Companies featured in the current edition of the newsletter: CETG, CLXS, ENZ, ETGF, GNBT, GSPG, HSOA, HYTM, IASCA, ICLK, NSMG, SWVC, TKO
Once again, last week the financial sector and oil prices were the primary swing factors. There was so much back and forth on rumors and clarifications that the stock market resembled a roller coaster – and not one you get off with that exhilarating feeling. Rather, it was more like a roller coaster that left you feeling dazed and confused. The Dow Jones Industrial Average lost 188 points for the week, increasing its year to date loss to 16.3%. The Nasdaq only dropped 6 points, giving it a year to date loss of 15.6%. The S&P 500 fell by 23 points or 1.9%, bringing its year to date loss to 15.6%. The Russell 2000 managed to gain 9 points or 1.4%, paring its year to date loss to 11.9%.
Government sponsored enterprises Fannie Mae and Freddie Mac were the main source of volatility for the market, as speculation ran rampant that they were destined for a government bailout despite repeated assurances from government officials and their regulator that they are adequately capitalized. At their lows for the week, shares of Fannie Mae and Freddie Mac were down 64% and 73%, respectively, from their closing prices at the end of last week. Oil prices certainly greased the ride. They experienced wide swings, too, touching $135.14 at their low Tuesday before rallying back to a new record high of $147.27 Friday. They eventually settled the week just below $145 or little changed from their close last Friday. Various reports discussing military posturing on the part of Iran and Israel, coupled with ongoing supply concerns, were at the heart of this week’s trading action in the energy pits.
Elsewhere, there were plenty of corporate headlines outside the financial sector to digest. Dow Chemical announced its intent to acquire Rohm & Haas for $78 per share in cash. Meanwhile, the latest turn in the InBev-Anheuser Busch battle had the two sides reportedly close to striking a friendly deal at $70 per share for BUD shareholders. Wal-Mart led a batch of retailers in reporting better-than-expected same-store sales results for June that were boosted by the spending of fiscal stimulus checks. Fellow Dow components Alcoa and General Electric officially kicked off the second quarter earnings reporting season with in-line profit reports. Neither company moved the market much, though, since it was pre-occupied with the Fannie Mae-Freddie Mac saga. Over the weekend, the Yahoo/Microsoft continued to play out, with Yahoo spurning Microsoft’s latest proposal as the bad blood between the parties escalated.
In the same vein, a smattering of economic reports failed to right the market even though they were generally better than expected. Pending home sales for May slipped 4.7% from April. That was a bit worse than the consensus estimate, but the actual level was fairly close to the level seen in December, which supported the notion that signs of stabilization in the depressed housing market are starting to emerge. Separately, weekly initial claims dropped 58K to 346K, well below the consensus estimate of 395K. The most constructive piece of data was the trade balance for May, and specifically the real trade deficit, which fell to $43.6 billion from $46.7 billion in April. The real trade deficit in April already left net exports on track to contribute 1.2% to real GDP in the second quarter.
What should investors look for this week? Earnings Season begins in earnest this week, with an announcement from Genentech (NYSE: DNA) on Monday before the bell. Tuesday morning before the market opens Charles Schwab (NASDAQ: SCHW), Eaton (NYSE: ETN), Johnson & Johnson (NYSE: JNJ), and US Bancorp (NYSE: USB) will release their earnings. Intel (NASDAQ: INTC) will report its numbers after the market closes. Abbott Labs (NYSE: ABT), Wells Fargo (NYSE: WFC), will announce results Wednesday morning, followed by an announcement from eBay (NASDAQ: EBAY) in the afternoon. Thursday will be the busiest day of the week with announcements from Bank of NY (NYSE: BK), Coca-Cola (NYSE: KO), Continental Air (NYSE: CAL), Danaher (NYSE: DHR), Ford Motor (NYSE: F), Johnson Controls (NYSE: JCI), JP Morgan Chase (NYSE: JPM), Nokia (NYSE: NOK), Novartis AG (NYSE: NVS) and United Tech (NYSE: UTX), all coming before the opening bell. There will also be a number of notable earnings releases after the market closes on Thursday from Google (NASDAQ: GOOG), IBM (NYSE: IBM), Merrill Lynch (NYSE: MER), and Microsoft (NASDAQ: MSFT). Friday will be highlighted with releases from Citigroup (NYSE: C), Honeywell (NYSE: HON), Manpower (NYSE: MAN) and Schlumberger (NYSE: SLB).
On the economic front, July NY Empire State Index, June PPI, and June Retail/Auto Sales will be reported on Tuesday at 8:30 a.m. May Business Inventories will be reported at 10:00 a.m. Wednesday morning June CPI, May Net Foreign Purchases, June Capacity Utilization, and June Industrial Production will be reported, followed by Weekly Crude Inventories at 10:30 a.m. At 2:00 p.m. all eyes will be focusing on the release of the FOMC Minutes from the Fed’s June 25th meeting. June Housing Starts, June Building Permits, and Weekly Jobless Claims will be reported at 8:30 a.m. on Friday. Additionally, Federal Reserve Bank of Philadelphia will release it Business Outlook Survey at 10:00 a.m. on Thursday.
