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Biotech / Medical : Chromatics Color Sciences International. Inc; CCSI
CCSI 29.77+3.7%3:59 PM EST
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To: HedyVP who wrote (4518)9/6/1998 9:41:00 AM
From: Jeffrey L. Henken  Read Replies (3) of 5736
 
I posted this yesterday on another thread here on Silicon Investor:

A brief analysis of the stock trading situation for those interested in CCSI:

Chromatics Color Sciences International was a high flying stock until June of this year. It's Colormate III proprietary medical instrument was rumored to be nearing a marketing deal when seemingly out of the blue the stock was hit by a massive wave of short selling started by this announcement from Arsenio & Company:

biz.yahoo.com

CCSI had seen yearly highs as great as $18 a share despite never having attained a single quarterly profit:

wsrn.com

$18 a share? Why is that possible? Because the FDA approved their Colormate III system to provide a non invasive painless bilirubin infant jaundice test and sales were set to explode. Not only that but CCSI was to receive money for each one of the individual tests. I took this from the latest 10Q filed with Edgar Online:

In this regard, the Company developed a Colormate(TM) device to measure the incremental change of the yellow content of the skin color in newborns to monitor bilirubin infant jaundice. On July 30, 1997, the Company received U.S. Food and Drug Administration ("FDA") clearance for commercial marketing of the Colormate(TM) device for the non-invasive monitoring of bilirubin infant jaundice in newborns by health care professionals in hospitals, pediatricians' offices or by
home healthcare agencies (the "Colormate(TM) Bilirubin Device" or the
Colormate(TM) TLc - Bilitest(TM)). The Company's efforts are currently focused on seeking to commercialize this medical application of its Intellectual Properties for non-invasive detection and monitoring of bilirubin infant jaundice. See "Risk Factors".

sec.yahoo.com

These days CCSI has settled into a bit of a trading range. Recently the stock was rising in what I believe was anticipation of a company announcement. The stock having hit a yearly low of 2 3/8's recovered nicely to sell briefly over 5. Unfortunately the announcement was only on a cosmetic deal with Nordstroms:

biz.yahoo.com

By the time the stock hit 4 15/16's on Thursday the shorts were already discussing strategies here at SI:

Message 5662586

There are a lot of important lessons that can be learned from an investment in any stock. CCSI longs learned in June that a rumored deal is not an actual deal. Many people also learned that it can be very risky indeed to buy on margin. But I digress, the point of this post is to discuss a short term and long term approach to an investment in CCSI.

I am long on this company but I am no longer foolish about my money. There is a trading range here and those who are short on the stock are taking advantage of it by bleeding the stock down after ever relatively insignificant press release is made by the company. So I would recommend purchase of this stock based on the following analysis. The FDA does not approve devices that they do not believe will work therefore there should still be a deal coming. This company has been attacked by the most vicious set of short sellers I have ever seen and the stock is still trading. There is no reason for us to expect the company will not make the long rumored medical deal especially after the attacks that have been made.

We now know that CCSI could trade back as low as $2 3/8's. Will it drop that far? I doubt it, but it could, and the current trend is now again down. I honestly believe that $18 will not be the yearly high for this stock but I do not want anyone to pay anything more for even a great buy than they have to in any market. In the meantime investors
could make money playing the swings up and down with a portion of their holdings. Please check the chart carefully and do your own due diligence:

dailystocks.net 


Address:  5 East 80th Street
          New York, NY 10021
Phone:   (212) 717-6544
Fax:     (212) 717-6675
Industry: Scientific & Technical Instr.
Sector:   Technology
Employees: 17
Officers: 
Arthur Guiry, Pres.
Darby Simpson Macfarlane, CEO/Asst. Treas./Chmn.
David Kenneth Macfarlane, VP
Leslie Foglesong, CFO/Secy./Treas.


InvestRight

Subject 22744

Regards, Jeff
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