Not a good week for stocks, but we had a couple of successes.

First off, though, a comment on a couple of stocks we mentioned last week.

SPPI

As soon as we sent out our e-mail last week, dilution. Despite already having $100m plus in cash, the company decided to top up with another $50m. With bios, however, you take the money while you can, and as long as it is wisely spent (which we assume it will be by the guys at SPPI, who are building up a decent salesforce for approved and hopefully soon-to-be-approved drugs), then longer term all will be to the good (we remain convinced).

Dilution, ill-informed comments by Cranmer on CNBC, and a general weakness in equities have taken this stock down this week, but we remain confident that there will be a run-up to the next FDA decision (due Oct 8th), and that this stock represents a good medium-term buy.

HURN

Despite a pullback Thursday, this stock continues to trend higher, and we have increased our position over the last few days.

CVM

Bit of a mixed week for CVM. Unsurprisingly, for a stock that had rallied so hard, it's taken a breather, which has opened up a buying opportunity. We have added to our position this week.

CMZ (USA)

This stock has been really badly hit by the check in the general market rally. Primarily it seems like natural gas stocks don't rally when oil moves up, but get hit when the oil price falls. At one point we were +20% on this one,  but we're currently nursing a small loss. In our view, gas prices will rise in the medium term, and we don't expect to be in the red for too long.

CHTP

It's not often you get a chance to pick up a real bargain and make some quick easy money, but we were all given a great opportunity Thursday. The results of a Phase III drug trial were poorly received by investors / traders, and the stock fell from a $7.02 Wednesday close to $1.71 at one stage Thursday. We didn't come in at the day's low, nor did we check out at the intra-day high, but we got in an hour after the open and out at $3 (the stock closed at $2.73), and made a good return. We often find fear provides good opportunities.

BSDM

The stock popped Tuesday on strong results from a cancer heat treatment trial, and we waited for a pullback before entering, thinking that the stock would rise over the coming weeks, as investors realised its potential. On Wednesday, the company filed a shelf registration statement, which investors mistook for immediate dilution and panicked. The stock dropped 10% Thursday, and we took the opportunity to average down close to the intra-day low.

The company has no debt, cash in the bank, and owns several good quality patents and licences. We expect more good news over the coming weeks, which may drive the stock price higher. Although we are bag holders at the moment, we are not uncomfortable with our investment in this company.

CXM

We are looking at this company today, as it is awaiting FDA approval on a medical device (due at the end of the month). A private placement earlier in the month saw the stock price fall on the dilution news, making this possibly a good buy-in opportunity now. Although a risky proposition (second-guessing the timing and decisions of the FDA requires balls of steel), there could be money to be made in a run up to the decision, or a positive outcome (or both).

GTF

A lesson in low volume stocks this one. We've had it for 2 weeks now, and it took a hammering Thursday on the general market sell-off (moving from +8% to -9% in moments). Like CXM, it's waiting on a medical device approval from the FDA (in December). We're just going to ride this one through the approval process, though. Oh, and a warning on medical device approvals - the FDA dates aren't as fixed as like they (mostly) are for drugs. They can come pretty much any time, and, as the approval rate is generally higher than for drug approvals, post-approval spikes usually aren't as high.

Disclosures - holdings BSDM, CMZ, CVM, GTF, HURN, SPPI

Here Is The City is not a registered investment advisor and nothing contained in any materials should be construed as a recommendation to buy or sell any securities. Here Is The City has not been compensated by any of the above mentioned companies.

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