to 5.9%.
Earnings reports from Wachovia, JPMorgan Chase, Merrill Lynch and Citigroup showed sharp downturns versus the prior-year period and in each case, with the exception of JPMorgan Chase, posted losses for the first quarter. These reports, though, weren’t as bad as expected and that realization unleashed a wave of pent-up buying interest that sent the financial sector up 5.2% for the week. Strikingly, the financial sector wasn’t even the best-performing sector for the week. That distinction belonged to the technology sector, which rallied 6.3%. Google played a large role in the Nasdaq’s outperformance as it soared 20% on Friday after eclipsing the first quarter consensus EPS estimate by $0.32 and reporting 20% growth in paid clicks.
The biggest mover on the week was the energy sector, which advanced 7.7%, moving in near lockstep with oil prices, which shot up 6.1% and finished at a new all-time high of $116.90 per barrel. The big move in oil was evident in a wholesale inflation report that showed producer prices rose 1.1% in March. Rising food prices also played a big part in that uptick, but when both food and energy were excluded, the increase in producer prices was a more palatable 0.2%.
What should investors look for this week? A slew of earnings reports will be released, beginning on Monday before the bell with Bank of America (NYSE: BAC), Eli Lilly (NYSE: LLY), Halliburton (NYSE: HAL), Merck (NYSE: MRK), and Novartis AG (NYSE: NVS). Following later in the day will be announcements from Boston Scientific (NYSE: BSX) and Texas Instruments (NYSE: TXN). Tuesday will highlight reports from AT&T (NYSE: T), Baker Hughes (NYSE: BHI), DuPont (NYSE: DD), EnCana (NYSE: ECA), Kimberly-Clark (NYSE: KMB), Lockheed Martin (NYSE: LMT), McDonald’s (NYSE: MCD), Parker-Hannifin (NYSE: PH), Smith Intl (NYSE: SII), SunTrust Banks (NYSE: STI), UnitedHealth (NYSE: UNH), Wyeth (NYSE: WYE), Norfolk Southern (NYSE: NSC), XL Capital (NYSE: XL), Yahoo! (NASDAQ: YHOO), and YUM! Brands (NYSE: YUM). Wednesday will feature announcements from AmerisourceBergen (NYSE: ABC), Boeing (NYSE: BA), Constellation Energy (NYSE: CEG), Delta Air Lines (NYSE: DAL), EMC Corp (NYSE: EMC), Freeport-McMoRan (NYSE: FCX), General Dynamics (NYSE: GD), GlaxoSmithKline (NYSE: GSK), Northwest Airlines (NYSE: NWA), Pepsi Bottling (NYSE: PBG), Schering-Plough (NYSE: SGP), UPS (NYSE: UPS), WellPoint (NYSE: WLP), Anheuser-Busch (NYSE: BUD), AFLAC (NYSE: AFL), Allstate (NYSE: ALL), Amazon.com (NASDAQ: AMZN), and Apple (NASDAQ: AAPL). Thursday will be another busy day with reports from 3M (NYSE: MMM), Aetna (NYSE: AET), AstraZeneca (NYSE: AZN), AutoNation (NYSE: AN), Bristol-Myers (NYSE: BMY), Bunge (NYSE: BG), Dow Chemical (NYSE: DOW), EDS (NYSE: EDS), Ford Motor (NYSE: F), Motorola (NYSE: MOT), Northrop Grumman (NYSE: NOC), Occidental Petro (NYSE: OXY), PepsiCo (NYSE: PEP), Raytheon (NYSE: RTN), Safeway (NYSE: SWY), Siemens AG (NYSE: SI), Travelers (NYSE: TRV), Whirlpool (NYSE: WHR), American Express (NYSE: AXP), Ingram Micro (NYSE: IM), and Microsoft (NASDAQ: MSFT). LM Ericsson (NASDAQ: ERIC), Goodyear Tire (NYSE: GT), Entergy (NYSE: ETR), and Coventry Health Care (NYSE: CVH) will conclude the week’s announcements on Friday.
Economic releases will be closely watched as investors attempt to decipher the magnitude of the economic downturn. Shortly after the opening bell on Tuesday, March Existing Home Sales will be announced. Wednesday mid-morning weekly Crude Inventories will be reported. Prior to the opening on Thursday, Weekly Jobless Claims and March Durable Orders will be announced with the March New Home Sales being reported at 10:00 a.m. March Michigan Sentiment Index will be released on Friday at 10:00a.m.
The conference schedule will be light this week. The three day JPMorgan 4th Annual China Conference in Beijing is the major event.
Pluristem Therapeutics Inc. (NASDAQ: PSTI), a bio-therapeutics company dedicated to the commercialization of non-personalized cell therapy products for a variety of degenerative, ischemic and autoimmune indications, announced that a preclinical study utilizing the company’s PLacental eXpanded cells showed a statistically significant advantage in ameliorating functional deficiencies in a standard Multiple Sclerosis animal model. These results demonstrate that PLX cells may be useful in the treatment of central nervous system disorders and can potentially help millions of people. The stock rose by a penny, to close the week at $3.75.
