The weakness in the stock has increased over the past few days. The volumes have been higher on some days, and it has gone below crucial levels. It is imperative that it bounces back soon, else the cut can be much deeper. Earnings are round the corner, and it is better that it shows some strength before that. Weakness could accentuate the effect of negative surprises. In Q2'13, it had done well by beating the analyst estimates by a good margin. It had reported and EPS of $0.22, beating the analysts estimate of 15 cents by nearly 50%. Considering the existing weakness, it is crucial that it delivers a good set of numbers. Positive surprises could take the stock higher, specially in view of the high level of shorts. Data showed that 10% of the float was short as on October 15. The Q3'12 performance was affected by an abnormal income, so the post-Q3'13 earnings ttm EPS will be more representative of the operational performance of the company. The P/E will shoot up to realistic levels. InterDigital gets a steady stream of licensing revenues, and a more diversified base can make the topline more stable. There is increased awareness in the market, and many companies are trying to monetize their proprietary or acquired patents. Marathon Patents Group (MARA) recently acquired several patents, and three of its portfolios have already started generating revenues. Hopefully, InterDigital will be able to beat analyst estimates again, so that the stock reverts to the growth path. Exposure to earnings is always extra risky. So one needs to play it carefully based on individual risk appetite. The balance sheet is healthy as always, as it had $770 million cash on June 30, and the debt was $204 million.
The earnings were not as per analyst estimates, but the stock continued to move up. The volumes have been good recently. It has been volatile during the past 52 weeks, but has appreciated 44%. The fundamental performance of the company is better than many peers, as it has been reporting profits over the last few years. Even this year, it is can be expected to report a net profit. The ttm net income is $73 million (EPS $0.95)and the revenues are $3.02 billion. In 2012, the revenues were around $2.9 billion and the EPS was $2.03. Credit Suisse downgraded its shares from a focus list rating to an outperform rating recently. Even analysts at Thomson Reuters/Verus downgraded its shares from a hold rating to a sell rating in a research note, but analysts at RBC Capital raised their price target for Penn from $57 to $59, with an outperform rating. The consensus rating is Hold, and the consensus price target is around $56. So the analyst opinion does not indicate room for much upside for the stock. But the stock has moved strongly, and the rally could have more legs. The valuations are stretched now, because the performance in Q2'13 has dragged down the EPS. The Trailing P/E is above 60, but the forward P/E is 25 which indicates expectations of earnings growth. The price to sales & price to book are also at reasonable levels (1.51 & 1.95 respectively). The leverage is high, and that is the case for the entire industry. There was a ruling in the patent infringement lawsuit filed by MGT Capital Investments (MGT) against several casino companies where Penn is also one of the defendants. While the ruling was positive for MGT, Penn got a temporary stay pending the outcome of the litigation against retailers of the machines WMS and Aruze. Future performance will depend on how the margins improve. However, the resilience of the stock is commendable.
The stock has corrected more than 28% from the high made in September. Despite this, it has delivered great returns over the last one year. The stock has multiplied several times compared to the 52 week low of $4.52 made in November. This is despite the fact that the losses have continued over several quarters and years, and even the topline performance has not been good. This indicates the resilience of the stock. The upcoming earnings will be a trigger, but so far it has moved against the tide. Good numbers will surely help it regain lost momentum. The short interest remains high at around 17%, and positive surprises could add to the buying pressure. Even in the last earnings, the company was not able to meet the analysts estimates, both for the top and the bottom line. Taking exposure of earnings is always risky, so one can play as per individual risk appetite. The company has a negative book value, and the debt is extremely high for its size. The ttm revenues are $8.52 billion and the net loss is $1.33 billion or $11.21 per share. The debt is $21.3 billion, and servicing such a high level of debt is difficult. Though most of the companies in the industry have high leverage, the situation of Caesar is relatively more difficult. The company had $1.8 billion cash as on June 30. Also, there was a ruling in the patent infringement lawsuit filed by MGT Capital Investments (MGT) against Caesars and other casino companies. The ruling was pretty positive for MGT, and Caesars got a temporary stay pending the outcome of the litigation against retailers of the machines WMS and Aruze. Thomson Reuters/Verus upgraded shares of Caesars from a hold rating to a buy and analysts at Bank of America reiterated an underperform rating on the stock.
