$ZFGN: Shades of Fen Phen All Over Again

Shares of ZFGN are down today on news that a patient died in one of their obesity drug trials. Many of you are young punks, attracted to “The Fly” because he curses and spits at people, and are not familiar with stocked market history. Back when I was a wee lad, in my 20’s, getting started in the business, Fen Phen was all the rage. It was a miracle drug that made fat people lose weight. I remember a guy in the boardroom who was long huge amounts of a biotech stock that had developed the drug and partnered with American Home Products, who was later bought out by Wyeth, and lost his fucking shirt on it, once it was revealed the the miracle drug murdered people. I forget the name of the little biotech stock. Maybe Neogen? I forget.

Here is an excerpt from a 1999 NY Times article. Total damages, eventually, exceeded $14 billion.

The American Home Products Corporation agreed yesterday to pay $3.75 billion in total to thousands of people who contend they were injured by taking the popular diet pill combination fen-phen.

Under the settlement — one of the largest ever in a product liability case — people who used one of the diet drugs for 60 days or less would be eligible for $30 to $60 prescription refunds, while those who have a heart valve injury could receive as much as $1.5 million.

While executives and industry analysts hailed the agreement — which came after months of negotiations and whose terms were widely expected — as a way for the company to put an embarrassing problem behind it, yesterday’s agreement does not shield American Home Products from all fen-phen liabilities.

Some six million people took the diet drugs Pondimin, American Home Products’ brand name for fenfluramine, the ”fen” in fen-phen, and Redux, a similar drug.

The drugs were hailed earlier in the decade as miracle pills for obesity, as an alternative to pure diet and exercise. Diet centers actively promoted the pills to the obese and even to people who wanted to lose a few pounds. In 1996, doctors wrote 18 million prescriptions for the two drugs.

But in September 1997, the company removed the drugs from the market at the request of the Food and Drug Administration after studies linked them to heart valve damage.

I am unsure about the safety of ZFGN’s drug. It’s fun to talk about fat people getting skinny through a pill. Truth is, the technology is hard. If you fat fuckers want to lose weight: start heading to the gym and eating less calories. It really is that simple.

As for the stock, ZFGN: I’d avoid like it was Lehman circa 2008. Where there is smoke, there is fire. This story isn’t over yet.

Stock market history class is now over. Fuck off and go away now.

Professor Fly

This was a stellar performer. With a name like that, I suppose
it’s only right and just for the stock to collapse in such an unceremonious fashion.

The auditor, Matt Erhart, said in the suit that he was fired after revealing what he believed to be wrongdoing at the bank to federal regulators and management at Bank of Internet. The complaint, filed in federal court in the Southern District of California, said that Bank of Internet violated federal laws that seek to protect whistle-blowers.

“As a former federal prosecutor and long time employment lawyer, I find the bank’s conduct as alleged here to be among the most egregious I have seen from a publicly traded company,” Carol Gillam, Mr. Erhart’s lawyer, said in a statement.

In an interview on Tuesday, Gregory Garrabrants, Bank of Internet’s chief executive, said the allegations were groundless. “The factual inaccuracies here are numerous and substantial,” he said. “Mr. Erhart has made all of these allegations in great detail to federal regulators, who have reviewed them in depth and have found them to be wholly without merit.”

All things internet, on a long enough timeline, die.

But look at the revenues and earnings ramp over the years. Truly spectacular, almost too good to be true, no?

Shares are being annihilated today. Nothing is sacred and everything is a facade. Buying opp? I have no fucking idea anymore.

If I told you nothing else mattered but the fate of the US dollar, would you believe me? Italian and French markets are leading the world this year, not because their economies are awesome, but because the euro had been going lower. Don’t look now, however, the dollar is now shitting the bed and this could be the beginning of some wonderful developments.

UUP vs SPY

For one, it allevites the pressure on our exports, which has been cited as a major issue of earnings loss from our fortune 500 companies, over and over again.

Also, it means oil and dollar denominated commodities will catch a bid. Look at how well gold and miners have been trading. You didn’t think it was because the financial system was about to collapse, did you?

Believe it or not, we need higher oil prices. With higher oil prices, over $100 billion in distressed oil and gas debt might get some financing. Otherwise, dark ominous clouds will enshroud the sector and high paying jobs will be lost.

Lads, I am trying to remain optimistic here. It’s easy to get glum and down and out, cast the world aside and sink into a hole of nothingness, begin to short stocks. But I know that’s a transient bet, one that, over time, will prove to be clownish and a bane to my checking account.