Rio Vista Energy Partners L.P. (NASDAQ: RVEP), a company that transports liquefied petroleum gas, announced its financial results for the year ended December 31, 2007. For fiscal year 2007 the company recorded total revenue of $5.9 million compared to total revenues of $0.9 million for 2006. All revenue prior to August 22, 2006 was derived from Rio Vista’s LPG sales, which have been divested. As a result of the disposition of the LPG-related businesses in 2006 and 2007 and the acquisition of privately-held energy company Regional’s business and the Oklahoma assets, Rio Vista’s sources of operating cash flows are expected to be derived from the operations of Regional and from the revenue received from the Oklahoma assets. Share rose by $0.08 for the week, to finish at $3.08.
Volume Alert: Shares of Calypte Biomedical Corporation (OTCBB: CBMC), a developer, manufacturer and marketer of HIV diagnostic tests, jumped more than 40% last week on record volume, after the company announced that its Chinese subsidiary, Beijing Marr Bio-Pharmaceutical Co. Ltd., had received registration and marketing approval for Calypte’s Aware HIV-1/2 OMT rapid test from the State Food and Drug Administration of China. This approval makes the Aware HIV-1/2 OMT test the first and only SFDA approved rapid oral fluid HIV test in China. This is a major accomplishment for Calypte since this long awaited approval permits the company to begin actively marketing its rapid diagnostic tests in China, one of the potentially largest HIV testing markets in the world. This approval also gives the company, for the first time, an approval in the country of manufacture. Absence of this approval in the past has hampered the company’s ability to register and market the test in a number of countries, a hurdle that can now be overcome by producing the domestically approved Aware product in its Chinese factory. Shares rose by $0.03 for the week, to finish at $0.10.
ProLink Holdings Corp. (OTCBB: PLKH), the world’s largest provider of Global Positioning System golf course management systems and on-course advertising, announced financial results for its fourth quarter and year ended December 31, 2007. The company reported fourth quarter revenue of $6.4 million compared to $3.8 million in the fourth quarter of 2006. Gross margin for the 2007 fourth quarter was 49%, compared to 21% in the 2006 fourth quarter. Total revenue for the year ended December 31, 2007 was $25.2 million versus revenue for the year ended December 31, 2006 of $21.6 million, an increase of 16.7%. The company also announced that the United States Air Force has awarded ProLink a contract, valued at $3.7 million, to install the ProLink Solutions GPS system, used at many of the world’s leading golf courses, at seven golf courses located at Air Force bases throughout the Pacific region. While the company’s financial should continue to be impacted near-term by the loss of an international distributor, domestic business remains robust and should more than compensate for the international shortfall, positioning the company for strong growth in the second half of the year as international sales begin to increase. Shares rose by $0.03, to finish the week at $0.59.
Access Pharmaceuticals, Inc. (OTCBB: ACCP), an emerging biopharmaceutical company that develops and commercializes propriety products for the treatment and supportive care of cancer patients, announced results from preclinical studies ongoing at the prestigious Imperial College London on Angiolix, its proprietary humanized monoclonal antibody. The new data shows that Angiolix interferes with binding of lactadherin on new blood vessels and many different tumor types including breast, ovary, stomach, as well with surrounding tissues the extra cellular matrix around tumors and new blood vessels formed by tumors. Based on this data, the company is commencing additional studies where Angiolix is administered in combination with chemotherapy in multiple tumor types, including breast and ovarian cancers. The company also presented a poster at the 99th Annual Meeting of the American Association for Cancer Research in San Diego describing the results of studies designed to determine the molecular mechanisms of ProLindac action, and the predictive factors of sensitivity and related target genes in cancer cell lines, compared to oxaliplatin and cisplatin. These results show that ProLindac displays a cytotoxic profile in vitro which is similar to that of oxaliplatin in most human cancer cell lines at similar platinum concentrations. With the polymer providing enhanced tumor delivery in vivo compared with oxaliplatin, there is now a good scientific basis to anticipate that ProLindac should provide superior efficacy in the treatment of a variety of cancers. Shares rose by $0.05 for the week, to finish at $2.25.
Advanced Cell Technology, Inc. (OTCBB: ACTCE), a biotechnology company applying cellular technology in the emerging field of regenerative medicine, filed its annual report for the year ended December 31, 2007 on Friday, past the statutory period for filing, resulting in an E placed on the company’s ticker symbol. We would expect the E to be removed early this week, reflecting the fact that the company is now current in its filings. The stock ended the week at $0.10.
