Richard - you asked for my analysis, so here it is.
I have been reading, with considerable interest, the Technical Analysis on the Thread. However, I am not convinced that this is fully applicable to a "development stage" company like Paracelsian.
My assessment is this. When the Company announces good news, it gets attention: the volume increases, and the price rises. And then there follows a period of no news. Investors lose interest, or assume that no news is bad news, or decide to take profits and move on. And then there is another anouncement, which generates interest (volume and price), and then the stock languishes again. There have been two exceptions to this pattern. First, the stock jumped in April of 1996, when an article by Leo Rishty (Unique Situations) was excerpted in The Dick Davis Digest. Second, December 12-31 of 1996. After the December 12 Press Release about AndroVir, the stock declined. The Company believed that it had announced good news - but few understood it as such. In addition to the points raised in my first posting on this Thread (irrational exuberance about protease inhibitors, the confusion about cholesterol levels, the unclarity about the precise role of AndroVir [taken alone, or with protease inhibitors]), there was the uninterpreted fact that this was a six week trial. I believe that many thought that this was too short to be significant; what the Company intended to communicate was that AndroVir is fast acting. (On this point, read carefully the comments of Dr. David Cohen, in the CRADA Press Release - still available at Paracelsian.com, click on Press Releases. And then read between the lines . . ..) The following day, Keith Rhodes stepped aside - and this made the Reuters newswire. This event was planned; Rhodes is not skilled in marketing. But since it followed by a day a Press Release that seemed disappointing, many thought the Company was in trouble. And then there is the fact that so many people had made so much money on other stocks that their capital gains tax picture looked bleak. A loss selling Paracelsian could offset some of their gains. So now there were more sellers than buyers, which induced more tax selling, bringing even more sellers to the market, further depressing the price . . ..
That is the past; now to the future. I believe that if the Company announces "good news" proximate to the Smith Barney Conference - further favorable test results, or a credible marketing plan for AndroVir - the pattern will be followed: increased interest, volume, share price. If that does not happen, then we will have to wait until it does: more impressive test results, or actual sales figures. But there are two sorts of reasons for continuing to stand fast. First, the Library of Traditional Chinese Medicines. Even if 99% are of no theraputic value, that still leaves 100. Do the major pharmaceuticals have such a lode? But of course a much higher percentage has shown positive activity. Second, there is the direct investment of Jack Rivkin/Travelers. He is a bright man, and his experts did a thorough investigation of the Company. (On a related point: concern was expressed that Travelers might "hype and dump" PRLN. In addition to being unethical, and probably illegal, this would be contrary to their interests, and impossible. In reverse order. This concern was raised when a block of 25,000 shares was dumped. But Travelers owns 1,350,000 shares: 25,000 a day for 54 consecutive trading days. This would be noticed. And the price would plummet. Additionally, if S B got a reputation for "hype and dump" at their Conference - who would attend next year? Would they throw all that away, just to make a few bucks on PRLN - which they could not do anyway? I think this worry is groundless.)
Of course, I hope that this is a great week. But if it is not? As William Wallace (Mel Gibson, in Braveheart) encouraged his men, facing a charge of heavy cavalry: "HOLD . . . .HOLD . . . HOLD"
I would, of course, be delighted to read reactions.
Jonathan |
