Sunday, July 30, 2017

Vuzix - Does fundamental performance even matter? (VUZI)

Over on stocktwits where I post with the username "growacet" I made a comment about $VUZI and was asked by another participant:  "Where's the pump"??

I should probably thank "wallstpirate" because he provided me with some fodder for something to write about.  I've been posting less than usual here at ATB after all, and inspiration is always welcomed.

So...where's the pump with Vuzix?  Where do I begin?

Let's start with which discloses an expectation of $15,000 from a third party for increasing awareness of VUZI.  Here's the link disclaiming the compensation:

Then there's which has published 20 bullish articles distributed both on their site and at  If you're looking for several hours of bullish sounding material on Vuzix, fill your boots:

Their disclaiming statement says they "may have been compensated" with the usual boiler plate language about their write ups being for informational purposes only etc.  You can read it all here:

I could go on and on of course,, and more but I think readers get the point.  Bearish short side website asserts that at least 21 professional campaigns have been used to promote Vuzix.

All the promotion, pump and hype is fine of course, but the important question is....What does it all mean?  What it means is that Vuzix is showing up on a lot of radar screens, investors who might otherwise have never heard about this company have been introduced to it.

Nowhere on any of these sites however do I see the writers advising potential investors to read over the company's SEC filings, except perhaps buried in the disclaiming statements, typically using a nice small font.  

But then, do the fundamentals even matter when a company is relying on pump and promotion to attract investors?  Promoters always talk about the future, that's what investing is ultimately all about of course.  I have little doubt that the AR space is going to be big, just like there was little doubt that web based commerce was going to be big back in 2000.  

There were some heavily pumped and promoted stocks back then too, Pets.Com springs to mind and others like Digiscents might ring a few bells for those who are older.  For every amazon and netflix that made it big there were hundreds that simply rode the wave of excitement, their stocks were hyped up and the printing press churned out shares as buyers couldn't get enough tech.

Is Vuzix using a printing press?  Are they constantly printing more and more shares?  Judge for yourself.  Back in February of 2013 the company did a 1 for 75 share consolidation.  Simply put, shareholders got one share for every 75 they owned.  Someone who owned 75,000 before the reverse took place had 1,000 afterwards.

Of course that was over 4 years ago now.  What has happened since?  If you check the 10Q filing for the period ending March 31st 2013 you'll see that the number of shares outstanding was 3,536,856 as of May 15 2013.  If you don't want to be bothered looking up the filing yourself here's the link so you can verify the numbers:

Fast forward to the most recently available filing, the 10Q for the period ending March 31st 2017 and you'll see that the number of outstanding shares has ballooned to almost 20.5 million, 20,408,926 to be precise as of May 10th 2017.

Here's the link to that filing:

That's an increase of 16,872,070 shares in four years.  That would have been over 1.2 billion more shares if not for the 1:75 reverse split and represents and increase of  477%.  If Vuzix keeps it up, at this rate they'll be pushing 100 million shares within the next 4 years.  100 million is a bit problematic, because according to their filings that's the amount they're authorized to issue.  But if they ring the bell again they could always do another big reverse split I assume.

But in the near to medium term it might not matter.  There are lots of companies that get pumped and promoted.  CYNK communications is one of my favorites, it went from a nickel to over $20 despite $0 revenues and having only one employee.  CYNK billed themselves as a social media company, in spite of not even having a website.  It didn't matter though, and it proves that no matter how bad a company is, if the promotion is good...there are always fools around willing to pay an inflated price.

That's it for now.....I might get a few comments, so I'll remind haters that profanity is verboten here. And I'll also disclose the fact that I have no position in VUZI long or short, so no skin in the game whatsoever.  If I do take out a position however I can state with near 100% certainty that it will be on the short side.

The next quarterly filing should be out soon, and we'll know how much more money was lost and how much higher the accumulated deficit has climbed.  And of course how many more shares were printed.  

Peace out.

Saturday, July 15, 2017

Contrarian lessons from comedian Ron White (PPHM)

Applied learning happens when a person takes knowledge acquired from one area and adapts it to a different situation.  I'm going to stretch that concept to the limit by suggesting that those who aspire to being true contrarians, that they could learn something from a routine done by comedian Ron White of the Redneck Comedy Tour.

