When we had kids I was super excited to watch classic movies with them once they were old enough. Top on my list was Rocky. An all-time great, I imagined my kids humming the theme song as they climbed their own paths to success.
Turns out, the movie was incredibly boring. They left the room about 20 minutes in and I didn’t last much longer.
But, is it a snooze-fest, or are we as a culture just so used to fast-paced action that even a great drama like Rocky can’t hold our attention? I believe it’s the latter. And, I further believe that this addiction to constant activity permeates far beyond entertainment and is driving much of the marginal activity in the stock market, creating massive volatility in its wake.
The truth is, the vast majority of shares in any given company are held by long-term investors who are not in the market on any given day, week or even month. Yet, the turnover in many of these companies will exceed the total shares outstanding over the course of a short amount of time.
It’s become a day-trader, algorithm driven market. Emotions rule the day and dictate activity. Markets open down on fear, reverse on fear of missing out, then reverse again. Never before have we seen this type of volatility. And, it’s not because investors en masse are active, it’s the marginal business of traders and black boxes that are creating these movements.
TFF Pharma (TFFP) is a great example of how the short-term thinking of investors can drive a stock’s performance. Over the last few weeks of 2021, TFFP was one of the better performers in my universe. The company had guided towards signed partnerships and investors piled in, thinking they were coming. I certainly believed they were imminent.
Four weeks later, TFF has been the worst stock I cover for 2022, down 40%. Has anything bad happened? Not at all. The internal programs all continue to do great and management remains as confident as ever that external deals will be coming.
However, investors are now jumping ship, turning tail on the stock as their attention wanders to more immediate trades. Will TFF announce a deal next week has become the overriding question about the stock; forget that fact that a meaningful partnership will bring more cash to TFF over a couple years than its current market cap. Multiple deals, which appear to be coming, would bring multiples of its current value.
I make very few trades in my account. I pick my stocks for the long-term and, as long as they are executing, tend to let them ride. However, if I’m a trader, I would be looking at TFF through a different lens than it appears everyone else is using.
Down 40% on delays? This is a gift horse. TFF is the same company it was in December and they still have internal programs that will be worth, in my opinion, multiples of the current share price. VORI and TAC, in particular, are entering phase 2 and will be partnered off by the end of the year. At this point, external partnerships are simply the booster rockets for a company that has more than enough going on internally to justify owning the stock.
Investors need to take a step back from the market at times and not let short term volatility affect their long-term strategy. If you’re a day trader, you might not want to own TFFP. If you have a timeline longer than a week, the current weakness in the stock is a great buying opportunity.
Yeah, sure, CEO Glenn Mattes has been knocked down and bloodied from predicting deals closing last year, which didn’t happen. But, it doesn’t mean they aren’t going to happen. When they do, people who sold in the hole are going to be kicking themselves.
Where does the market go from here? We saw a reversal this week with the S&P changing course from big selling to a Friday rally. Does the first up week of 2022 signal a change?
My answer is, “it depends”. The global macro environment has dictated trading so far in 2022 with higher rates being the dominant theme, followed by concerns over the Ukraine and tensions with China, etc. My thinking is that the fear of higher rates is fully priced into the market at this time.
The rhetoric around rates is changing at the Fed. They don’t like to see massive selloffs in the market as they can lead to recessions on their own. Expect to hear concerns over the economy become louder and, therefore, the pace and number of rate increases start to sound less ominous.
But, this doesn’t mean we are out of the woods. Inflation is still an issue as are valuations for the larger tech companies.
The result of all this is, I believe, major relief for smaller caps and longer-dated issues like biotech and growth stocks. I believe the worst is over for my group in particular, but I’m not a raging bull. On the contrary, I continue to believe there will be weakness in the overall market and 2022 is likely to be a down year when it’s over.
I do feel that the broad brush that has decimated my universe is gone, however, and think that the table has been set for a period in which companies with strong balance sheets and demonstrable value added catalysts will be able to see their share prices go higher. I guess you could say that, for the TW universe, I firmly believe the worst is over.
There was a very good writeup on Atomera (ATOM) in the EE Times this past week. The article, Quantum-Engineered Material Boosts Transistor Performance, gives a great technical overview of the benefits of MST. While we wait for market adoption, it’s certainly nice to see a highly technical blog discussing the compelling reasons why that adoption is likely to occur. Eventually our patience and FOMO will be rewarded.
ParkerVision (PRKR) was in the judge’s chambers this last week discussing motions for their upcoming trial with Qualcomm (QCOM). This trial, as I’m sure you’re aware if you’ve read my blog for more than 3 months, has been delayed forever. The legal system could be very slow in this country prior to Covid; it’s worse than ever now.
But there’s now a light at the end of the tunnel. The judge has committed to ruling on the motions prior to the start of his next jury trial, which is in March. So we can expect to hear back from him sometime in the next 7 weeks or so.
When Parker does hear back from the judge, the information relayed should include a trial date. The current thinking is that it’s a late Q2 event; probably in June. Assuming no more pandemics that shut down the legal system, I think the announced date will actually see a trial. Jeff Parker’s eternal patience will have paid off.
