{AKRN}
Ray, I still like the company, but they hit three potholes recently. An FDA audit of CGMP at their main plant disclosed a series of violations. Most of these were intermittent lack of documentation in such areas as cleaning logs, several different versions of a single Std Op Procedure, and tasks performed by new employees before their training was complete. There was one flask with a cloudy appearance. FDA is thorough!
The second problem was an earnings shortfall, which they had pre-announced. I'm not comfortable with the explanation that sales mix was unforeseen and due to wholesalers ordering around the end of the quarter. If that were the case, we would not be at problem #3, which is lower guidance for next year.
I've held some AKRN for all but a few months of the past five or six years. I add and subtract shares, based on price, hoping to continue to trade around a rising trendline. Currently, I have a low level of shares, and don't feel pressed to rush to add more. Thanks for the cup and handle discussion this summer. When AKRN didn't break out, I pared back my position.
Nor do I want to be all the way out. They are still earning the money to develop their proprietary products, which will pay off some day. In short -- they need some fixin', but nothing major. That said, this is a value play, and those seem to be getting more attention these days. |
