My Rally Cap is On!

The turkey hangover can last several hours or even up to a few days. You have overindulged and need to digest for a while before you’ll even consider stepping back up to the buffet. But, if you’re anything like me, when you do go back for more your stomach has expanded and appetite has increased.

Investors seemed to suffer a Thanksgiving rally hangover early this past week. It took some time to digest the war in Gaza, slowing inflation and an increasing risk appetite. It also took rolling the calendar from November to December. In the end, however, once the appetite returned on Friday, markets took off.

Is this the beginning of an extended rally in micro-caps? I’ve been saying that the XBI, a great proxy for beaten up microcaps in my opinion, was breaking its downtrend and could rally into year end. Thus, I’ll stick with that call. The sun is going to shine on stocks that haven’t seen the light of day in a long time. I think a risk-on rally is starting.

Where to invest? At the risk of getting repetitive, I’m investing in companies with strong balance sheets and upcoming catalysts. My top names, which were discussed in more depth last week (The Outlook for December), remain Anixa (ANIX), Atomera (ATOM), enVVeno (NVNO) and INmune Bio (INMB).

Which doesn’t mean there’s not opportunity elsewhere. A rising tide lifts all ships and the stocks that are the most beaten down can bounce the furthest. This past week saw TFF Pharma (TFFP) rally 22%. It’s now three weeks and 75%(!!!) from its lows. And, still dirt cheap.

Two new board members were announced this week by TFF. There’s a saying that insiders sell for many reasons but only buy for one. Well, the same with (high quality) board members. They can leave a board for many reasons but will only join for one; they like the prospects of the company.

I believe the two new board members are a nice endorsement of a beaten up company. Data is coming on both phase 2 programs later this month and it’s open label. I’m quite sure the new board members had a peek under the covers before jumping in the bed. Despite needing money, TFF is poised for a continued rally from here.

Also bouncing nicely this past week is another biotech with great data and a bad balance sheet. IN8bio (INAB) rallied 16% and is poised to continue this run into data at ASH.

What are we looking for? If they have data on seven patients lasting more than a year with CR (complete remission), that would be about the most meaningful thing we could see. There’s a financing in their future, which caps near term upside, but like many biotechs it’s so cheap relative to their potential that dilution could be easily tolerated by investors.

Friday was the worst day for hedge funds as a group since 2021. As a group, they have limited exposure to the riskier names and, in many cases, are short them. More fuel for the fire as we head into year-end.

Lest you think that the rally in micros doesn’t have a lot of room to run, check out this list of gains needed to reach the 52 week high for each of our companies. While I understand some have stubbed their toes and/or diluted investors, there’s still a lot of room to run…

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    • I can only say that I drank from the same punch bowl from which Glenn was pouring. When management lies, it’s very tough to make money as an investor.

  1. If you believe in the $XBI rally into December then you may want to consider $LABU. 3x biotech etf.

    And coming from a kid that grew up on the south shore of Long Island and huge Met fan in the 70s and (yes finally!) 80s… Thank you Bill Buckner

    • Buying fundamental companies that will eventually win is investing. Buying a leveraged ETF is gambling. Eventually 3X ETFs all trend to zero. I’d rather own individual stocks so that I can be wrong on my timing and still come out okay in the end.

  2. Dan.i have had my rally cap on for some time. Anixia spvnf, inab. Inmb As I sit in a bar in downtown indy. Waiting for my beloved iowa hawkeyes to take on Michigan.a incredible task no doubt. I feel like some of these stocks are a up hill climb. Anix to announce there phase one this week. Although we know the results will be amazing. I dove in deep to spvnf. Is 200,000 to much to own. I believe this company is doing what it needs to do. As I said up hill but not insurmountable. Wishing everyone a happy prosperous holiday season. 😊

    • Uphill but solid fundamentals will win as long as we don’t get diluted to death. Anixa and Spectra7 are two examples of companies that are trying to dilute as little as possible and are seeing committed management teams buying more stock.

  3. I agree on the board hires. That is very good news – hope to see them buy-in on the next offering. I like the reference to partnership opportunities in this sentence regarding Cathy’s input on the clinical programs:

    “As TFF Pharmaceuticals continues to advance its two clinical programs, Cathy’s presence on our Board will help shape our decision-making, both with respect to product development, strategic and operational planning, and potential partnership opportunities”

  4. Dan Dan Dan.. OMG you put a pic up of the 86 Mets.. One of the most bad ass teams in the history of the game.. fights.. brawls.. there will never ever be another team like the Mets of that year.. it was a year of baseball ill never forget.. game 6 against the Astros and the comeback in game 6 against the Red Sox.. I made frequent trips to Shea that year and went to the parade.. just crazy fun

    • Ed, I’m a lifelong Red Sox fan. That comeback shattered me for many years. It also wa the greatest comeback in the history of sports.

      • I respectfully disagree. The Cardinals comeback in Game 6 of the 2011 Series against the Rangers was THE greatest comeback ever! It was the David Freese game. Rangers were one strike away from the championship TWICE! And had 2 run leads in the 9th and 10th innings which they blew. I never get tired of watching the replay of those last 2 innings.


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