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Post by mnholdem on Aug 8, 2014 10:20:29 GMT -5
BATTLEFIELD LINES
Mannkind has often been called a battlefield stock, because both camps of investors have firmly entrenched themselves in their positions regarding the likely fate of Mannkind Corporation.
One camp, represented by a massive 30% short interest, predicts that MNKD stock will fall, and fall badly. One shouldn’t assume that this camp wants the company to fail, but simply that Mannkind will be unable to deliver with so many obstacles in their path. This camp believes that global pharmaceutical giants will not take the risk of repeating Pfizer’s costly $2 billion Exubera blunder. A second argument is that market penetration will be small because physicians will remember Exubera and will not give Afrezza a second look. This side of the battleline believes the odds favor Afrezza not meeting the expectations usually associated with a blockbuster.
The other camp predicts that MNKD stock will rise, and could do so in spectacular fashion. Their most common argument is that global pharmaceuticals recognize that the Technosphere particle that delivers Afrezza represents a breakthrough in pulmonary drug delivery and, unlike Exubera, delivers rapid-acting mealtime insulin with virtually 100% absorption and no lung residue. They believe that physicians will also recognize the breakthrough, and the superior kinetics behind Afrezza, which mimics a healthy pancreas. This camp is entrenched in the belief that patient-driven demand for a needle-free solution for mealtime control of blood glucose levels will be much greater than the other camp’s predictions.
What will happen to the price of MNKD shares following the August 11 conference call? How will the market react? Stock price predictions range from as low as $1 to as high as $100/share. Many from both sides have become emotionally attached at the prospect of Mannkind making them wealthy.
I think emotional investors on both sides are likely to be disappointed.
At this point, I should make the disclaimer that I am in the long camp. I’ve done my research and expect Afrezza will become a blockbuster. I also work hard to stay unattached in order to see through the fog of emotions that can lead us into making bad investment decisions. That’s the hard part, especially when one realizes this drug’s potential for the treatment of diabetics.
There was a friendly jab posted on this board the other day that disturbed me a little. “… apologies, I've helped turn mannmade to the dark side! It's a sad thing to see such a metamorphosis, from an optimist to a realist. Let's hope we all stop that slide at "realist."
I realize the poster was gently ribbing a usually optimistic member’s toned-down post, but good investors, I think, train themselves to be realistic.
What if a buyout of Afrezza is announced? Well, a buyout is a buyout and share price becomes a done deal. But how will the market likely react to news of partnership(s)?
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Post by mnholdem on Aug 8, 2014 10:21:25 GMT -5
MARKET DETERMINES PRICE BASED ON NEAR-TERM VALUATION
What seldom gets debated on discussion boards is that share price is primarily driven by the market’s evaluation of the near-term valuation of a company. To be sure, good and bad news often cause temporary price fluctuations. Yet history shows us that share prices nearly always return to a level that supports what the market considers to be the present or near-term value of a company.
Since FDA approved Afrezza, certainly there has been some stock manipulation at play. But prudent investors should also be willing to consider that the market is primarily returning pps to what it thinks is the current valuation of the company. As of yesterday, August 7, 2014 Mannkind remains a company that has great potential, but in the near-term has substantial debt, one approved drug and an approved drug delivery system.
Any partnership announcement at or before the August 11 conference could change all that. What will likely to happen to the share price of this battleground stock?
Obviously, it will come down to the specifics of the deal(s)but emotionally-charged investors should be prepared to accept that MNKD shares will likely end up where the market determines to be the new financial situation of Mannkind Corporation in the NEAR term.
Upfront payments, that replace company debt with a substantial cash in the bank, will certainly increase Mannkind’s valuation. The announcement of manufacturing, sales & distribution partnership(s) will also increase valuation, but how much will depend upon the size and scope of the launch.
Announcement of plans for future distribution of Afrezza in Europe, China and India has limited value AT THIS TIME and may likely be considered by the market to be less important to short-term share price than many emotionally-charged investors want and expect.