The stock has not done much over the last few days, and the volumes have been low. Meanwhile, the company has been making efforts to inform investors about its activities. It had filed a presentation about its activities / prospects earlier this month. The company believes that its transformation into a patent assertion entity has done well so far. It has been able to acquire premium patent assets due to effective due diligence. It has already got settlements related to its initial licensing campaign within 3 months of start. There are huge hopes from Hayes, who joined the company as part of a merger with North-South Holdings. He brought a portfolio of 222 patents related to wireless communications, and the company has a partnership with the Rockstar consortium. Hayes is expected to pursue multiple strategies for monetizing the patents. He has the experience of successfully monetizing patents through a wide variety of monetization methods, including asset restructuring and licensing brought against companies such as Cisco, Broadcom, Nokia, Ericsson, Tellabs, and Alcatel-Lucent. It has filed lawsuits against T-Mobile USA, VTech Communications and Uniden, which are giants in mobile and cordless telephony. The company is expected to acquire more patents, and pursue litigation against other companies for monetizing the existing patents. Analyst Greg Miller had recommended to buy Spherix in an article on SA, and had put a value of $50-$350 million on the patents owned by Spherix. The company has no debt on books, and has sufficient cash for operations, especially after a recent funding. So the potential is definitely there, but the outlook will improve decisively once there is regular inflow from the licensing arrangements. That will improve the financials, and change the way people look at the company. Hopefully, the management, especially Hayes, will live up to the potential and deliver tangible results.
The Q3 numbers are going to be released in the first week of November. That will determine the short term trend of the stock. Analyst estimates the revenues to come in at $36 million, while the management guidance is for revenues in the range of $35-38 million. This indicates a decline on a yoy basis. In Q2'13, the revenues declined on a yoy and a sequential basis. The sale of some Micro-optics assets to FLIR will give the company additional $15 million. The long term performance of the company has not been good as the revenues have declined, and the losses have increased over the past few years. The revenues & operating profit of the IP segment have declined. The digital optics segment has also seen decline in revenues, and the net losses have increased. The overall market for monetizing IPRs has done well recently, and several companies have begun to assert their proprietary or acquired patent rights. Spherix (SPEX) recently acquired hundreds of patents and has already filed lawsuits against T-Mobile, Vtech and Uniden to enforce its rights. For Tessera, the operating expenses comprise mainly of R&D and SGA expenses, and there have been unusual expenses related to impairment of Goodwill and restructuring expenses. The litigation costs have also increased. On the positive side, the cash position is very good, and there is no debt. The spin-off of the manufacturing part of the digital optics segment may help reduce pressure on margins because that has been the major drag for years. The stock performance over the last 3-4 months has not been good, though it has appreciated 33% on a 52 week basis. It is trading around important levels, and needs to rebound and cross $20 convincingly so that it can gain positive momentum. The sustainability of any upward movement will depend on the financial performance in the next few quarters.
The stock has done well over the last one month. It has appreciated by 12%, and the volumes have been high. Over the last one year, it has gone up by more than 55% and there could be some momentum building up. However, it needs to spend a few more days above important levels for the uptrend to gain strength. The valuations are reasonable, as the price to sales ratio is 0.56, while the operating profit margin is 4.5% on a ttm basis. The net margin is -2.01%, and there is a possibility of a turnaround soon. On a ttm basis, it has recorded revenues of $684 million, and a net loss of less than $15 million. It is only a matter of time before the market begins to factor future positives. However, it has to deliver a good set of numbers over the next couple of quarters. It has $50.82 million cash and the debt is $86.45 million. Insider purchases are good for the prospects of the stock as they indicate the faith of the management in the future of the company. Over the years, the revenues have been growing at a robust pace, and even this year is likely to be good. One major reason to be positive on the stock is the backing of Dr. Phillip Frost. He is known for his acumen at picking up great companies when they are not noticed by the market. His success stories in the pharmaceuticals sector are well known, and his investment in Biozone Pharmaceuticals (BZNE) has made news recently. His stocks have done great recently, with many delivering triple digit returns. However, the long term success of the stock will be based on its fundamentals. It needs to improve its fundamental performance so that the uptrend can be sustained over the long term.
