Danny Deadlock top story
Danny like VPO here is on the prowl for value stocks all the time, but his track record is not very good this year. He highlighted ELR early in the year. It had a small bounce of about 30 % but then retreated quickly to less than the price at which he highlighted it.
He also singled out CEZ a stock which I held at 12 cents when it was 13 cents. It never rallied at all after his spotlight was shone on it. I think it rallied to about 14 cents a few months ago but now it sits at 10 cents, with tax loss sellnig around the corner, 30 % less than the price it was highlight
Alot of my followers made a killing on Hyduke last year . Stock was 50 cents when take over was announced at 1.37. I sold the next day. My patience paid off as I held that stock for four years but always knew it was too good for some one not to take run at it. Greedy people held out looking for a better offer, the offer fell thru 3 months later and now the stock sits at 40 cents , a two year low, with sales plummeting, and a management team in disarray.
A few of my followers then said to me VPO what is your top pick value play TODAY , a stock like Hyduke with limited downside and enormous upside. That stock, my stock to hold and stick under your mattress for 2014 is Bellus Health Care.
These are the reasons why. It has a small float after an unpopular roll back a year ago. Paul Desmarais ( Power Corporation ) owns 10 % of the shares. The Bellini family ( company founders ) own 30 % of the stock. Another 30 % held by institutions. Exactly like Hyduke with management and Board having alot of skin in the game.
Power's shares were purchased in excess of a dollar. You are getting the ability to buy at 60 % discount to what the billionaire bought in for, and less then the breakeven price of the other large shareholders.
With markets toppy there will be huge inflows into other sectors. Underperforming stocks can have huge rallies when good results have bene tabulated or good news is ahead. RVX went from 1.20 this year to as high as 3.80 before their results were out for their drug. It bombed and the stock crashed. BLU on the other hand has not one but two strong pipeline prospects, one in phase 3 , the other in phase 2, and a non core division they can sell off at any time for more cash at their discretion when market metrics permit a good sale price. They are fully funded to take their lead product Kiatka to phase 3 completion. They have a partner who is footing the entire cost for 50 % of sales. There you have it. A play that is financially de-risked, another pipeline stock in phase 2 ,and cash enough until completion. Like RVX it will at least triple in price as the trial progresses. I suspect because of the other assets it should hit two dollars within the next 2 years at some point. The patient investor will be rewarded with a 500 % gain. If the stock is successful it will shoot to 8 dollars.
The other caveat is IPO on biotech in USA for unfounded pre phase 1 companies are going for for 500 m to a billion. Here you have a company rich in prospects, where other investors gambled EARLIER and funded the several hundred million dollar pipeline but now as a value investor you can get in on all that prior R and D for a pittance.Mark my words,any pull back in the markets will lead to more safe haven destinations, and with rising medical costs the pharma/ biotech sector will go to another high. And at any point in time a savvy pharma could easily come in with a solid offer prior to phase 3 results. Because of the high break even price of the large shareholders this ensures a healthy premium. Note I first highlighted this stock on the BLU bullboard when it was 27 cents. Unlike Danny Deadlock whose picks never bounced more than 30 % and fleeting, I am alreadu up 50 % in a few months. The stock is consolidating last week at 40 cents. Yours truly VPO added another 50 000 shares giving me a total like Hyduke of just under 400 000 shares.
FRO wil l become interesting when metals start to shine, but like all Venture stocks in the mining space only 1 in a 1000 results in an actual commercial mine. BLU is the better play.
Danny is a value investor as I am but lately he has not been that good. But we share the same philosophy so I respect the gent. He also highlighted IFR when it was about 6 cents. I purchased 200 000 shares and flipped at 11, so had it not been for that article I'd have 10 K less in my account.