The conference schedule is light with the five day SEMICON West 2008 Conference being held in San Francisco, beginning on Monday and the two day IBC Life Sciences’ Next Generation Vaccines conference that will be held at the Gaylord National Resort and Convention Center in National Harbor, MD, beginning on Thursday.
Volume Alert: Shares of Enzo Biochem (NYSE: ENZ) jumped 19.6% last week on nearly twice average volume, in the process closing at its highest level since December. The company continues to build its life sciences business organically and through acquisition. With approximately $96 million in cash and cash equivalents as of April, 2008, the company has the financial flexibility to continue to grow its Life Sciences division, where revenue rose to $7 million in its third fiscal quarter ended April, 2008 compared to just $0.9 million in the year-earlier period. Since Invitrogen Corp.announced a planned $6.4 billion buyout of Applera’s Applied Biosystems Group, shares of Enzo have rallied approximately 31%. Both Invitrogen and Applera focus on the medical research industry, making advanced laboratory equipment, cell and genetic kits used for drug development, and software, areas that Enzo participates in. Shares ended the week at $13.40, up $2.20.
Hythiam, Inc. (NASDAQ: HYTM), a healthcare services management company that provides behavioral health management services to health plans, employers, criminal justice, and government agencies, announced that the initial results of a double-blind, placebo-controlled study utilizing Hythiam’s PROMETA Treatment Program were presented at the Research Society on Alcoholism conference in Washington, DC. The study showed that those who received the pharmacologic component of PROMETA achieved statistical significance in percent days abstinent when compared to those who received placebo. The presentation concluded that PROMETA can reduce alcohol withdrawal symptoms, promote abstinence, reduce cravings, and improve mood and sleep in those who have symptoms of alcohol withdrawal. The analyst at UBS, in reiterating his Buy rating and $10 price target, noted that, “Anton’s preliminary comments appear to be supportive of previous controlled and uncontrolled study results on both alcohol and stimulant addicted patients. Six weeks into the study, Anton was able to show statistically significant reductions in alcohol usage among patients with high withdrawal symptoms.” Shares fell by $0.27, to finish the week at $1.99.
Generex Biotechnology Corporation (NASDAQ: GNBT), the leader in drug delivery for metabolic diseases through the inner lining of the mouth, announced that it has initiated dosing of over one hundred patients in the company’s pivotal Phase III clinical trial of Generex Oral-lyn, its flagship proprietary oral insulin spray product. Dosing of patients is now underway at 31 clinical trial sites in the United States, Canada, Russia, and Ukraine. The company also announced that an Investigational New Drug application has been submitted to the United States Food and Drug Administration on behalf of Generex Biotechnology Corporation for its AE37 immunotherapeutic vaccine combined with a vaccine peptide that works by a different mechanism for patients. The immunotherapeutic cancer vaccine AE37 is being developed through Antigen Express, Inc., the wholly owned immunotherapeutics subsidiary of Generex. Separately, Rodman & Renshaw reiterated its Outperform rating on the stock, noting that the company is expected to complete its Phase III trial of Generex Oral-lyn by next year. The stock rose by $0.03 for the week, to close at $0.83.
Telkonet, Inc. (AMEX: TKO), the leading provider of innovative, centrally managed solutions for integrated energy management, networking, building automation and proactive support services, announced that it has passed a significant milestone, with Telkonet now supporting more than 200,000 guest rooms with its differentiated HSIA guest support services. This achievement underscores Telkonet’s market leadership in the hospitality industry, reflected in the steady growth of Telkonet’s HSIA network and demand for its customized, comprehensive solutions across high-speed Internet access, occupancy-driven in-room energy management and proactive, integrated customer support. The stock fell by 2 cents for the week, to close at $0.45.
Volume Alert: Shares of junior gold company Goldspring, Inc. (OTCBB: GSPG), the holder of what is believed to be the largest mineral rights land position in Nevada’s Comstock Lode Mining District, surged approximately 13% last week on more than three times average volume, as investors continue to bid shares of the stock higher in anticipation of the company announcing results from its initial 43-101 resource report, anticipated by the end of July. The report, which could provide further validation of the potential of the company’s holdings in the Hartford Complex, could help the company access conventional bank financing to support future drilling activities, or perhaps attract a larger company seeking to acquire a significant land position in the Comstock Lode Mining District. Shares ended the week at $0.034, slightly below its 52-week high.
Capital City Energy Group, Inc. (OTCBB: CETG), an energy company focused on the oil and natural gas industry, announced that Standard & Poor’s has commenced Factual Stock Report coverage of the company. Shares rose by $0.35, to finish the week at $2.43.
