Hey, Bob. Don't expect to make any friends out of the shorts here if you look at this company from a practical perspective. I have been saying the same thing as you for a long time. It doesn't matter if these short sellers think that Zicam Cold Remedy works. It doesn't matter if they think the company is a fraud. It doesn't matter if they like Gunn Allen Financial or any other firm that makes a market in the stock today or made one in the past. It doesn't matter if they like the university where Dr. Davidson earned his graduate degree. Nobody that matters cares about these "issues" raised by short sellers. The only thing that matters is how much product the company sells and how much profit they make. These issues are in the hands of consumers, not a small group of irrational and closed-minded short sellers that hang out on a financial message board. Of course one can't ignore regulatory issues, advertising claims, management, financials, risks, etc., but the management of this company has plenty of experience in the OTC drug market, including officers and directors from Perigo and Johnson & Johnson, and it is highly unlikely that they wouldn't operate by the book.
Matrixx is creating a brand name out of a single product that they named "Zicam" in 1999. Essentially that is their business plan, and it is a smart one. The name Zicam is derived from Zinc + ICAM, the former being the active ingredient in Zicam Cold Remedy and the latter being the receptor where the rhinovirus enters cells. The company now has nine additional products in addition to the original Zicam Cold Remedy nasal gel (pump). Zicam Allergy Relief came first, which contains no zinc. The active ingredients in this product have been proven effective in clinical studies dating back 40 years, and more recently in an independent study conducted on Matrixx's own allergy remedy. The company also makes Zicam Extreme Congestion Relief and Zicam Sinus Relief. The active ingredient in these products is Oxymetazoline HCl 0.05%, which is the same active ingredient in Afrin. No zinc there. They just launched three new oral products to target consumers that don't like nasal products. Matrixx is spending about 6% of sales on R&D, and hinted that they are developing products targeting the analgesic and oral care markets. I would guess that they will use the Zicam brand name for those products as well. The name is catchy and easy for consumers to remember. It is smart of the company to leverage it in new products. This is a growing company with excellent management, and a great base of products to work from. These are the reasons that I hold an investment in this company's stock.
One potential risk in the short term is that the company had a lot of sell-in (to retailers) in the third quarter. Nobody can predict how much sell through (to consumers) they will get in the fourth quarter. Given the sales trends in prior years, the odds favor good sell through, but obviously this depends on a lot of factors including the severity of the cold season, the effectiveness of Matrixx's advertising, and consumer acceptance of Matrixx's new products which use a unique and new delivery system. I don't think that the company will stumble, but it certainly is a risk for the next two quarters.
Zicam Cold Remedy has worked for me and my family in most cases, and there is no question in my mind that the company's claims for all of their products are valid. I would not invest in this company if I thought otherwise. By the way, there's a new more civil thread at Subject 54259
Best regards,
Dan |
