Debra Fiakas'  Instablog

Cellulosic ethanol developers such as Verenium Corp. (VRNM:  Nasdaq), Poet Energy (private) and Dupont’s Danisco Cellulosic Ethanol (DD:  NYSE)  have reported some development progress.  Poet management have even considered in initial public offer of their company’s stock.  Unfortunately, stock prices in the sector have failed to follow along and Poet remains private.   

The problem might be that the science has not yet caught up with the public’s resolve to use renewable fuels.  There are several different processes still under development to turn fibrous organic material into biofuel:  acid hydrolysis, thermochemical conversion, biochemical conversion, consolidated bioprocessing, and combinations of these three.

Conmed Healthcare Management(CONM:  Nasdaq) is scheduled to report June quarter results on Wednesday this week after the market close.  A conference call is scheduled for the same afternoon.  We have estimate $0.02 EPS on $13.0 million in sales for the quarter.  There are no other published estimates for the Company.  We expect more details from management on the business pipeline as well as recent successes with contract renewals and new contract awards.  Last week the Company announced that a collection of contract renewals and upgrades over the last six months have resulted in $2.0 million in incremental revenue.  We estimate the revenue run rate for existing business increased to $54.0 million beginning July 2009.  This is more than double the run rate reported eighteen months ago in March 2007.

Shares of Conmed Healthcare Management were recently listed on the NYSE Amex exchange under a new symbol  -  CONM.  We expect achievement of national market listing to expand the potential investor base as institutions that are prohibited from holding over-the-counter listed securities are now able to take positions in the stock.  Furthermore, national market listing also opens the door to solicitation by registered representatives are brokerage firms. 

Health care is a salient issue today, but services in correctional settings are rarely discussed by politicians.   Nonetheless, the health and well being of detainees and inmates are high on the priority list of law enforcement and corrections officials, who are mandated by the Constitution to ensure the physical and mental health of men and women behind bars.  The burden is awkward for agencies that are better trained for safety and security tasks than to diagnose, prescribe and nurse.  More importantly it is costly to maintain in-house health care programs.  Consequently, in recent years there has been a shift to outsourcing health care functions in jails and prisons.  The trend has fostered a crop of private correctional operations offering medical and behavioral health care services.

There is a handful significant corrections health care providers.  Prison Health Services, a division of America Service Group (ASGR:  Nasdaq) based in Tennessee, serves state prisons as well as county detention facilities.  ASG claims approximately 6% of the total market, including both privatized and non-privatized correctional health care services.  ASGR shares are trading at 13.9 times trailing earnings as investors have shrugged off earnings misses in the last three quarters.

The palladium mining industry is getting drawn into the energy and carbon debate by some recent technological advances.  Representatives of North American Palladium, Ltd. (PAL:  NYSE Amex) told a compelling story at the NYSSA 9^th Annual Mining and Minerals Conference in New York in late May 2009.  The company has three mining operations in Quebec and Ontario, Canada.  As a diversified precious metals company, NoAmer Palladium producers about 270,000 ounces of palladium and 20,000 ounces each of platinum and gold each year.

As sexy as gold and platinum might be for many investors, I was impressed by the story behind palladium.  The somewhat scarce precious metal is used in electronics, dental, jewelry and automotive applications.  Advances in diesel engine design have led to an increase in the amount of palladium used diesel fuel catalysts and a growing substitution of palladium for the more expensive platinum, to which palladium can be considered a close relative.  NoAmer Palladium expects continued growth in demand from this market segment even without a recovery in the automotive sector. 

Dynamic Materials is switching to a quarterly payout from an annual dividend, declaring the first quarterly dividend of $0.04.  The payout has not been increased, but we expect more frequent payment could create interest among investors who are looking for a combination of dividends and growth.  The current yield for BOOM shares is 0.8%. The announcement should serve as a catalyst for the stock, albeit a weak one, since the decision to pay quarterly provides some assurance that management has looked down the business pipeline and decided the dividend is secure. 

We continue to suggest investors approach BOOM shares with caution at the current price level.  Economic conditions appear to be improving, but we continue to have concerns that industry and enterprise have many more lean months ahead.  

Hard to believe after the last five years of seemingly endless debate and commentary on Regulation SHO, but the SEC has again floated out rule changes for public comment.  The SEC head, Mary Shapiro, is making short sale regulations a priority after abusive short-selling exacerbated the downward spire of Lehman Brothers and Bear Stearns. 

The SEC proposes two approaches to short selling restrictions.  One is a price test that would apply market wide.  The other is a “circuit breaker” that would apply to individual stocks experiencing severe market declines.  Two tests are proposed for each of the two proposed approaches.