The stock has done well over the past few months, and the volumes have been high. There has been a lot of volatility, but the general trend since last couple of months has been up. The movement is more related to the prospects of the company, especially related to the QuSomes drug delivery technology. The contract manufacturing wing of the company is also expected to do better in the future, especially after the investment by MusclePharm (MSLP). Several analysts have expressed positive sentiments about the company. Analysts consider the company unique because not only does it have a high potential technology under development / testing, it also has a running business which provides it cash flow. MusclePharm is a $100 million company, and if it shifts a portion of its production to Biozone, then that can significantly add to the topline. Dr. Frost has faith in the QuSomes , and the confidence could be due to the results got by Opko Health (OPK) during the testing of the technology. The faith is proven by the fact that he got MusclePharm to invest in Biozone specifically to gain access to the technology. QuSomes are believed to help in reducing manufacturing costs and increase the solubility of drugs. The efficacy of drugs increases at lower doses, leading to lower treatment costs and lesser side effects. So the prospects look good, because any pharma manufacturer would like to own such a technology or at least use it through Biozone's contract manufacturing facilities. The cash position of the company is good, and it may get a bonus by way of some pro-rata dividend from liquidation of BetaZone Laboratories, a company that engages in the development, sale and licensing of pharmaceuticals and cosmetics in Latin America. Biozone owns 45% of that company. The exact amount will be reflected in future earnings.
The court ruling was positive in the sense that the venue will not be changed, and the claims of direct infringement have not been dismissed. This is good because it will avoid further delays in the case due to transfer etc. Further, since the claims have not been dismissed, the first hurdle has been definitely crossed. The Aruze and Penn lawsuits will not be split, but the court granted the motion to sever the action against WMS, Caesars and MGM. This is not that bad anyway. However, the court granted defendants' motion to dismiss contributory and induced infringement claims, and the court granted defendants' motion to pause proceedings against MGM, Caesars and Penn. This is because the court viewed these as retailers who did not necessarily have detailed knowledge about slot machines they operated. So first the manufacturers need to be found guilty of infringing patents, and then the users will be tried. As mentioned by Greg Miller on seekingalpha, the ruling is very much positive for MGT. So, as of now, the Markman hearing will be held in June next year. However, he has put in his money in MGT mainly for the prospects related to the fantasy daily sports business. This is because of the growth potential of that segment. He mentions prospects of exponential growth (2000%) over the next 7 years. The daily segment will only increase in popularity over time. If MGT is able to leverage this growth story, that will be the real game changer for the company. The awards / settlement related to the lawsuits will be bonus events, so to say. The size of the awards can surely make them bigger than a bonus. The company needs to provide more information about the progress of the Fantasy sports business from time to time. That will help the investors remain aware of possibilities.
The company announced the acquisition of four U.S. Patents relating to process automation in production and enterprise resource planning (ERP). The patents address the ability to enhance ERP and production planning processes through the introduction of adaptive learning processes. Marathon or its subsidiaries have acquired other patents recently, and the acquisition brings the total number of patent portfolios to seven. The other notable patent portfolios, are Sampo, CyberFone, Relay and Bismarck, out of which the first three are already generating settlement revenue. Marathon is working with its partner IP Navigation to monetize the Bismarck portfolio. The CEO stated in the press release that the company will continue to focus on building a diversified portfolio of compelling patent assets. Analyst Greg Miller had expressed positive sentiments about the stock in an article on seekingalpha recently. He expects the company to turn profitable very soon. The $1.5 million revenue earned by the company in Q2'13 indicates that the patents are generating cash, and more revenue can be expected in future quarters from settlements made by the company recently. However, the magnitude of the inflow has not been disclosed yet. The company has sufficient cash for now, and the revenue is expected to strengthen the position due to the low cash burn rate. The low float makes it easier for the price to appreciate, but it has its disadvantages as well due to increased volatility. However, if the performance is good, then the upward moves will be easier. Greg had stated that he expects a 50% appreciation in the stock by 2014. The stock is currently trading close the price of $5.20 where institutional investors had put in their money. So there is a possibility of support, and the chances of a rebound are high. Even other analysts are expecting the company to report a profit in the next earnings release. That could be an important positive trigger for the stock.