The breakthrough Technosphere delivery system has great potential but, with the exception of Afrezza, Technosphere also has limited short-term value.
To evaluate Mannkind Corporation, the market is likely to care only about near-term developments and will ask two questions:
A. What is your timetable for launch of Afrezza in the North American market?
B. What are your near-term sales projections in the North American market?
Price targets are usually set for one year, so investors should not be disappointed if the market chooses to ignore global sales projection when determining MNKD’s worth. Off shore revenues are simply too far away. Remember, the market usually considers what the value of a company will be in the near term.
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Post by mnholdem on Aug 8, 2014 10:31:26 GMT -5
CONCLUSION
I have made many friends on discussion boards during the past year, and many of you know that I am 100% behind the success of Afrezza and Mannkind Corporation. I consider Alfred E Mann to be a brilliant tactician and philanthropist, who sincerely cares about health care.
Following the imminent announcements, I’m convinced that short interests are about to be very disappointed and will lose a great deal of money.
I am equally convinced that many emotionally-charged longs will also be disappointed because they have built up unrealistic expectations of immediate 500%-1000% gains.
In the end, though, it really doesn’t matter what I think. The market will decide... and I don't think I am going to be disappointed.
Good fortune all!
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Post by rogerrodger on Aug 8, 2014 10:33:27 GMT -5
An Excellent post & observation. Thanks
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Post by a1nb2p on Aug 8, 2014 10:37:04 GMT -5
Very eloquent, and well put. Thank you.
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Post by mannmade on Aug 8, 2014 10:39:29 GMT -5
For what it's worth... We and I know Baba was joking... mostly...  I have always considered myself a realist regarding Mannkind and Afrezza, with the end result, that is, Afrezza will work. Just think I got the timing wrong on a few occasions not realizing the power of the shorts/bears influence on this stock... I am still very high on Mannkind but perhaps time and subsequent events over my five years have tempered my expectations in terms of timing... I have seen this stock hit a $1.57 since I purchased my initial shares at $3.81. So what Baba was referring to was a slight readjustment of reality on my end as I began to see the trading patterns after the successful completion of several binary events. I am on record as having said I believe in the science so my support has not been irrational, nor have my expectations changed I believe, except perhaps in the timing of reaching certain expectations on share price... As I have previously stated... I do not think it will be a buy-out (far a variety of reasons although it is possible a B/O may be the result) and I still believe this is a 3 to 5 year hold for me right now and will accumulate when it makes sense and I can... Until I hear of a Black Swan event or some such other information I will continue to believe at certain price levels such as the current situation, Mannkind is quite a bargain to investors and it will be a g-d send to diabetics... GLTA! |
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Post by mannmade on Aug 8, 2014 10:39:34 GMT -5
For what it's worth... We and I know Baba was joking... mostly... I have always considered myself a realist regarding Mannkind and Afrezza, with the end result, that is, Afrezza will work. Just think I got the timing wrong on a few occasions not realizing the power of the shorts/bears influence on this stock... I am still very high on Mannkind but perhaps time and subsequent events over my five years have tempered my expectations in terms of timing... I have seen this stock hit a $1.57 since I purchased my initial shares at $3.81. So what Baba was referring to was a slight readjustment of reality on my end as I began to see the trading patterns after the successful completion of several binary events. I am on record as having said I believe in the science so my support has not been irrational, nor have my expectations changed I believe, except perhaps in the timing of reaching certain expectations on share price... As I have previously stated... I do not think it will be a buy-out (far a variety of reasons although it is possible a B/O may be the result) and I still believe this is a 3 to 5 year hold for me right now and will accumulate when it makes sense and I can... Until I hear of a Black Swan event or some such other information I will continue to believe at certain price levels such as the current situation, Mannkind is quite a bargain to investors and it will be a g-d send to diabetics... GLTA! |
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Post by dreamboatcruise on Aug 8, 2014 11:29:15 GMT -5
mnholdem,
I think you miss a sizable camp that is long but not harboring belief of huge short term jump (500 - 1000%). However, after approval we've had two analysts put targets of $15 and $16 on the stock. Even getting to $15 would be a good run from here and an amazing one from the year's low. I don't claim to have much ability to predict short term moves of MNKD stock price. Right now I'm thinking an announcement of a partner, unless containing some amazing and unexepcted financial terms such as equity investment in MNKD at high pps, will put us somewhere in the $11 - $20 range.
