Companies featured in the current edition of the newsletter: ACCY, AFMI, BOKO, CACN, CGXP, CVM, ENZ, ETGF, FMTI, GMPM, GSPG, HSOA, IVOT, PBIO, PLKH, SEE.V, TAGS, TKO, XCR
There was certainly plenty of volatility last week, but when the dust settled, stocks were little changed. The Dow rose 97 points, paring yearly losses to 7.2%. The Nasdaq lost 20 points, contributing to a decline for the year of 7.5%. The S&P 500 fell less than 1 point, leaving it still down 7.4% for the year. The Russell 2000, which is the best performing index this year, slid 6 points and is off 4.2% year-to-date.
Both the Bulls and the Bears had sound reasons for “putting a stake in the ground.” Concerns about Lehman Bros.’ (NYSE: LEH) financial position, after the investment bank pre-announced a $2.8 billion loss and said it would raise $6 billion, stoked fears that another Bear Stearns-like meltdown could wreak havoc in the markets, and the Fed’s inflation-fighting rhetoric heightened fears that it was behind the curve. Offsetting this was better than feared economic data and an increase in M&A activity, highlighted by InBev’s $46 billion cash bid for Anheuser-Busch and news from Invitrogen that it plans to acquire Applied Biosystems for $6.7 billion. Later in the week, Morgan Stanley upgraded the Financial Sector.
While losses were insignificant in the stock market, there was a rout in the Treasury market, as the yield curve adjusted to shifting expectations about the timing of a possible interest rate hike from the Fed. The change in expectations was fueled by hawkish comments from numerous Federal Reserve officials, which focused on concerns about reigning in inflation expectations as opposed to fostering increased economic growth. Notably, the fed funds futures market now expects a 65% probability that the Fed will raise rates at the August FOMC meeting versus just 9.2% a week ago. The yield on the 10-year note jumped to 4.26%. The 10-year note yield is just a touch above the annual inflation rate of 4.2% that was seen in the May CPI report released Friday. That report helped contribute to a “relief” rally in stocks, as it was not as bad as feared.
The week’s earnings calendar is highlighted by reports from BestBuy (NYSE: BBY) and Goldman Sachs (NYSE: GS), which announce results on Tuesday pre-market, Morgan Stanley (NYSE: MS) and FedEx (NYSE: FDX) on Wednesday pre-market, and Carnival (NYSE: CCL) and Circuit City (NYSE: CC) prior to trading commencing on Thursday.
On the economic front, June New York Empire State Index and April Net Foreign Purchases will be released on Monday. May Housing Starts, May Building Permits, and May Core PPI will be released on Tuesday prior to the opening. Following shortly after the market opens, May Capacity Utilization and May Industrial Production will be announced. Weekly Crude Inventories will be announced on Wednesday at 10:30 a.m. Before the bell on Thursday, Weekly Jobless Claims will be reported followed by May Leading indicators and the June Philadelphia Fed Index at 10:00a.m.
The conference schedule is busy beginning Tuesday with the three day 18th Annual Merrill Lynch Transportation Conference in NYC, the three-day William Blair & Company Growth Stock Conference in Chicago and the two-day Capstone 2nd Annual Small Cap Conference in Milwaukee. Wednesday will be another busy day with the Deutsche Bank Securities Global Consumer & Food Retail Conference in France.
Enzo Biochem, Inc. (NYSE: ENZ), a leading biotechnology company specializing in gene identification and genetic and immune regulation technologies for diagnostic and therapeutic applications, jumped last week after news of Invitrogen Corp.’s planned $6.4 billion buyout of Applera’s Applied Biosystems Group. The deal could have positive implications for Enzo, as it is the first time that a major consumables player is combining with a systems player delivering larger integrated solutions to the market. It could make ENZ a buyout target. Also, the transaction could pave the way for Enzo and Applera to settle existing litigation. ENZ also announced results for the fiscal third quarter and nine months ended April 30, 2008. For the 2008 fiscal third quarter, total revenues increased 36% to $18.9 million, from approximately $14.0 million in the corresponding year ago period. Gross profit from operations increased 19% to $9.3 million, from $7.9 million a year ago. The company’s net loss declined to $2.1 million, or $0.06 per share, compared to $3.8 million, or $0.10 per share a year earlier, an improvement of $1.7 million. The fiscal third-quarter loss narrowed on a rise in sales at Enzo Life Sciences unit with the addition of acquired Axxora Life Sciences products. For the nine months ended April 30, 2008, revenues climbed 62%, to $56.6 million, compared to the previous year’s nine months of revenue of $35.0 million. Gross profit from operations advanced 39% to $28.3 million from $20.3 million. In other news, Lazard Capital Markets analyst Jeffrey Frelick reaffirmed a “Buy” rating with a $19 price target and said life science revenue should continue rising, following another acquisition last month. Shares rose by $1.71, to finish the week at $11.50.