To be a contrarian means to swim against the current, to be bold  and buying when others are scared, and to run for the exits when everyone is rushing in to buy.

Easy to say, not so easy to do though.  The herd doesn't panic without a reason.  When investors start storming out of a stock there's typically some news that spooks them and starts the stampede. With PPHM that news was the release of their fourth quarter and fiscal year end results up to April 30th 2017.

The company reported higher than expected losses and the stock tumbled in after hours trading.

So what does this have to do with a routine by redneck comedian Ron White?  Check out this video of an old bit he did and  then I'll explain.

That's an abbreviated version, but it makes the point.  Ron is describing a flight where there's engine trouble, forcing his plane to return ten minutes after taking off.  In the full version he describes the aircraft as being as big as a pack of gum, with a velocity that's twice the speed of slow that they get passed by a kite.

That's not a bad metaphor for a highly speculative stock like PPHM and thousands of others.  If you're going to hop on board a plane like this, you best not be a nervous flyer.  Mr. White though, he has the perfect attitude for someone flying on a small plane or for someone investing in speculative stocks.  

When an announcement is made that the plane has lost oil pressure in one of the engines, while everyone else is nervous....Ron, who's been drinking since lunch, doesn't care.  "Take her down", is his remark..."And hit something hard, I don't wanna limp away from this piece of crap"!!!  

I would argue that's a wise approach with development stage companies that have not yet attained, and may never attain, profitable operations.  Obviously there's going to turbulence, "engine problems" and plenty of bumps and jolts.  If you're going to be "losing your mind" like the young passenger next to Ron White in this little scenario....then maybe its best not to get on the plane in the first place.  

You see it in social media all the time when bad news hits....posters come out of the woodwork moaning and bitching.  No doubt many are disgruntled shareholders upset that their speculative little stock hasn't graduated to inclusion on the S&P 500 index.  

But I sometimes suspect that there are others who are actually buying, and merely looking to influence others into giving up their seats. Buying because they're confident that the plane will right itself and not crash.  It could be hedge fund type players planning on promoting the stock later in my opinion, perhaps knowing that while the past isn't pretty, that there's some positive news coming down the pipe that could get investors excited and buying again.

On the other hand, if social media is full of pump and promotion despite crappy performance...."Don't worry about those results, just wait til next quarter, or next year".  When I see an abundance of that type of Scooby might say "Rut Roh".  

Not a strategy for the faint of heart though....if you're playing with money you can't afford to lose, to extend the metaphor...plane crashes do happen.

PPHM has had its share of turbulence certainly, in early 2016 they halted a phase III trial which sent the PPS crashing from a split adjusted price around $7 to less than $3....those who gave up their seats to buyers lost out on the climb back above $5 though.  

Now financial results up to April 30th have seen the PPS fall back below $5 to somewhere around $4.50 in after hours trading.  So what does the future hold?  Is it time to panic and get that parachute out?  Or is it better to sit back and enjoy that scotch?  Those results are almost 3 months old of course, the calendar I use says its the middle of July and not April.  

Perhaps you've heard that old saw about the CEO asking his CFO..."How do the numbers look"?  The CFO then says..."How do you want them to look"?  

Anyway me and my friend Johnny Walker know what we'll be doing....take her down, go ahead....cause we don't care, we're just gonna sit back and enjoy the ride.  All you nervous types read the disclaimer at the very bottom of this blog site, actually everyone should read it whether they're nervous or not.  

Peace out.

Wednesday, June 28, 2017

ACU.V - Nobody ever went broke taking profits

I haven't written anything on Aurora for a while, however if anyone is still following this blog...I think there are at least 3 dedicated readers....I thought it best to disclose that I've closed out my position.  The reason is because it looks to me like the dinner bell may be ringing calling the herd to the trough.

With that being said its entirely possible and probably likely that there's still more upside left, and perhaps some significant upside.  But as it says in the subject line right at the top, nobody every went broke taking profits.  I first established a position in ACU.V at 15 cents and then averaged it down to 12.5 cents.  If the PPS climbs to 40 or 50 cents...or more, then I'll just cry into the money I made.

Best of luck

Wednesday, June 21, 2017

Short attack on Resverlogix (RVX.TO - RVXCF) But did they overplay their hand?

