smh -
The tone of your post reflects the inherent danger of conducting a 'monologue' for any given company. While I'm obviously not responsible for the lack of participation on this thread, I appreciate and welcome the challenges you present.
Regarding the cup-with-handle observation - your perception is most likely short sighted: if you check the SI chart you’ll immediately notice the volume has trailed off considerably since the strong up move in early to mid-August. This would suggest that most who have bought in have stayed and that your ‘too bad it didn’t hold up’ conclusion has a strong likelihood of being significantly premature.
I'll respond to your other comments in two ways 1) I'll give a superficial, immediate reply based on my own previous DD and 2) I'll return to the 10K to verify what I remembered.
Some of the forces driving by investment in HDII were precisely those you found problematic. I was impressed by the proprietary engineering that was integral to the profilor and that HDI appeared to be capturing significant market share in the research arm of this field. Their 'protection' and 'advantage' was that they had already appeared to have gained a significant foothold. I recall that during my original DD, the 'competition' aspect of the 10K read like the typical 'wolves in the wings' scenario you would find in countless other companies, ESPECIALLY those in the biotech or medical device field. The competition component did not differ from what I've read many other forums so it failed to raise any cautionary signals. I'll revisit that but I'm quite confident of my understanding since I've checked back on this a number of times.
The recent problems with Sepracor are a perfect example of this sort of competitive landscape - yes there will be hurdles to cross and proprietary approaches to be proven, but if the underlying approach is solid, and management has a clear business model, as is the case with HDI, then the company will do well. These positive and negative aspects of medical technology/biotech companies are consistent throughout the field, whether we're discussing HDII...or SEPR or MLNM or BTRN or VRTX. While the latter four are hyped extensively on SI, HDII remains unknown. I've found this fact often plays a role in the degree to which SI participants focus on the 'competition' area of the 10K - the hyped stocks have the competition discounted whereas in the ignored companies it is emphasized. Perhaps this is an exaggeration....but there is more than a kernel of truth here. In short, the level of concern you express towards HDII is as valid as it would leveled towards many of the other unprofitable BT companies listed above. An interesting exercise would to be to examine the ‘competition’ etc sections of BRTN or VRTX and post a ‘straightforward’ analysis of them on SI. I can assure this would shock many investors.
My final point is the most important - you state ' I was also looking for some indication of increasing demand from the research community.' When I looked into HDI I quickly discounted the research sales for their devices. Yes the device is designated 1000 times 'For research purposes only' and that is where the sales are now. However, it was my perception that 95% of investors were attracted to the company based on FDA approval (currently under review) for the compilor for clinical use. Needless to say, and as you outline in you opening sentences, the demand for a non-invasive, highly accurate approach to monitoring CV dynamics would be incredibly strong. There are compelling reasons to believe the compilor will be approved for clinical use. If this becomes manifest, the company will be at the sweet end of a very attractive revenue stream.
I'll return from my re-DD shortly. Please recall this was the impression of someone who attended HDI's presentation at a recent meeting in Chicago messages.yahoo.com
I look forward to your continued participation.
Scott |
