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://