Shareholders and watchers of RVX and RVXCF have seen the stock tumble precipitiously in the wake of a financing deal first disclosed after the bell on Thursday June 8th.  The following day the company announced financing of up to $10 million dollars CDN through the issue of units consisting of one share and one warrant with the price being $1.80 and with the warrants priced at $2.05

Prior to that news coming out the PPS had closed at $2.05 CDN on Thursday June 9th.  Then the slide in the PPS began, by the time Friday's trading had closed RVX had closed at $1.64 on the TSX. More alarming was the volume, in spite of trading typically coming in around 30,000 per day that Friday saw over 1 million shares trading hands.

A casual observer might think that shareholders had bailed out on the financing news en masse, but that would be a mistake.  And that wasn't the end either, the PPS has continued falling ever since settling at a close of just $1.33 CDN on Tuesday June 20th for a drop of 35% from before the financing was announced.  

So what caused the fall?  A look at the just updated short interest gives the answer.  Short sales which had totaled 229,700 up to May 30th 2017 exploded higher to 841,500 current up to June 15th, that's an increase of 611,800 between May 30th and June 15th.  Obviously borrowing over 600K shares from investors and then dumping them back into the market, that's going to have an incredibly negative impact on the PPS, especially in a thinly traded and tightly held stock like RVX.

Now I have a lot of respect for those with the willingness and capacity to short a stock trading for a piddly $2.00 or so Canadian.  This is not an activity engaged in by individuals trading from a laptop and risking their child's college fund.  To short a stock like RVX in these numbers requires a significant bankroll.

But perhaps, just could be that players on the short side of RVX have overplayed their hand in my opinion.


The company just attended the Bio International Convention in San Diego on June 19th.  They did a presentation, and the PDF of the Power Point slide show was made available just afterwards. Investor website Seeking Alpha picked up the slide show and published it on their site, you can see it here.

Take note of the debt figure on page 5 of the slide presentation.  Investors and followers of the company should already have been aware of the company's debt, pegged at $68.8 million CDN and owed to CitiBank.  The loan is collateralized by a standby letter of credit from Eastern Capital Ltd which is the investment arm of billionaire Kenneth Dart, a well known and successful BioTech investor and heir to the Dart Container fortune.  

The stand by letter of credit though has a catch, if Resverlogix were to default on the loan, then Eastern would get pretty much all the company's intellectual property, including the patents on their lead compound Apabetalone currently in a Phase III trial called BETonMACE.  And the loan comes due this coming August, which isn't far off.

It has long been my opinion that this loan has been an albatross around the company's neck, and a significant factor in depressing the share price of RVX, preventing the company from attaining a substantially higher PPS, that is my point of view.

But back to the PowerPoint published by SeekingAlpha.  The debt figure increased, instead of $68.8 million the new figure is $117.6 million CDN, a difference of almost $50 million.  

This sent my wheels spinning obviously.  The most logical conclusion from my perspective was that the company had either extended the CitiBank loan or replaced it.  I considered it possible that they had raised enough to retire the $68.8 million CitiBank loan, and to tap into and additional $48.8 million which is sorely needed by the company to finance trials and continue operations.  

Well, those thoughts were quickly replaced by bewilderment when the company changed the Slide Presentation available on their own website and put the debt figure back to $68.8 million CDN on the updated link.  You can see the newer version here: 

I sent an email to the company's IR seeking clarification.  It wasn't just the debt level that changed, but also the MC and the number of shares outstanding, both issued and fully diluted.  The answer I got back was even more confusing with the head of their IR department claiming it was the result of a typo.  

A typo???  Cambridge Dictionary defines a typo as a "small mistake in a text when it is typed or printed".  That's something everyone has done, typing there when using the possessive form instead of their, or your instead of you're.  But calling a difference of almost $50 million dollars and differences in the number of shares outstanding a "typo", that doesn't add up.  That's like calling Mount Everest a little hill.  

I don't know what happened, but I am more than a little bit skeptical of the "typo" story.  I think its possible that the $117.6 million debt figure is based on something tangible but not yet final.  That is a suspicion on my part, and something I do not expect confirmation of at this point.  If however the company announces a new loan agreement that comes anywhere close to that new figure, then I'll be almost certain of it.