IAG has recovered a bit from the recent lows. It is up around 15%, though the volumes have been a bit down in the last couple of sessions. Gold has corrected from the recent high and seems to be finding its feet around crucial levels. The correction was expected, though it has run a bit deeper than one would have liked. A sustained rebound will improve the sentiments. All stocks have corrected significantly, and the underlying nervousness surfaces as soon as there is some weakness in gold prices. The sentimental impact of the correction over the last two years cannot be expected to go away in a jiffy. However, an analyst on SA has mentioned that the sector is doing better now because it has learned from its mistakes. The costs are down, and the expansion plans are much more conservative. Consequently, the author sees that we could be witnessing an inflection point after two years of declines. There are analyst upgrades, including that for IAG. HSBC has an overweight rating on IAG, with a PT of $6.20. many are seeing deep value in the sector for the long term. Pershing Gold (PGLC), a development stage company in Nevada, recently announced that it is on track to start production from its mines. These are signs that the managements are a bit more confident than they were a few months ago. For IAG, the dividend yield is a big plus point, especially if one considers the scope for additional returns due to capital appreciation. The valuations remain attractive as the company is trading at around half its book value. Unlike many peers, it still is in profit on a ttm basis. The SA article recommends a long IAG for long term investment. The leverage is also reasonable if one considers the cash position.
The latest press release of the company mentions that it has taken a significant step towards putting its Relief Canyon Mine in Pershing County, Nevada back into production. An engineering consulting firm (Knight Piésold) has been selected to perform the geotechnical engineering work required to update several key permits for the mine. Subject to completion of these steps, the company may be on course to resuming production from facility. According to CEO Stephen Alfers, the expertise of the consultants will help the company optimize the design of the expanded mine and secure the required permit modifications. The company's 2013 drilling campaign is still in progress, and continues in an area mainly north of the North Pit. The drilling effort has the objective of expanding and upgrading the existing measured, indicated and inferred resources from the mines. The results of the drilling have been encouraging, and has also discovered several high-grade intercepts. The news is important because the company has categorically mentioned that it is likely to become Nevada's next new gold producer. It is poised for fast-track resumption of gold production with only modest capital expenditures to re-start the entire operation. The leach pads can accommodate 21 million tons of ore with lots of room for expansion. The gold recovery plant has the capacity to process up to 8 million tons per year. However, the PR did not mention the time frame for resumption of production. More details on that will help get a clearer picture. Meanwhile, Gold has corrected significantly and seems to be finding support around crucial levels. As soon as the sentiments improve, one is likely to see more stock specific action in the sector. The cost of production for Pershing is expected to be significantly lower than the industry average, so it may be able to achieve decent margins even if the price remains around current levels.
The company has been in the news recently and the stock has also been extremely active. The recent volumes indicate increased interest in the stock. Last few days have seen more than 3 million shares being traded. This is also due to increased awareness about the potential of the market for used phones and electronics goods. Launch of new versions of smartphones leads to a spurt in demand for older versions. This draws attention of people to the numerous used phones and similar devices lying at homes. There is potential to monetize those devices which have so far been considered useless. Usell's interface has been praised in a few articles, and the company is also highlighting the advantages offered by Usell compared to other sites which sell used phones. One can get a better price faster, and the process is hassle free. There was an article on seekingalpha recently mentioning that high resale value of Apple products is a unique competitive advantage which is not so easy to replicate. Usell is also planning to include other used products like watches and jewelry which are low weight but expensive enough to have reasonable resale value. The company is getting more active by bolstering its board. It recently appointed Steven Rubin and Gerald Unterman as strategic advisors. Rubin has held senior positions in IVAX, OPKO Health, and is on the boards of several other companies owned / controlled by Dr. Phillip Frost. This indicates the increased interest of Dr. Frost in Usell. Rubin has extensive leadership, business, and legal experience, he has expertise in strategic planning and acquisitions. Unterman has expertise in investment management. Earlier, Michael Brauser was appointed Chairman of Usell replacing Sergio Zyman who resigned as a director. Daniel Brauser, the Company's President, was appointed interim Chief Executive Officer to replace Zyman.
