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John H. Ford
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For the past 30 years, I have been involved in startups, as a founder, and active investor. My first company was purchased by Johnson & Johnson, which set the foundation for future investments. My level of trading escalated after graduating from college, primarily as a result of my... More
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  • A shareholder tours the oculus manufacturing facility

    I recently returned from a great meeting with the Oculus management team,. Here are a few of the highlights:

    I was once again impressed with the quality of the team that the CEO has put together. I was reminded of the fact, that all of these guys come from backgrounds of successfully building startup companies. This is not their first endeavor. They have learned and grown from previous efforts, and are applying what they have learned to this company.

    During this trip, I was able to take a tour of the manufacturing and administrative facility. It turned out to be much more impressive than I imagined. Many of the startups I have been involved with, were pretty rough around the edges in the early stages. That is not the case with oculus

    We walked around and poked our head in various doors, and one thing that surprised me was the number of laboratories. It seemed like every room, I looked in, had someone in a white lab coat, performing some sort of a high-tech bioengineering task. There was one very large room that was sealed off, and I was told that not even the spouses of management were allowed in there. This was the room that housed the machines that creates the Oculus products. There were no armed guards standing around, but you certainly got the feeling that it was a very secure room. I am sure the competition would love to spend a couple of hours in there.

    There were two main bottling facilities, one for the gel and one for the liquid. The machinery was impressive and modern, and I can see why the FDA is very pleased with this facility.

    One area that was particularly impressive was where they stored their inventory. There were these huge containers full of the Oculus products, ready to be shipped.  I was surprised by the sheer volume that was being produced, and of course eventually sold.

    During my meeting with management, a couple of things stood out. I didn't realize this, but they have been traveling to New York and meeting with institutional investors, the goal being to make these large investors aware of Oculus and it's future potential. Since it is institutional investors that move stock prices, this is a good thing in the long run for shareholders. On those days when millions of shares are trading hands, you can be sure the institutions providing the bulk of the trading.

    The other thing I was reminded of is that this is a company that works very hard at projecting low and delivering high. They consistently meet or beat guidance, and that is a result of carefully giving guidance that is conservative and well thought out. In terms of the 2013 $45-$60 million revenue, I was reminded that this is a projection based on existing revenue streams, and does not include any future revenue streams. In other words, the $45-$60 million guidance is conservative. There is a good chance they will beat that prediction.

    Here is what I walked away with after this meeting. Management is exceptional. They have a real business producing and selling a successful product. In my opinion, they have at least an 80% chance of success. As with all startups, things can go wrong, but this company has so much going for it, that even with a view missteps, their success is likely. The opportunity to get in under two dollars a share, provides huge upside potential.

     



    Disclosure: long OCLS
    Tags: OCLS
    Oct 06 1:43 PM | Link | Comment!
  • Insmed still priced in the ridiculous zone

    OK, $.96 per share in cash, zero cash burn, and selling for $.69 a share.  Ridiculous!  Crazy!  Fantastic!  These are the kind of market inefficiency, we search for as value investors.

    And, we have a catalyst coming up, on December 15, 2010.  That is the official delisting date, and management is very motivated to get a deal done before that date.  Remember, the value in this company is not only the cash, but it is the NASDAQ listing.  A private company can become more or less instantly liquid, by forming a partnership with INSM, and taking advantage of the NASDAQ listing.

    Imagine you own a large stake in a private company, but you cannot sell your shares.  By merging with a public company, your shares become liquid, and hence marketable.

    So with this company, we are actually looking at four assets:

    Number one: $.96 per share in cash, no debt.

    Number two: NASDAQ listing opportunity for private company.

    Number three: IPLEX

    Number four: Going concern value


    The value of these assets is something above $.96 per share.  How much?.  I don't know.  Maybe $20 million, maybe $50 million.  It actually doesn't matter, because at today's price, $.69 per share, the cash alone provides a tremendous premium.

    What is the risk?  Management could spend some or all of the cash on some lame company.  Given their track record, I think, if they were to purchase another company, it would probably be of quality.  Or, we could end up with a reverse split.  That scenario doesn't bother me, because the cash position would look the same.

    Basically, what were being offered right now is for $.69, we can purchase a box of cash, with $.97 inside, plus a few other goodies that are worth something.
     
    I got in at $.62 a share, and will be purchasing more in the coming weeks, as it drops below $.70 per share.  I love it when stock prices entered the ridiculous zone!



    Disclosure: long INSM
    Tags: INSM
    Sep 14 10:55 PM | Link | Comment!
  • Insmed has gotten too cheap!

    Insmed, INSM has been falling of late, and has reached an excellent entry point.  Any purchase below $.70 a share, should provide reasonable upside potential, with very little downside.  I have been placing buy orders for the last two days.

    They are sitting on over $.90 per share of cash, with no debt. Management has proven themselves, with the development and sale of a successful product, to a major pharmaceutical firm.  They are now sitting on the cash, looking for an acquisition of a later stage pharmaceutical company, with potential for near-term revenue.  I look at this company as something like a specialized venture capital firm, sitting on cash, with an intense level of experience in the biopharmaceutical area.

    Goldman Sachs, Blackrock, and one of my favorite Russian investors have been  shareholders for some time, and I am particularly impressed that they didn't sell during the recent run-up.  This is an excellent value play, with tremendous downside protection provided by the $.90 per share of cash, no debt, and currently operating at cash breakeven.
    Tags: INSM
    Jun 24 11:10 AM | Link | Comment!
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