And finally, if that weren't enough we have the NYTimes reporting on the Trump Administration's new draft order which seeks to ease restrictions on Drug and Biotech companies.  Adam Feuerstein of just tweeted this saying:

Biotech and drugs stocks are going to triple in price tomorrow.

All of them.

Exciting times, exciting times.  But I won't be watching the market tomorrow, I'll be visiting the Zoo on what promises to be a spectacular day.  Please note, I'm just a retail schmo...albeit one with some industry experience to go by, but still just a retail investor.  And I am a shareholder in Resverlogix so my opinions are obviously biased.   Please read the full disclaimer at the bottom of this site.

Sunday, May 28, 2017

Resverlogix - Plenty of smoke but is there fire?

After writing about a dividend paying retirement home with my last post I will now return to more familiar ground, writing about a speculative stock.  

Resverlogix is a company I've opined on several times here at ATB going back to June of 2016, and over the past year it has certainly performed.  

Here's a link to that first post:  

And here's the 1 year chart:

That's a jump from the $1.20 to $1.30 area to its current price in and around $2 for a gain in the neighbourhood of 60%.  However I must admit to being very greedy on this one because of what I consider to be the "mind blowingly" blockbuster potential of the company's lead compound Apabetalone.  

You know you're in love with a stock when you start inventing words to describe it like "blowingly".  

Those who've followed this blog or the company already know the story.  Apabetalone has shown itself to be an inhibitor of Bromodomain and Extraterminal Domain, (BET for short) proteins.  The biggest promise seems to rest in the area of Cardio Vascular Disease or CVD for short.  CVD affects many people, especially those with conditions like Diabetes and Chronic Kidney Disease (CKD).  

I'm not going to go over old ground except to list some of the potential applications that Apabetalone could have.  Beyond the aforementioned Diabetes and CKD there's also Alzheimer's, at least one form of Muscular Dystrophy, Degenerative Retinal Disease, Thrombosis and more.  

So what's new with Resverlogix that compelled me to write another blog post?  What's this smoke referred to in the subject line?  Relax I'm getting there, but I'm getting older and I like to take my time.  

There are a couple of expressions about smoke that contradict each other.  One says:  'Where there's smoke, there's fire'.  But another is used about someone who talks out of his nether regions, where the bromide goes something like:  'He's just blowing smoke'.  So the question with Resverlogix begs: Is there really a fire cooking up something big, or is it nothing more than the company blowing smoke?

Bottom line answer, I don't know.  I hope the fire is burning hot and cooking up an absolute feast, but I can't say that with any certainty whatsoever.  That's what makes the market game so compelling, it is anything but easy.  If there were no risk and Apabetalone was assured to fulfil its billion dollar potential, then shares wouldn't be trading for Canadian Toonies. what is this smoke I'm referring to?

The first is FDA approval for the company to proceed with a 2a clinical trial for patients with Chronic Kidney Disease who are undergoing dialysis.  This is on top of the on-going Phase III trial for patients with Diabetes called BETonMACE.  The news about the CKD trial came out on May 15th just passed, here's the link:  

The second "puff of smoke" came out on May 23rd and is much more intriguing for me because it involves mention of Pfizer and the fact that they have applied for a patent for the treatment of a rare disease called Friedreich's Ataxia with BET-family bromodomain inhibitors including Apabetalone. The patent application specifically cites Apabetalone as a compound developed by Resverlogix.  

Here's the link to that news item:

And more intriguing (for me) still is that this news was picked up two days later by a portal for Friedreich's Ataxia news stories that had a very interesting take on Pfizer's patent application.  Here's the link:

And here's the intriguing part:

  • Resverlogix, which is based in Calgary, Canada, responded to news of the patent application in an understated way. Instead of indicating it would challenge the patent request, the company’s president and chief executive officer, Donald McCaffrey, said that “we welcome the attention drawn to Resverlogix and apabetalone from significant industry groups such as Nature Reviews Nephrology and Pfizer.”

Could there be something brewing between Resverlogix and Pfizer?  Again I don't know, but I do think its a possibility.  Obviously deals of this nature, if they do come together....its not something whipped up on the spur of the moment.  