This is the third time in a row that the earnings have been below par. The revenues declined on a yoy and sequential basis, and the net loss increased significantly. 2013 will be a bad year for Acacia as the company is now carrying a $23 million net loss on a ttm basis, and the revenues are only $181 million. If one considers the nine month figures, the topline for 2013 may be much lower. The reaction to the earnings is not over yet, and the stock may see a few more days of selling before it begins to stabilize. The confidence is much lower, and the fact that the stock has gone below $20 indicates that a much deeper cut could be in store. One could see $15-$16 over the next couple of months. It was imperative for the company to deliver this time, but it failed to do so. The Q3'13 revenues declined by 56% on a yoy basis, and even the sequential decline was more than 32%. The net loss increased to $15.7 million compared to $6.6 million in Q3'12 and $12.5 million in Q2'13. Even the non-GAAP net income fell to $5 million from $6.7 million in Q3'12. In the third quarter of 2013, three licensees individually accounted for 34%, 31% and 19% of revenues, as compared to five licensees individually accounting for 30%, 13%, 10%, 10%, and 10% of revenues recognized during the third quarter of 2012. This points to higher dependence on a few clients for majority of the revenues. The competition in the sector has increased, and there are patent assertion entities like Spherix (SPEX) which are working to increase the diversity of their patent portfolios. Several companies are more aggressive, and hence it is important for Acacia to diversify to smoothen the curve. Even the cash position of Acacia has witnessed some declines.
Earnings are a couple of weeks away, and that could be the short term trigger for the stock. The stock has appreciated by 15% over the last two months, and good earnings may take it beyond the $19 levels. However, increase in stock price before the earnings will make the exposure risky. Earnings exposure has a 50-50 chance of success. Even RPXC did not do well in the last earnings, as the performance was not up to expectations. The valuations are a bit high now, though good Q3 earnings may improve the P/E & P/S. Currently, the ttm P/E is around 21.66, and the forward P/E (fye 31-Dec-2014) is 16.75. The PEG ratio is also not too high at 1.59 which indicates moderate expectations for growth. This is inline with the management guidance. The guidance for the full year revenue is around $229 - $235 million and Non-GAAP Net Income is expected to be between $50 - $53. The ttm revenues are around $217 million and the net income is $43 million. The price to book ratio is around 2.32 and the price to sales is 4.24. Considering the expected growth in the market, the future prospects look good. However, competition is also increasing with several companies working aggressively to increase their market presence. There are also patent assertion entities like Spherix (SPEX) which have acquired patents with a clear strategy to monetize them through litigation and licensing. RPXC's balance sheet is strong as it has no debt with $259 million cash (on June 30). So if the company can beat the estimates and deliver a good set of numbers, the possibility of a strong uptrend is high. On the other hand, negative surprises could lead to profit booking because the stock has already run up quite a bit.