Forbes Medi-Tech Inc. (NASDAQ: FMTI), a life sciences company dedicated to the research, development and commercialization of innovative products for the prevention and treatment of life-threatening disease, announced that the Nasdaq Hearings Panel has granted the company an extension through June 30, 2008, to demonstrate compliance with the Minimum Bid Price Requirement for continued listing on the Nasdaq Stock Market. Compliance with the Minimum Bid Price Requirement is normally demonstrated when the company notifies the Panel that it has evidenced a closing bid price of $1.00 or more for a minimum of ten consecutive trading days. Shares rose by $0.21, to finish the week at $1.21.
Tarrant Apparel Group (NASDAQ: TAGS), a company that engages in the design, contract, manufacture, and sale of private label and private brand casual apparel, announced that its Special Committee of Independent Directors has retained the law firm of Bingham McCutchen LLP as its legal advisor and Houlihan Lokey Howard & Zukin as its financial advisor to assist the Special Committee in evaluating the previously announced proposal submitted by the company’s founders and executive officers, to acquire the outstanding publicly held shares of Tarrant for $0.80 per share in cash. The stock fell by $0.07 for the week, to close at $0.66.
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 won the contract to supply Main Street Developers with Telkonet SmartEnergy, with the first systems being installed in four new properties during 2008 and early 2009. The hotel development company selected Telkonet after extensive evaluation of competitive energy management solutions, singling out Telkonet’s patented Recovery Time technology as a major factor in the contract award. With six to ten franchised hotel projects underway each year, Main Street Developers plan to implement TSE universally as a core element in its green energy strategy. The stock fell by 2 pennies for the week, to close at $0.54.
CEL-SCI Corporation (AMEX: CVM), a company that engages in the research and development of drugs and vaccines used in the treatment of cancer, and researchers at Northeastern Ohio Universities Colleges of Medicine and Pharmacy jointly announced favorable new developments in the LEAPS heteroconjugate vaccine technology developed by CEL-SCI. The LEAPS vaccine consists of a portion of an HIV protein attached to a portion of another very small protein chosen to promote and direct the immune response to the virus. These findings demonstrate a new way to stimulate the immune system to fight viral diseases. They also may lead to new treatments against autoimmune diseases by redirecting established immune responses, stopping their attack upon the body. The stock finished the week unchanged at $0.67.
Circle K Southeast Division, a division of Couche-Tard, the second largest independent convenience store operator in North America, and Boo Koo Holdings, Inc. (OTCBB: BOKO), a company that develops, produces, markets and distributes alternative beverage category energy drinks, said last week that they have jointly created an extension to the Circle K proprietary energy drink brand, GazZu – the GazZu Shooter. A concentrated version of original GazZu, the two-ounce GazZu Shooter is available in cherry, orange-mango and grape flavors. The company designed the GazZu Shooter for customers whose lives are hectic and need a quick boost. The line extension comes following the successful launch of GazZu last September. GazZu was the company’s first wholly-owned, proprietary energy beverage, created in conjunction with Boo Koo Beverages. BOKO also announced that it has appointed Gil Cassagne, formerly Chief Executive Officer of Cadbury Schweppes Americas Beverages, to the position of Chairman. Casagne, who recently joined the company’s Board, has an impressive record of building highly successful brands at Cadbury Schweppes. Shares rose by $0.04, to finish the week at $0.64.
Volume Alert: Shares of GoldSpring, Inc. (OTCBB: GSPG), the owner of the largest mineral rights land position in Nevada’s Comstock Lode Mining District, surged last week to a new 52-week high on more than 10 times average volume, after the company reported that drill hole #40 at the Hartford Complex, encountered five feet of ore containing 1.927 ounces of gold per ton. This hole, due to the high-grade of mineralization, has the potential to have Bonanza levels of gold. This is the highest grade of ore the company has identified since the commencement of the drilling program in December 2007. Drill hole #40 also provides even stronger support for the company’s conclusion that continued exploration in the vicinity of its on-going drilling program will result in a dramatic increase in the company’s precious metals resource and substantially increase the value of its holdings. The company also announced results from its preliminary interim resource report, which suggested that less than 5% of the company’s holdings would be valued at approximately $350 million based upon current gold prices. The stock finished the week up nearly 20%, closing at $0.025.
Affinity Media International Corp. (OTCBB: AFMI), a special purpose acquisition company, announced that the proposal to approve the merger agreement with Hotels at Home, Inc. was not approved by Affinity’s stockholders. The board of directors of Affinity anticipates that the proposed merger with Hotels will be abandoned. The board of directors of the company will continue to evaluate alternatives that may be in the best interests of Affinity’s stockholders, including the potential liquidation of Affinity. Shares rose by $0.32 for the week, to close at $5.92.
Ceragenix Pharmaceuticals Inc. (OTCBB: CGXP), a biopharmaceutical and medical device company focused on infectious disease and dermatology, announced that it amended the forward looking guidance in its most recent annual report regarding NeoCeram. The amendments are as follows: 1) The company intends to file a separate 510(k) for NeoCeram, as a result of several changes the company plans to make to the formulation regarding sterilization and viscosity; 2) The company expects to complete development and file the 510(k) by the end of the first quarter of 2009; 3) The company believes the contemplated changes are minor and should not result in an inordinately longer review period but cannot predict when clearance will be received; and 4) Upon receiving regulatory clearance for NeoCeram, the company plans to commence the clinical study. Shares rose by $0.06 for the week, to close at $0.73.