Still reading?  Good.

Because adding to the smoke was the recent Bio Equity Europe event in Paris where the company was scheduled to present on Monday May 22nd, but didn't attend. That fact was confirmed to me by email from the company's IR department.  No explanation was given as to why Resverlogix decided to forgo this opportunity to present itself to investors.  

All this is happening at a crucial time, because a look at the company's financial disclosures reveals them to be, if not broke, very close.  As of January 31st of 2017 they reported having just under $5 million CDN left in cash with a burn rate of between $2 and $3 million per month.  You don't need to be Stephen Hawking to do the math.

On top of that they have a loan with Citi-Bank that is coming due in August for a little under $70 million CDN.  That loan is guaranteed by one Kenneth Dart who's investment arm Eastern Capital is a major shareholder.  The loan is collateralised by the company's intellectual property, including Apabetalone...default on the loan and Eastern gets pretty much everything.  

All this makes for anxious investors....I can see it it going both ways.  Either we open the kitchen door to find a huge feast laid out, with the possibility of Chef Ramsey being represented as Pfizer stepping in to satisfy the appetite of Resverlogix shareholders.  That or its just smoke coming from the kitchen stove for an overdone pot of Mac&Cheese.

The clock is ticking.  Standard boiler plate disclaimer, please see the very bottom of this blog.  I'm a shareholder, that is to say I eat my own cooking.  I'm hopeful that its prime rib I smell and if it is that its isn't over cooked but instead is juicy and reddish pink.  

Short interest makes dividend paying retirement home company EXE.TO an intriguing play

This blog tends to focus mostly on speculative stocks, companies that often have little to nothing in revenue and certainly don't distribute dividends to investors.  But there is certainly a place in most portfolios for some solid performers, companies that pay investors to own them with regular dividend payments.  

And in my opinion you can do a lot worse than to look at retirement homes for one simple reason, the baby boom generation.  Those hippy dippy teens who were once skinny dipping at the Woodstock Music Festival, they're now moving into their golden years.  Gone are the days of stripping down with friends for a cool refreshing swim in a lake, now comes the age when they're looking for help getting in and out of the bath.  

The post war baby boom started in 1946, which means the front end of the boomer generation is now entering their 70's.  And that's just the front end, the boomers have been called 'the pig in the python' and those who study demographics have been sounding alarm bells for a while now about the impact this generation is going to have on society as they enter old age.  

One inescapable fact of human existence is that we all need somewhere to live, no matter what age we are.  People are living longer and healthier now than at any point in history, but there's no defeating father time, it gets us all eventually.  While some older people will be healthy enough to maintain their independence for a very long time, many will also have to look at moving into assisted living facilities and retirement homes. 

That's the business Extendicare is in.

My legion of regular readers, all three of them, know that I pay close attention to short interest and that I have a healthy respect for bears.  When I see a stock with short interest at 10% of the issued shares, or higher....that to me is a warning sign.  However the level of short interest in Extendicare is well below 10%, sitting at just 2.3% of the 88.8 million odd shares that are issued as per, that's current up to May 15th 2017.  

Over the long term I don't see anything to worry about with an investment in EXE.TO.  That's not to say I don't expect pullbacks and periods of consolidation, that's par for the course with stocks.  But over the next 10 to 20 years I view retirement homes as being almost as sure a bet as running a Casino. And we all know that when running a Casino that the house always wins, unless its someone named Donald Trump at the helm,  Thankfully his name isn't on Extendicare's Board of Directors.

But back to Extendicare's short interest, 2.3% of the issued shares represents a little over 2 million. My suspicion is that bears would like to cover, but they're pinched.  You can't buy unless there are others willing to sell after all.  Back in 2014/2015 when they were divesting the U.S. side of the business there was some uncertainty, but that issue has long since been resolved.   

This isn't some tech company that's been around for 10+ years, surviving by selling its shares and engaging pumpers and promoters to drum up interest.  Extendicare has paid a monthly dividend for years of 4 cents per share, which at current prices represents a yield of just under 4% which is better than a GIC, with the share price growing steadily over the past 5 years.  