The EPS came better than expected, and the market reaction seems to be positive. The after hours trading quotes indicate that there may be a big gap up. If it crosses the recent highs and sustains at higher levels, then it could signal the start of another leg of the uptrend. The main reason for optimism is that the paid click volumes have increased sufficiently to make up for the declines in cost-per-click. So the declines may continue to be offset, and there could be an equilibrium point going forward. The increased usage of customers on mobile devices compared to PCs was expected, and the growth trend could continue for some time. However, the transition to mobile will require continuous adjustments due to the dynamic nature of the market. As pointed out by one on the analysts, the pace of growth has slowed down over the years, due to base effect, saturation etc., and that is one reason why Google is investing so heavily in new ventures to revive revenue growth. The Motorola Mobility venture has not been a success so far as the revenues have declined and the losses have increased. It is not going be easy, as the smartphone market is increasingly getting more crowded. Resale value is a selling point now, and Apple (AAPL) products score better on that. Usell (USEL) a company which provides a platform for selling used mobile phones and electronic devices, recently posted great growth in revenues. So Google's fundamentals may continue to catch up with the stock price, though the growth may not be that fast. Valuations may appear to be high, but the size and influence of Google, and its consistent performance makes it command a premium. There are worse stocks trading at much higher valuations purely based on promise.
The sentiments are surely better now, and the last couple of months have seen the stock break out of the trading range. A few months ago people were talking about sub $300 levels for the stock, and now there are voices which are saying that it may test the all time high of $705. The Carl Icahn tweet did the stock a lot of good. Now analysts seem to be finding reasons to buy the stock. The situation on ground has surely not changed that dramatically to start expecting $700 instead of $300. In any case, it is often better to follow the smart money (Carl) rather than the analysts, and a few important things may have changed. The company may be able to deliver better numbers in forthcoming quarters. An article on seekingalpha has given ten reasons for buying the stock. The author mentions new deals, surprise sales, analyst revisions, heightened brand awareness (most valuable brand), competitor stagnation, and a new shareholder friendly attitude from management as reasons for expecting a $700 price soon. There is specific mention of the NTT DoCoMo Deal which will bolster sales in Japan, and the increased market share in US. The analysts are expecting better numbers, and the management guidance is also more optimistic. Apple is making inroads into educational and other organizations for institutional sales. Another analyst had mentioned that the high resale value of Apple products is a competitive advantage which cannot be replicated easily. Sites like Usell (USEL) always benefit from new launches by Apple due to demand for used handsets of prior versions. Usell reported great growth in revenues in the last quarter. The fundamentals of Apple were never bad. For a few months the perception had become excessively negative. If the quarterly numbers are better than estimates, then it may gain more strength.
A recent article on SA is a bit negative on the stock mainly because of selling by insiders. The author mentions that 244K shares have been sold by insiders in 2013, while there has been no instance of insider purchasing. However, considering the trading volumes, low level of insider ownership and low volume of sales by insiders, one cannot take this as a reason for being negative on Actavis. Insiders sell their stock for various reasons, and one cannot conclude that they are negative about the prospects of the company. Insider buying, on the other hand, can be attributed to positive outlook, and there have been recent cases where such purchases have correctly predicted increase in momentum. OPKO Health (OPK) and Biozone Pharmaceuticals (BZNE) have recently moved up exponentially backed by insider support (Dr. Phillip Frost). For Actavis, the performance has been great, and the stock has moved by around 70% in 2013. Even over the longer term, the returns have been good. It has appreciated by more than 560% over the last 5 years. The momentum is backed by the company's expansion efforts over the last few years through acquisition. It has increased its global presence in various markets, and according to Zacks, the recently concluded $8.5 billion stock-for-stock Warner Chilcott acquisition has increased the size and presence of the company significantly. The deal has resulted in the creation of a leading global specialty pharmaceutical company with combined annual revenues of about $11 billion. The joint entity holds the third position in the U.S. specialty pharmaceutical market with annual revenues of about $3 billion. The deal will help in increasing the EPS significantly in 2014, and the cash flow will improve. This will help the company in reducing its debt. There are also expectations of post-tax operational synergies and related cost reductions and tax savings of more than $400 million.