Element 21 Golf Company (OTCBB: ETGF), the leading manufacturer of advanced Scandium Alloy golf and fishing equipment, announced that in addition to the launch of its infomercial on the Golf Channel, it is also launching a marketing 30s commercial campaign on the Golf Channel in seven leading golf markets. Initial broadcast areas were chosen based on the presence of retailers that carry Element 21 Scandium Golf equipment. The markets where the commercials will air include Atlanta, Chicago, Columbus, Hartford, Myrtle Beach, Dallas and Washington. The commercials are designed to educate the consumers on the advantage of Scandium, and to drive sales of the company’s revolutionary golf clubs that have the ability to improve performance among both novice and experienced golfers. The company also announced that Jeremy Starks won the Bassmaster Elite Series Southern Challenge presented by Advance Auto Parts using the company’s Carrot Stix Fishing Rods. The stock dropped by $0.10 for the week, to close at $2.00.
Gamma Pharmaceuticals Inc. (OTCBB: GMPM), a marketing and product formulation company focused on developing, marketing, and selling innovative product lines of nutritional supplements, personal care products and OTC pharmaceutical products, announced that its Brilliant Choice and Savvy brands have been selected for distribution by DPI Midwest, a leading distributor of nutritional products. The company has been advised that DPI will distribute Gamma’s products to its network of more than 3,000 retail outlets in 12 states. DPI will initiate distribution of the products during the last week of June. The company expects to recognize revenue beginning in its second quarter ending June 30, 2008. DPI’s distribution coverage includes Whole Foods Midwest Division, Supervalu’s Jewel Chain, Safeway’s Dominick’s chain, Marsh Foods, and two Kroger KMA Divisions. In addition, DPI Midwest services hotels, health clubs, corporate dining facilities and other major accounts. Shares rose by $0.16 for the week, to close at $1.71.
Home Solutions of America, Inc. (OTC: HSOA), a provider of restoration, construction and interior services to commercial and residential customers, announced that it has entered into a forbearance agreement with its lenders that will enable the company to retire, through a series of payments, all of its current bank debt with Texas Capital Bank and its syndicate members by August 1, 2008. The company also announced that EvenFlow Funding, LLC, a newly created entity controlled by HSOA’s Chairman, has committed to provide up to $3.5 million of equity financing for working capital purposes under a separate funding agreement approved by the Board of Directors. The deal appears highly favorable for the company, as it would eliminate $39 million in debt for just $10.5 million. The company has already received $2.0 million of these funds from the Chairman. Share rose by $0.16 on above average volume, to finish the week at $0.82.
iVoice Technology, Inc. (OTCBB: IVOT), a “green” technology company, focused on acquiring and identifying promising technologies that address environmental issues announced that it has filed a new patent application for a patent on a Recycled Tire Trash Can made from recycled tire crumb rubber. The products will be made from 100% recycled tire crumb rubber. This is the third patent application filed by the company for products made from recycled tire crumb rubber. The company also announced that it intends to change its name to iGreen Innovations, Inc. The stock traded under $0.01 for the week.
ProLink Holdings Corp. (OTCBB: PLKH) , the world’s leading provider of Global Positioning Satellite golf course management systems and digital out-of-home on-course advertising, announced that Desert Canyon Golf Resort now features the ProLink Solutions GPS system used at many of the world’s most famous golf courses and plans to participate in ProLink’s exclusive national advertising opportunity. Top courses in America and around the world select ProLink as a key golfer amenity, as well as a crucial management and revenue-generation tool. As more and more upscale golf properties utilize the system, ProLink’s advertisers are rewarded with an expanding audience of affluent, hard-to-reach consumers. The stock rose by a penny, to close the week at $0.51.
SeaMiles Limited (TSXV: SEE), North America’s premier cruise loyalty provider, announced that it is preparing to make an application to list its common stock on the International OTCQX to increase the Company’s exposure to U.S. investors. In the short period of time since the company’s inception, it has become recognized as the premier cruise loyalty provider, and believes that now is the time to expand interest in the company in the United States, whose residents are one of the largest customers of the cruise industry. Share rose by $0.15, to finish the week at $2.00.
On the Wires: Alternative Construction Technologies, Inc. (OTCBB: ACCY), announced the appointment of two directors, Thomas Dawe and Carlton M. Johnson. These directors were appointed in connection with the recent financing with Bridgepointe Master Fund, Ltd. and CAMOFI Master LDC. In connection with that financing, the lenders retained the right to recommend two nominees to the company’s Board of Directors. Customer Acquistion Network Holdings, Inc. (OTCBB: CACN), announced that its Board of Directors voted to appoint David Garrity to fill an existing vacancy on the company’s Board of Directors.