FALLING KNIFE?

CMED

I got to develop a strategy before the market open and put through orders early. For example, this morning, I should have put through an order to sell CMED @ 32.5. Because when panic occurs (particularly if it is involved short squeeze), it is usually rather short-lived. Nonetheless, I am rather pleased as CMED breaches $30 with ease. The next step is to see ELOS to breach its recent high of 43.80. For that to occur, it needs another strong day or two.

OBP.TO

I opened a small position on OBP.TO upon the news of receiving approval for its drug in Canada. While it remains a rather speculative stock, the fact that it will roll out the drug immediately partially mitigates the speculative nature, as it will soon generate revenues and cash flow. Potential trials and approvals in Europe and USA would be bonus. There is practically no one to cover it and it remains under the radar for most. My initial target is $3.0.

SFCC – FALLING KNIFE?

I am buying a bit of SFCC at 26.66 for a TRADE (on margin). The stock is down by more than 20% due to a small article in Bloomberg and is down by more than 42% since its quarterly results in November 3, 05, despite the fact that Q3/05 was a decent quarter (with the exception of backlog, which was a bit of disappointing). There’s a slightly chance that it will miss Q4/05 and its 05 consensus, despite the fact that management maintains its outlook guidance. At this level, the stock is obviously very cheap (12X of its 06 EPS, with 16% growth rate, vs. 16X of S&P average, and 22X of peer group), compared both to S&P and its peers. The company has come out and deny the accusation and is schedule a conference call tomorrow to deal with the issue (and I assume that it will reiterate the same line of its release today). There is a large stock repurchase program in place, and a lot of inside buyings recently. These should support the stock from further decline. I thought the market over-reacted. Even the accusation were true, I do not believe it warranted a 20% haircut. If not, it should recover to its prior level, i.e. low 30s, a decent trading opportunity. It is not the best breed in the pharm service space though (disappointing backlog, potential miss of Q4/05), therefore, do not turn it into an investment. This is a cheap stock, temporarily mis-priced, but not an excellent company. I expect the stock to recover to lower 30s, a level I should exit.