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Post by fofos2000 on Aug 8, 2014 11:43:23 GMT -5
...good grasp of reality, well put and well done
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Post by mannmade on Aug 8, 2014 11:48:34 GMT -5
dreamboatcruise, I agree with what you say above but am thinking $13 to $15 pps target and that depends on the announced partnership terms. Also I could see it dipping below $13 to $15 pps in the interim, until we get real revenue numbers, as the shorts/bears will find a way to tear apart the partnership deal and then move on to the adoption/revenue issue and we will play the same game at a bit higher level of bottom than where it currently is. Think we are stuck with the shorts until revenue... And if growth is slow at first then it may take a year or so of revenue growth to shake loose of them for good...
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Post by david on Aug 8, 2014 12:06:35 GMT -5
CONCLUSION
I have made many friends on discussion boards during the past year, and many of you know that I am 100% behind the success of Afrezza and Mannkind Corporation. I consider Alfred E Mann to be a brilliant tactician and philanthropist, who sincerely cares about health care.
Following the imminent announcements, I’m convinced that short interests are about to be very disappointed and will lose a great deal of money.
I am equally convinced that many emotionally-charged longs will also be disappointed because they have built up unrealistic expectations of immediate 500%-1000% gains.
In the end, though, it really doesn’t matter what I think. The market will decide... and I don't think I am going to be disappointed.
Good fortune all!
I concure. |
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Post by savzak on Aug 8, 2014 12:11:48 GMT -5
Dreamboatcruise and mannmade,
I think your $15ish price targets are very reasonable. I don't disagree but would reserve judgment until I see the terms of the deal. However the confidence of the shorts at $8 does make me wonder. I imagine that they know as well as we do that there will be a deal announced. All of the "MannKind is going it alone" stuff on the other board is just bashing blather. Everyone knows there will be a deal. And everyone knows it will be soon. That's why Monday is ultimately not that important in my opinion. Oh sure, it might provide a take down opportunity for the short side, given the apparent high level of concern over the issue. But since we all know a deal will be announced within the next several days or very few weeks, what difference does it make to even a medium term investor?
So back to the point...are the shorts so confident at $8 just because they believe there will be no announcement by Monday and that they'll therefor be able to take the stock down next week? Or are they comfortable at $8 because they don't think the deal will be good enough to motivate the stock price much higher or for very long after it is announced. I hope it is the first, but if it's the second, I sure hope they're wrong.
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Post by mannmade on Aug 8, 2014 12:37:07 GMT -5
Dreamboatcruise and mannmade,
I think your $15ish price targets are very reasonable. I don't disagree but would reserve judgment until I see the terms of the deal. However the confidence of the shorts at $8 does make me wonder. I imagine that they know as well as we do that there will be a deal announced. All of the "MannKind is going it alone" stuff on the other board is just bashing blather. Everyone knows there will be a deal. And everyone knows it will be soon. That's why Monday is ultimately not that important in my opinion. Oh sure, it might provide a take down opportunity for the short side, given the apparent high level of concern over the issue. But since we all know a deal will be announced within the next several days or very few weeks, what difference does it make to even a medium term investor?
So back to the point...are the shorts so confident at $8 just because they believe there will be no announcement by Monday and that they'll therefor be able to take the stock down next week? Or are they comfortable at $8 because they don't think the deal will be good enough to motivate the stock price much higher or for very long after it is announced. I hope it is the first, but if it's the second, I sure hope they're wrong.