That 4 cent monthly dividend means that bears have to dig into their collective pockets every month for roughly $80,000 at current short levels, that's almost $1 million per year.  Extendicare doesn't have to cover the dividend payments for shares that have been sold short, that's up to the bears who sold them.  

Recently analysts covering the company poured a bit of cold water on things, but I've never been one to trust analysts, I don't think they have my best interests at heart.  And certainly with EXE some price targets have been brutally wrong, but in a very good way for longs.  

RBC just boosted their Price target from $9 per share to $9.75, which to me is like targeting 20 wins at this point in the season for the Blue Jays, even though they've already won 23.  But it is what it is, perhaps its just a matter of industry players helping out the bears who seem to be stuck.  You can read about it here:

I'll leave it there and, as always, strongly suggest further research.  Take note that I am a shareholder and as such my opinions should be viewed as heavily biased.  

Thursday, May 25, 2017

Toronto housing bulls can relax - Buyers should take advantage of the lull

Emotion can have a big impact on a market in the short term, you see it with stocks all the time. Bad news will hit an otherwise profitable company with solid fundamentals, and the stock price will fall. Then sanity returns as the market realizes that nothing truly important happened and the PPS recovers.  

The same thing happens in reverse with highly speculative money losing companies.  Good news comes out and excitement takes over as buyers storm in and push the PPS up to often insane levels. And then reality sets back in and the PPS collapses as people wake up and look at the balance sheet and see nothing but red.  

With housing there are 3 fundamental metrics that drive the market.  The two most important are obviously supply and demand.  The third factor has a big impact on the first two, and that is affordability.  In housing affordability is largely driven by mortgage rates, most people would not be paying $1 million+ for a detached family dwelling in "The Six" if mortgage rates were in and around five or six percent.  

But with interest rates sitting under three percent and a lot of household incomes well into six digits, GTA families can afford to assume hundreds of thousands of dollars in mortgage debt.  

A note of caution though, interest rates are key.  If mortgage rates go up even one full percent, then the supply/demand dynamic will change dramatically.  Many current homeowners would no longer be able to afford to keep up with mortgage payments and would be forced to sell, and the number of buyers would drop as would the amount they could afford to spend.

But absent a sharp jump in lending rates, if mortgages continue to be handed out at less than 3%, then GTA housing bulls have little to fear in my view.  Why?  Let's face it, when it comes to Canada the greater Toronto area "IS DIFFERENT".  Immigration is a big factor, probably the biggest reason that GTA real estate has been a rocket ship performer over the past 10+ years.  

There are lots of people who go to work in UAE states like Dubai and Bahrain or in Saudi Arabia where they make big bucks and pay $0 in income taxes.  After ten years working in the Gulf States its not unusual for a couple to emigrate to Canada with $1+ million in the bank, often in U.S. funds. They can afford a $1 million dollar home in The Big Smoke because they can buy it free and clear, with $0 needed to finance a mortgage.  

There's a very popular blog called Greater Fool authored by shameless self promoter Garth Turner that has been predicting an imminent correction in the housing market for a while now.  Turner is so excited by the recent pull back that I understand he's cancelled the prescription for his boner pills. 

Take note however that Garth Turner has been the Chicken Little of the Canadian housing market for nearly ten years now, starting in 2008.  The Über Moron was telling homeowners to "sell now if you want out at the top" when a single detached dwelling selling for $1.5 million now was going for a paltry $500 or $600K.  

In fairness to Mr. Turner he's an effective communicator and very successful financial adviser.  He goes on cross Canada tours offering seminars to the sheeple who follow his blog, and you have to sound brash and confident if you want the herd to free up the capital in their homes and invest it in the vehicles you're flogging.  

For those who still think Garth's the man, here's what he was saying in October of 2008.  Homeowners, how much has your property gone up since then?

So relax housing bulls, unless interest rates make a big jump, then this latest fear driven dip caused by the foreign buyer tax and Capital Inc's recent troubles will be just another blip like we've seen before over the past 10 years.  By the fall market things will be back to what they've been, steady increases.

Capital Inc will probably survive, and even if they don't...other B class lenders will step in to fill the void.  Foreign buyers might represent 5% of the market, and even that is probably being generous.  When bidding wars start up again, it might mean 18 offers instead of 20.

But if you prefer doom and gloom and like drama....go read Greater Fool.