Perrigo has done well over the long term, though the last one year has been relatively less robust. It is still up by 10% over 52 weeks, and is hovering around its 52 week high. A recent SA article had mentioned that consistent insider selling over the last few months and the relatively high valuations could be reasons for being negative on the stock. The author had pointed out that there have been no insider purchases since a long time and the price to sales is relatively high. However, considering the low level of insider ownership in the company, and the volume of the insider sales, this alone cannot be a reason for being negative about the stock. The selling could be due to various other factors, and cannot necessarily be linked to possible negative expectations in the minds of the management. Selling is not always indicative of poor outlook, though insider buying is usually associated with positive expectations. Recently OPKO Health (OPK) and Biozone Pharmaceuticals (BZNE) have seen positive momentum based on purchases / support by insiders. Regarding the valuations, Perrigo management expects 13-18% growth in EPS in fiscal 2014. The management expects standalone fiscal 2014 adjusted EPS of $6.35 to $6.60 compared to $5.61 for 2013. The acquisition of Elan is also expected to be increasingly accretive for EPS. It is expected to add 10 cents per share in fiscal 2014 and 70 to 80 cents per share in fiscal 2015. The forward P/E is 16, which is not bad for a company which has delivered consistent growth in top and bottom-line over the past few years. The revenues have grown from $2.26 billion in fiscal 2010 to $3.53 billion in fiscal 2013. The net profit has nearly doubled from $224 million to $442 million during the same period.
The stock hasn't moved much and seems to be waiting for triggers. The fall after the earnings has stopped, but the volumes are too low to indicate any reversal. The important supports have held so far, and news flow will determine the movement of the stock. The company has made news for its partnership with Costco for selling its products. Recently the Combat Protein Powder was shipped to Costco stores, and it is likely to be shipped to international locations by the end of next year. The partnership with Costco expands the company's reach beyond specialty health, nutrition and sports stores and online retailers to mass consumer channels. The news about collaboration with Arnold, and the focus on the FitMiss range has also increased hopes about good growth in the topline. In addition to improving the revenues, such collaborations are likely to strengthen of the brand presence of MusclePharm as a company. However, the bottom-line is still negative, and it is important that the company achieves profitability soon. The company has reduced costs, and its recent investment in Biozone Pharmaceuticals (BZNE) is expected to streamline manufacturing operations for its product line. Further, Biozone's QuSome technology can help in lower cost of manufacturing, leading to lower costs. Importantly, the technology improves delivery of nutrients as well as pharmaceuticals to the body, increasing the efficacy at lower doses / amounts. Lower costs can help MusclePharm compete on cost for specific products in specific markets by giving it more room to implement new marketing strategies. Investment and presence of Dr. Phillip Frost in both these companies indicates that there are possible synergies between the two companies. Otherwise, investment of $2 million would not have made sense to Frost. The results of the investment may take time to reflect in the numbers, but the next couple of quarters will indicate the progress being made by the company towards achieving profitability.
The upward momentum has increased even further. The volumes over the last few days have been extremely high. Nearly 29 million shares have been traded in the last two days, and some consider this part of a short squeeze. There were 35 million shares (22% of the float) short on September 30, and the price on that date was $8.81. So the stock has moved nearly 40% over the last couple of weeks. The announcement about investment in Zebra Biologics has increased the excitement, and even Dr. Frost has continued to acquire shares consistently, though in small quantities. As mentioned in an article on SA, people are skeptical about whether the announcement of Zebra Biologics actually played a significant role in the move. The undisclosed investment appears to be speculative as Zebra is into development of next generation antibodies. It may take years before this technology can be commercialized to contribute meaningfully to OPKO's top or bottom line. So ultimately, this move can be traced to the power of Dr. Frost. Frost now controls more than 152 million shares of OPKO Health out of the outstanding 403.6 million shares (37.7%). His investment in Biozone Pharmaceuticals (BZNE), which owns the high potential drug delivery technology QuSomes, and the agreement between OPKO and Biozone, has made a lot of news. The acquisition of PROLOR Biotech, and several other investments over the last couple of years have helped the stock post remarkable gains. Again, many of these investments may take time to help improve the financial position of the company. The valuations are surely exceptionally high. The price to sales is nearly 50, and the price to book is also extremely high. For those who want to invest on valuations, it is not so convincing. However, if the squeeze gets tighter, then it is possible for the stock to go even higher.