Savzak, I concur with you... As for the shorts reasoning, I can't offer anything but a guess as they do not play with transparency as the rest of us must do... I would say it is a combination of calculated algorithms, some pre-mediated collusion btwn traders from hedge funds, and the knowledge that the SEC does not seem to enforce rules against naked shorting... And some very good strategy moves by covering their short positions with calls/puts on the other side... If I was a short fund manager/trader and I knew i was going to dump 500,000 shares on the market to cause a sell off... I would then buy back at a lesser price make a bit of a profit and play this game all the way until revenues... Also real current short data is hard to come by. If we knew the following ti would be much easier to deal with in developing one's own investment strategy: 1.) Current number of short shares, (not prior two weeks) 2.) Naked shorting numbers 3.) Prices at which shares have been shorted. (Hard to know how many shorts have covered and simply re-bought at hire prices) So I am just long term hold as I believe the science will prevail... |
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Post by joeypotsandpans on Aug 8, 2014 12:46:41 GMT -5
Dreamboatcruise and mannmade,
I think your $15ish price targets are very reasonable. I don't disagree but would reserve judgment until I see the terms of the deal. However the confidence of the shorts at $8 does make me wonder. I imagine that they know as well as we do that there will be a deal announced. All of the "MannKind is going it alone" stuff on the other board is just bashing blather. Everyone knows there will be a deal. And everyone knows it will be soon. That's why Monday is ultimately not that important in my opinion. Oh sure, it might provide a take down opportunity for the short side, given the apparent high level of concern over the issue. But since we all know a deal will be announced within the next several days or very few weeks, what difference does it make to even a medium term investor?
So back to the point...are the shorts so confident at $8 just because they believe there will be no announcement by Monday and that they'll therefor be able to take the stock down next week? Or are they comfortable at $8 because they don't think the deal will be good enough to motivate the stock price much higher or for very long after it is announced. I hope it is the first, but if it's the second, I sure hope they're wrong.
Or....option 3, are the shorts just being ignorantly complacent...or option 4, with little to no shares available to short, they are boxed in a corner on a stock that is now getting extremely oversold and washed out at a decent support level and is ripe for a nice relief rally with all the nervous longs that have surfaced in the last couple of days....personally I vote for #4, we'll see how it unfolds and I would and have for reasons in my TA thread put it closer to 15.50-16.50 with a strong cc. Strong doesn't necessarily mean a name being announced but a very assertive and confident statement whereby you can read between the lines without much ambiguity. I would expect any sell off if there is one to be very short lived (similar to the crazy drop at the time of the approval announcement) and met by strong buying for a quick reversal to eventually break through the 8.42 near term resistance on its way back to the 50 day ma and beyond.... looking forward to next week  |
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Post by dreamboatcruise on Aug 8, 2014 13:47:38 GMT -5
I agree with some of the comments by Joey and Mannmade... there could be a lot of different scenarios with the shorts. There are many ways traders can profit from volatility, so don't assume all that short interest is simply people with strong convictions that Afrezza will fail or seriously disappoint. Imagine for instance someone having started shorting a lot when we got close to $11, knowing there was an opportunity to push it down over the past weeks. Once they saw we had support around $8, they might be buying call options to help unwind the short position without triggering short squeeze themselves. If they ended up with a net long position then they may make a killing on the way up. It seems drawing conclusions related to the underlying business and drug from large short interest is likely misguided.
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I have always considered myself a realist regarding Mannkind and Afrezza, with the end result, that is, Afrezza will work. Just think I got the timing wrong on a few occasions not realizing the power of the shorts/bears influence on this stock... I am still very high on Mannkind but perhaps time and subsequent events over my five years have tempered my expectations in terms of timing... I have seen this stock hit a $1.57 since I purchased my initial shares at $3.81.