Avicena Group, Inc. (OTCBB: AVGO), a biotechnology company that develops novel therapies for neurological and neuromuscular diseases, as well as develops dermaceutical and nutraceutical products based on its proprietary understanding of cellular energy, filed its annual report for the year ended December 31, 2007. The company reported an increase in revenues by $45,663 in the year ending December 31, 2007 compared to 2006, from $374,952 in 2006 to $420,615 in 2007. The increase of 12% in 2007 over the same 2006 period was primarily due to a $32,393 increase in Neotine sales. The stock fell by $0.04, to close the week at $0.20.
Seaway Valley Capital Corporation (OTCBB: SWVC), a company that focuses on making equity and equity-related investments in companies that require growth and expansion capital, announced that it is merging into it the businesses of North Country Hospitality, Inc., which is based in Watertown, NY and has assets throughout northern and central New York, in a transaction valued at approximately $11.7 million. To date, North Country Hospitality has assets of approximately $13 million and projects revenue of approximately $6.2 million for fiscal 2008. Together with Seaway and its subsidiaries, the combined company will have assets of roughly $31.5 million and pro forma annualized revenues of $36 to $41 million, once Hackett’s converts each of the WiseBuys stores. The company has already identified opportunities between its retail operations of Hackett’s and certain North Country companies, whereby each could immediately benefit from a close relationship with the other. The stock ended the week at $0.006 on heavy volume.
Just weeks after national construction company National Storm Management (OTC: NSMG) said it opened a new office in Alpharetta, Georgia, a suburb of Atlanta, to capitalize on recent storm activity in the area, the company may have another opportunity as a result of an estimated $150 million in hail damage in Texarkana. The company expects to provide first-responder services in area such as these. The company provides storm restoration services in seven states. The stock ended the week at $0.055.
Cord Blood America, Inc. (OTCBB: CBAI), the umbilical cord blood stem cell preservation company focused on bringing the life saving potential of stem cells to families nationwide and internationally, reported that revenue for 2007 totaled $5.8 million, up 74% compared to revenue of $3.3 million in 2006. Due to an adjustment in how the company recognized yearly storage revenue for CorCell acquisition, the amount it could claim as revenue was reduced by a one-time charge of more than $500,000. The stock ended the week at $0.01.
On the Wires: Amarillo Biosciences, Inc. (OTCBB: AMAR), a specialty pharmaceutical company focused on low-dose orally administered interferon as a treatment for a variety of conditions, announced that Peter Mueller, Ph.D. has been appointed Chief Operating Officer and Director of Research. Darrell W. Gunter, executive vice president and chief marketing officer for Collexis Holdings, Inc., (OTCBB: CLXS), a leading developer of high definition search and knowledge discovery software, was reappointed to the Software & Information Industry Association Content Division Board.
SPECIAL SITUATIONS:
Capital City Energy Group, Inc. (OTCBB: CETG) $2.95
With crude oil prices seemingly setting a new record each week, it is not hard to see how many energy companies, both on the production and exploration side, as well as in the energy services sector, could benefit. What if you combined a company with a successful history in the energy sector and a credit facility of $75 Million that was aggressively seeking to acquire prolific oil and gas properties and oil field service companies, in essence creating a vertically integrated energy company? Now add into the mix an energy funds management company that has compiled impressive returns managing money for investors. What you get is Capital City Energy Group, a company that recently became public by merging with a shell company.
Capital City Energy Group, Inc. is taking advantage of the many attractive opportunities available in the energy sector by applying its Triad business model which reflects its three divisions. Eastern Well Services, LLC a wholly owned subsidiary is on the oil field service side of the business. Eastern provides fracture stimulation, well cementing, production logging, pressure testing and other general wireline operations. Recently, its engineers were selected for a project in Botswana, South Africa by Sabre Energy, an emerging international oil and gas company.
Founded in 2003 and profitable since its inception, its funds management division structures, funds, and manages investments in energy properties. The company is also targeting acquisitions of oil and gas properties where it plans to act as a principal, applying the expertise it gained as an investor in selecting promising properties for investment. Recently, it secured a $75 million credit facility from First Merit, which should greatly enhance its ability to make acquisitions. These purchases are expected to target energy-related businesses that are strategic to the core fund management business such as drillers, operators, service companies, pipelines, and lease owners, among others. The direct ownership in the full spectrum of assets within the energy industry transforms Capital City Energy Group into a more dynamic and full-service energy company. The financial structure of the company makes it an ideal partner for many companies in the energy sector that seek to grow their businesses as it has the capability to provide financing through its funds management business.
Although the company recently went public, it is no startup. For the fiscal year ended 2007, Capital City had revenue of approximately $2.9 million, and EBITDA, a non-GAAP measure, of $1.9 million. There are currently approximately 26.8 million shares outstanding, giving the company a market capitalization of approximately $80 million. With energy prices soaring, a proven management team and a vertically integrated approach to combining exploration and development with a services business, Capital City appears well positioned to capitalize on record high energy prices, providing significant profits for early investors.