Collexis Holdings Inc. (OTCBB: CLXS), a leading developer of semantic knowledge discovery software and expert profiles, and JISC Collections for an online resource, announced a new agreement which aims to encourage greater collaboration and expand scientific knowledge amongst the biomedical research community in the UK. For specially negotiated subscription fees, researchers, teaching staff and students at universities and research councils in the UK, will be able to access Collexis’ Expert Profiling. This online resource enables users to quickly identify experts within their institution as well as identify, locate and collaborate with other experts from around the world. The company also announced that the National Center for Research Resources, of the National Institutes of Health, has chosen the company to develop a State of Science Analysis System to help better direct funding for biomedical technology research. Using ground-breaking technology from Collexis called Portfolio Analysis, NCRR will be able to compare the specific technologies it has funded to the state of science as represented in scientific journals and unfunded grant portfolios. This will enable NCRR to decide if it is funding research in the most promising technologies or overfunding some areas. It will also help identify gaps or blind spots where specific areas of research might be underfunded. In other news, the company reported the closing of its private offering of company’s common stock, from which the company accepted the remaining subscription agreements for a total of 16,513,492 shares and received the total remaining subscription proceeds of $2,477,024. The stock fell by $0.06 for the week, to close at $0.40.
Element 21 Golf Company (OTCBB: ETGF), the leading manufacturer of advanced Scandium Alloy golf and fishing equipment, announced that it expects to report record 2008 fiscal fourth quarter revenue, for the period ended June 30, 2008, as a result of strong sales of its golf and fishing equipment lines. Net revenue, according to preliminary estimates, is expected to increase approximately 40% compared to the company’s 2008 third fiscal quarter, when Element 21 generated net revenue of $565,630. The fiscal fourth quarter results are expected to represent the sixth consecutive quarterly sequential increase in revenue. The company also announced that it has received an initial $300,000 order for its Carrot Stix line of fishing rods from the Farris Brothers, Inc., a leading distributor of Hunting and Fishing Supplies. The purchase represents the initial order for the 2008-2009 season. Shares rose by $0.15, to finish the week at $1.25.
Home Solutions of America, Inc. (OTC: HSOA), a commercial, institutional and infrastructure construction company serving the private and public sectors, announced that it completed ahead of schedule the repayment of its bank debt. The total amount repaid was $10.5 million and HSOA is now relieved of any further debt payment obligations to the bank syndicate. Funds for the payoff came from accounts receivable collected through an equity investment from the company’s Chairman and another large shareholder and the proceeds from the sale of the business of the company’s PW Stephens subsidiary. The company’s remaining obligations to its bank lenders are to issue warrants to acquire 2.1 million shares of its common stock to the lenders and to replace or cash collateralize approximately $2.0 million of letters of credit issued pursuant to the bank facility, in each case on or before August 1, 2008. The company also announced that it completed its previously announced relocation of its corporate offices from Dallas to New Orleans. The stock rose by a penny for the week, closing at $0.74.
IAS Energy, Inc. (OTCBB: IASCA), an oil and gas exploration company seeking to establish new business, announced that video1314.com had record web site traffic with over 14.3 million monthly hits to its site in June, 2008. Video1314.com is a fast growing Chinese Web 2.0 platform that allows users to share videos, music, audio as well as sell goods and services using videos in its marketplace. The company has been averaging more than half a million clicks to its site each day and expects this to increase substantially in the coming months through the introduction of more user-friendly interfaces in the future. The stock fell by a penny for the week, to close at $0.21.
National Storm Management, Inc. (OTC: NSMG), a national construction company providing storm restoration services in seven states, announced that it is prepared to provide first-responder services in response to hurricane and other tropical storm activity as Hurricane Season begins. Already, there was a tropical storm prior to the commencement of Hurricane Season, and Hurricane Bertha is the first named hurricane of the season. National Storm has opened new offices in the city of Texarkana and in Alpharetta, Georgia, a suburb of Atlanta, as part of its strategy to provide first-responder services surrounding storm activity. The stock finished the week unchanged at $0.03.
Seaway Valley Capital Corporation (OTCBB: SWVC), a company that invests in equity, equity-related, and debt in companies that require expansion capital and in companies pursuing acquisition strategies, reported that its War of 1812 Amber Ale, which is produced by wholly owned subsidiary Sackets Harbor Brewing Company, was featured on draught at this year’s Coke Zero 400 powered by Coca-Cola at Daytona. The company also announced that its wholly owned subsidiary, Sackets Harbor Brewing Company, was featured at the sixth annual Empire State Brewing and Music Festival. The stock traded below $0.01 for the week.
On the Wires: interCLICK, Inc. (OTCBB: ICLK) announced that it has appointed David M. Garrity, CFA as Chief Financial Officer. Generex Biotechnology Corporation (NASDAQ: GNBT) is scheduled to make a poster presentation of clinical data at the 35th Annual Meeting & Exposition of the Controlled Release Society in New York, July 14, 2008.
