Here's the latest installment in the shorts v. SEPR. (Note that I still think SEPR is the single best bet in biotechs, so I'm likely prejudiced here).
It's from Herb Greenberg's column, in TSC.
Talking about one Jordan Kimmel, of Magnet Investment Group:
On the downside, he says that Sepracor (SEPR:Nasdaq) is still his No. 1 short. "There's still tremendous debt, margins are decelerating and insiders own little stock," he says. "I think it will absolutely implode."
Remember, this is the guy who told me (and I chose not to print because I couldn't verify any trouble at the time) the same thing about McKesson (MCK:NYSE).
Now this is the second time around for this attack. Here's the first from a few months back:
Then there was the time, shortly after he called on McKesson, that he sent out a warning about Sepracor (SEPR:Nasdaq), the now-fallen biotech giant, which lost its air after Johnson & Johnson (JNJ:NYSE) chose not to exercise its option to co-promote a new version of Sepracor's allergy drug. "It had high debt, extremely decreased revenues, insiders didn't own a share and somehow this stock was going up because of momentum players. As soon as the momentum broke, I went short."
This produced the following follow-up:
Sepracor slight?: In an item yesterday, analyst Jordan Kimmel was quoted as saying that Sepracor's (SEPR:Nasdaq) management didn't own any stock. That prompted reader Robert Macek, from Ann Arbor, Mich., to accuse me of shoddy journalism because Sepracor's management owns 7.4%. You're right, Robert, they do. Kimmel's explanation: With a developmental stage biotech company, 7.4% might as well be nothing.
Let me analyze some of Kimmel's statements:
1. "With a developmental stage biotech company, 7.4% might as well be nothing"
So certainly Kimmel wouldn't have suggested buying Amgen back in early 1994 with the stock around 10, given that management ownership at that point was a mere 3.3%, or Biogen at the same time at around 8, given that its management ownership at that point was 6.04%?
Of course 7.4% management ownership is a considerable amount for a company at SEPR's point of development.
Incidentally, all these numbers understate ownership somewhat because they reflect only exercisable options (technically, exercisable within 60 days).
2. "Extremely decreased revenues" - I have no idea what he is talking about, particularly at a time before SEPR had any products on the market. I can produce a similarly meaningless positive statement that has numbers to back it up:
SEPR's revenue for the three months ended June 30,1999 increased over 150 times from the corresponding quarter the preceding year! (From $32,000 to $4,947,000)
3. "Margins are decelerating" - again I have not the faintest idea of what he is talking about. This is the first quarter they have had any margins at all.
So here we have what I can only term a naive short getting considerable play and respect ("remember this is the guy") and no sensible skepticism in TSC.
Peter |
