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"What A Day" Randoms: Dendreon, Foster Wheeler, Emageon, Whole Foods


Yes Minyans, risk-control sometimes does work, even when it hurts.

  • Yesterday started out just after 6:00 a.m. with the Dendreon (DNDN) "Approvable Letter" news (a misnomer if there ever was one), and the subsequent 60% pasting of the stock. I had tried to guestimate as precisely as possible how much I was risking, and, but for the shorts propping up the stock in the early going, I'd have been painfully accurate. Yes Minyans, risk-control sometimes does work, even when it hurts. Now that you all feel sorry for me, I'd like to give some public snaps to Prof. Miller for the coverage of the Provenge saga. The end result did not turn out as many of us had hoped, but his analysis of the science was spot on every step of the long way. I'll never get tired of saying that the "Street" game is one of probabilities, which means that there will be days when a 20% chance of rain will get you soaking wet. What it also means is that if you can trust the analysis you'll be on the right side of the odds more often than not. Which brings me to...

  • Foster Wheeler's (FWLT) moon shot. Before the release I wondered out loud about something that just wasn't lining up. The stock was way too cheap for its projected growth rate and the overall mojo in that group. As it turns out, what I really missed was... that the stock was way too cheap for its projected growth rate and the overall mojo in that group. There are three morals to this story: a) If I had dug deeper into this stock (better analysis) I would have concluded that "probably" I was not missing anything, and I'd have gone into the report much longer than I was; b) Misjudging that type of upside move was not bad because I only made $x profit, it was bad because my "analysis" was obviously not very good – which means that I could have just as easily gotten soaked; and c) Just because apparently everyone else who bid the stock up $15 missed the "analysis," it does not make it any better; in a business where generating alpha is the business, yesterday FWLT was the alpha. Which brings me to...

  • The omega, not in the biblical/heretical sense, rather as in "this is the last time I will ever touch this $@#*!*@ (insert any seven characters of your choosing) stock ever again." I am referring to Emageon (EMAG), a sorry excuse for a healthcare IT name which, at $11'ish seemed to have discounted some recent slip ups. Au contraire mon-frere, EMAG impaled the longs to the tune of 27%, with a train-wreck quarter, worse guidance, and the resulting (and well deserved) spew of venom from virtually all analysts on the call. The only reason my position was small Wednesday morning, and 27% smaller Wednesday evening, was that I did not have a chance to read the call transcript until tonight; that revealed a farcical level of clueless-ness by (mis-)management. You can safely assume I no longer (and never will again) have a position in EMAG. Which brings me to...

  • Today's likely piñata candidate - Whole Foods Market (WFMI). All that needs to be known here is this: WFMI missed estimates for revenues, EPS, net income, and Same Store Sales; its expenses were too high, and FY guidance was reduced... again. Other than that, the merger with Wild Oats (OATS) - which saved WFMI from being disemboweled after its 1Q report - is looking shaky and shakier because of anti-trust issues. I may be picky – and cranky – but a 40+ multiple for this gem still seems a wee-bit high. Which brings me to...

  • It was a long week yesterday.
Positions in DNDN, FWLT, EMAG and WFMI
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