The currency wars are real and right now the dollar is winning by losing.

NOTE: We are running free trials for Exodus for the rest of the week. Email [email protected] for access

Am I supposed to feel good because the market isn’t getting its brains kicked out, or because Europe is trading better? This is abuse, making one feel as if they’re being treated fairly because one isn’t being kicked down a flight of stairs lined with mustard.

I can’t control the market. But I can do a few things.

1. Email [email protected] for FREE, unfettered, access to Exodus

2. Don’t forget to ask about the iBC conference, which is happening in less than 10 days. It’s going to be fantastic and we’re gonna have a great time.

3. All of the above.

All you need to know right now is the dollar is going lower vs the euro. Everything else is noise. A lower dollar helps us tremendously and will pave the way for higher stock prices. Nevertheless, early going, I am not impressed by this ‘rally.’

Biotech is looking good, but everything else like vomit.

More later.

dollar crushed by 0.55% v euro, NASDAQ futs up 8, oil flat

Higher

Kick-ass earnings: BAC +2.8%, ADTN +1.9%, DAL +1.6%, LLTC +1.8%, CSX +1.6%, WFC +1.0%, PNC +0.2%

M&A related: SNDK +10.1%; report out they hired banksters to arrange a sale

Euro-trash banks: CS 1.7%, DB 1.5%, HSBC 0.5%

More Euro-trash, this time pharma: SHPG +2.7% (initiated with a Nutella Good at Northland Capital), NVS 1.1%, GSK 1%, AZN 1%

Metals and Miners higher: RIO +2.6%, BBL +2.3%, MT +2.2% (initiated with a check this shit out at Berenberg), VALE +1.9%, GOLD +1.6%, FCX +1%, SLV +0.9%, BHP +0.3%

Euro-Trash oil: SDRL +3.8%, STO +1.6%, RIG +1.5% (higher despite downgrade from bucket shop, Seaport Global Securities), RDS.A +1.1% (upgraded to God Amongst mortals at Argus; tgt $73), BP +0.9%.

Random shit: CASI +14.7% (orphan bullshit…europe), TRIP +10.2% (Did a deal with the man, at PCLN), ZFGN +4.1% (after dropping a gazillion points the past two days, this garbage is up now), ZEN +3.5% (acquires some piker company), MU +2.3%; up on SNDK deal talk or INTC eps beat), AKRX +1.7% (boring), STON +1.6% (CRAMER PUMP), HABT +1.4% (Wells Fargo discloses monster stake), CQP +1.3% (Blackstone takes 5.5% active stake)

Analyst nonsense: MCD upgraded to this isn’t poison anymore at some random boiler room, PBMD +10.7% (initiated with a Cool Shit at H.C. Wainwright; tgt $3), ADI +1.7% (upgraded to Everything is Awesome from Boring at BMO Capital), ECA +1.3% (initiated with a Holla at Your Boy at Deutsche Bank), DYAX +0.6% (upgraded to The Good Shit from Skunk Weed at Leerink Partners), MNK +0.5% (initiated with a Jammin’ at Northland Capital), AXTA +0.5% (initiated with a Blue Horse Shoe Buy at RBC Capital Mkts), HAIN +0.5% (initiated with an Crack at Cowen), VFC +0.3% (upgraded to BUY THIS NOW at Piper), XON +1% ( initiated with a This Can Go Either Way at BofA/Merrill).

Lower

Shitty earnings: CPHD -13.5%; this company is a huge piece of shit (also downgraded to piece of shit at Raymond James; target lowered to $47 at Needham), CFX -9.9% HAWK -6.1%, HASI -4.4% (dilutive offering to boot), INTC -2.6% (also upgraded to pretty good from meh at Summit Research), ASML -2.4%, OZRK -1.6%, JPM -1.4%.

AG -9.8%; nonsense company, DOC -4.9%; no one really cares, NVCR -3.3%; recent IPO, time to crush shareholders, BRG -1.6% (financial engineering horseshit), RCL -1.3% (mystery!), IRWD -1% (phase 3 lotto), COP -0.6% , AAPL -0.5%; Tim Cook is still gay and dating, )

Analyst dart throws: GPRO -1.7% (downgraded to garbage from treasure at Piper Jaffray), UA -1.3% (downgraded to huge pile of shit at Piper Jaffray), DISCA -1.1% (ticking lower; downgraded to no opinion from this is great at Macquarie), TWTR -0.9% (downgraded to laughable from buy at JMP Securities), ORCL -0.8% (downgraded to snooze fest from awesome party at JMP Securities), WLL -0.4% (downgraded to turd from good stufff at Deutsche Bank).