I continue to believe that, once a date is set, you will see PRKR rally into the event. They won the last time and the setup this time around, in terms of evidence unearthed in discovery, is overwhelmingly positive. Trials are inherently uncertain but one would think that Parker stands more than a sporting chance of victory.
We have, for premium subscribers, a call with Jeff Parker on Tuesday morning at 8:30am EST. On that call you can get a better sense of the quality and quantity of the evidence, and make your own decision about the validity of ParkerVision’s case. I’ve made mine already…
Also for premium investors, we put out an initial report on Spectra7 (SPVNF) this past week. That note is available here, Spectra7: Hyper-Growth in Hyper-Scale Data Centers.
In case you missed it, the top three insiders at INmune Bio (INMB) canceled their 10b5-1 sell programs. Last November, the stock had a wall at $20 as, every time it hit there, the insiders sold and filed a Form 4. Not a ton of shares, but not a good look. That perceptual overhang is gone.
Even better would be insider buying. My guess is that, if the stock is still around these levels in 3 months, you’ll see that. Insiders can’t buy until 6 months from their last sale date of November 3rd, so May 3rd is the first chance they’ll have. I know they are not happy with the share price and, at the same time, I’m 100% convinced they believe it’s crazy cheap.
Since their last sales, the INKmune program has been greatly de-risked. All the patients treated are showing great results and, importantly, consistency across the patients in terms of how the drug is affecting them. Outsiders may consider this to be too early to judge, but, having spoken to Dr. Lowdell, he seems to be quite positive that the drug works.
We should be seeing some results from INKmune very soon. And, if the stock continues to languish afterwards, we’ll possibly be seeing some material insider buying.
In recent newsletters, I’ve recommended shorting Cassava (SAVA) and Tesla (TSLA). Both are down about 20% from then and I’d still be short both here.TW Research's Disclaimers & Disclosures: TW Research may have been compensated for writing this article. For a full list of disclaimers and disclosures, please visit http://
Love your optimism for TFF given the bloodbath. It will certainly be a story worth telling when they come through all this. While most of this pressure on the stock may be external, believing in Glenn and team is difficult if their visibility was so poor for all of 2021 that they couldn’t deliver on at least one of the “at least 2” deals he predicted. That’s problematic and does raise serious questions as to whether his optimism is supported by the known intentions of partners to do deals or if he was just hopeful given they have so many MTAs. Is TFF simply a science experiment for partners or do they really see the potential ROI and put money down? And when they do, will partners commit to serious upfronts or build in contingencies that could drag revenue out for several more quarters or years. I don’t want to see us in a situation (Glenn’s worst case scenario) where they have to raise this year. Seems we get basic news about trials and enrollments but, still waiting on news of variants from Augmenta, the supposed new DARPA deal, and the long awaited Plus Products deal. And is Union really committed given they have their own trials going for Niclosamide as a inhaled prophylaxis? I know it’s different than TFF’s process but it is just an option for them even if it works. For all the shots on goal and progress they are making in clinical trials, uncertainty is starting to outweigh the opportunities. Maybe that is just a touch of pessimism creeping in with the stock price but they have shared far too much optimism with the street given the results, and that has consequences. Thanks again for your insight and sharing your opinion. Very helpful as usual.
Thank you for sharing your thoughts, pfalker. You’re spot on with your observations and summarizing why the stock is trading at the current level
Peter, I do agree with you. The company has to restore credibility in the market and there’s only one way to do that; execute on the promised partnerships. Until that happens, valuation will remain low and investors will continue abandoning ship. Once they do execute, from these levels you’re looking at tremendous return potential.
I agree Dan and I guess I’m stating the obvious above. Also, I misspoke. I think it’s a USAMRIID deal that was on the commander’s desk in Q3 conf call. It will be very interesting to see how this stock reacts when they finally announce substantive news. Not sure I’ll believe it when I see it!
Dan, I greatly value your news letters.
I believe it is market conditions that encourage frequent monitoring of stocks and trading around the volatility. This certainly seems to favor the nimble trader. Especially with investors who own individual small and microcap stocks. Many have seen their protective stops taken out over and over, even when set 30% to 50% below purchase price. Most late-stage development companies may be years away from profitability. Meanwhile, continued dilutive capital raises, balance sheets bleeding red, and sometimes seeing insiders with hefty stock awards, may add to lack of confidence in the company. It begins to seem logical to sell the pops (pumps) and buy the dips, rinse, and repeat.
In many cases, even if a company begins to achieve positive cash flow, it may not quickly reach the price point originally bought. Giving the nimble trader a potential advantage. Say I now buy ATOM in the $12 range, for example. Suddenly we get news of a 2nd JDA, or actual revenue from the first. The stock then pops 100% to the $20s. I’s still have time to get in at a lower price point than someone who bought in the $30 or $40 dollar range. I could give the same example for many of the late stage development companies.
As a senior investor, I don’t feel I have the luxury of waiting decades for a return on my investment. I can see an impatient young investor not having the patience to wait the same.
Updated my Atomera info. As a former engineer for 35 years the EE Times was one magazine I read. Good article by industry professional.
Atomera(ATOM): Next Generation Fabs Royalty Potential for Atomera’s MST Technology are Huge