Friday's turn of events for SIGA Technologies has drawn a lot of attention and interest in the stock. First of all, I want to emphasize that I'm waiting until after Monday's conference call before coming to any conclusions regarding the string of events that led to SIGA's price collapse on Friday, because things that are unclear and suspicious now may be explained in full on Monday. However, things certainly do look pretty suspicious at SIGA right now; with the timing of Thursday's stock offering just a day before an amendment to the BARDA contract was to be announced.
The question of "who knew what and when" is sure to be asked on Monday, but the truth is that we may never know exactly what transpired over the last few weeks between SIGA technologies and the contracting office.
In the same way there were "leaks" that a contract announcement was imminent, there may have been leaks that the BARDA amendment was to be released, because the shorts pounced with ferocity as soon as they saw an opportunity to jump.
Friday's extreme action also had all the makings of a 'bear raid'; otherwise quiet message boards that saw maybe five posts a day for weeks were suddenly bombarded with a slew of new IDs, all claiming to have been there all along and all claiming that they were selling and moving on (and suggesting that everyone else should, too) because SIGA was essentially a failed company and a failed stock. The normal five posts a day grew to hundreds of posts of Friday, and those posts during a short raid are intended to spread fear and misinformation as the shorts plunge the stock further than the news warrants.
Friday's drop was exacerbated by the raid; in my opinion SIGA dropped a lot further than it should have based on a turn of events that really doesn't change anything for the potential of SIGA. It's still a waiting game for BARDA and the pipeline is still in tact.
If you're a long term investor in SIGA and not just in the stock for the BARDA trade, then you're looking at a pretty good price to add shares, in my opinion, because nothing has changed with the fundamentals and future potential of the company.
However, my own investment in SIGA was strictly for the BARDA trade and I'm still sitting on March and June calls (added more of both on Friday) and a few leftover December calls (which I think it's a safe bet that they'll expire worthless next week).
Two key factors to take away from the recent events that transpired at SIGA:
- Nothing is a done deal until it's a done deal when the government is involved.
- Regardless of how promising a situation looks, it's always important to protect your investment by trading the volatility with some trading shares.
In the event of SIGA, as I described here last week, I dumped most of my December $7.50 calls when they spiked enough to ensure that I came away from the investment with a profit; I only mention this because I know the riff-raff and the wolves are circling and waiting for any chance to try and discredit VFC. I always try to emphasize being on 'house money' when expected news hits.
All being said, I'm going to wait and see what is said on Monday before deciding whether or not to stick around with SIGA - and maybe even go long with the cheap shares instead of sticking stricly to my calls for the BARDA play - or just flip my March/June options and move on.
All indications now are that the contract is going to be delayed at least a few months, since the actual amendment isn't due to be released until on / about December 28th, but let's see what SIGA has to say in the conference call. Before then, it's too early to jump to any conclusions.
Regarding the December 28th date given as guidance for the amendment, I have little faith that anything will be released on that date; absolutely nothing gets done in the government between Christmas and New Years. More likely, expect news during the first week of Junuary.
As always, this is all just my opinion, each investor should do their own DD and rely on that DD when making investment decisions.
Disclosure: VFC is long SIGA call options.