Its been several months since my last bout of unparalleled generosity. My spiritual advisor recommended that I do it again.

Effective tomorrow, the good folks at iBankCoin will grant free and unfettered access into our world class market intelligence platform, called Exodus. Trust me when I tell you, there is nothing else like it out there, especially for retail.

All you need to do is email Vince: [email protected] or myself [email protected] and you will be hooked up through the weekend. When inside, I strongly suggest emailing us again for a free live one on one demo.

Congratulations on your gift. Consider this to be my spiced soul’s cake, granted to you, the neighborhood beggar. Go say some prayers for me now and ask God to release my relatives from purgatory (extra Halloween).

Be well,

Fly

The Chinese economy is completely in the shitter and the government is immersed with stopping busines in Macao, due to moral concerns. Morons.

Words cannot express how fucked they are, save their $3.5 trillion in cash reserves, of course. They need a massive stimulus program, now.

China’s consumer price index (CPI) rose 1.6 percent in September from a year earlier, against forecasts of a 1.8 percent rise from a Reuters poll and following August’s 2 percent gain.
The producer price index (PPI) fell 5.9 percent, in line with expectations and after a 5.9 percent fall in the previous month.
The PPI, which measures wholesale prices, clocked its 43rd straight month of decline as overcapacity in a number of sectors coupled with a lack of demand to keep a lid on prices.

The Shanghai is down just 0.36%. I feel we are at a point that the Chinese government has to announce some sort of stimulus package soon. If so, expect a strong bounce in China related commodity names.

Last year, in Exodus, I created a ‘Bubble Basket’ to properly assess market risk. It’s a completely objective index of about 100 high valuation stocks, all trading outside of their peer group. The purpose of this index is to see get hard data and isolate this segment of the market, which stretches across many different asset classes.

Here is the chart.

Over the past 3 months, the bubble basket is down 19.8%. Over the past month, it is down 5.8%. And over the past two weeks, it is +3.18%.

I think it’s fairly representative of the market and how growth without profits is being tossed into sewer pipes.

Interestingly enough, the last time this index bottomed was one year ago today, on October 13th, 2014.

Have a look.

This is wholly ridiculous. The VC community keep jerking each other off, buying and selling shit, making billions, while we starve here in the open fields of broken down stocks. I feel like a serf working the plow and my master is inside the house fine dining on next to extinct, exotic, animals.

“The Fly” wants to eat extinct animals too and partake in this grande chicanery. But no, the banksters 2.oh, the VC edition, keep their best investments private for extended periods, hyper inflating their values to unsustainable levels, and then they dump this shit into my fields hoping that I could make crops with the fertilizer.

Like bastard Russia or fraudulent China, this country is corrupt from the top down, a new oligarchy of tech nerds and motivational speakers infect our society with their brand of mendacity. I’m afraid all of these caitiffs have uncorked my vials of wrath and I will never stop ranting and raving until I am placed in an asylum.

Five of my top 6 positions were higher today.

I opt to rely upon my BIDU position for profit because the Chinese are clear with their intentions to lie and cheat, in order to succeed, unlike the big jowled florid faces of our financiers, fucked faces of the first order.

I keep waiting and waiting for this fucking market to allow me the opportunity to dance on the graves of my enemies, urinate down on my foes from atop mountain; instead, all I get is this back and forth horseshit, with one clown car blowing up after the next.

It’s never cool for entire asset classes to disintegrate. The oil and gas implosion happened and I made very little noise about it–because my exposure was limited. Now the biotech sector is under seige; and again, I am laughing at it because I am not the one on the chopping block.

When the social media sector blew up for the first time, I was horrified by the outcome.

I know we’re all experts out there, sagely walking through this minefield of financial fuckery. I wouldn’t blame or cast aspersions upon any of you for having a rough go at it these last few years. This is a market to break gurus in half, shit them out, and flush them into the mouths of alligators. That was very disgusting. I know it. But that’s how I feel with this tape: utterly disgusted.

My bear blogger Bluestar is posting large picture of vermin, which is fitting. For the day, I’ll probably make some money; and in the past, I might’ve made fun of you for losing coin.

Not today. “The Fly” is turning over a new leaf with his readers, one with unparalleled understanding and comradery. For the time being, we’re all in the same boat, trying to figure out how to survive. Consider this a detente, a temporary ceasing of hostilities for the benefit of all.

Top picks: BIDU, SLCA, SHAK

NOTE: Fred’s ETSY is at a new 52 week low.