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John H. Ford's  Instablog

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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  • VHC, potentially huge payoff in 2011

    I have been trading this stock profitably for the last year, both in options and common. I see an excellent opportunity now, albeit high risk. There are currently in talks with Apple, Cisco, and other big players, and I sense a buyout, or a settlement.

    Here is the way I am playing it now. If we get a buyout, we could see a double or triple from today's $13 price. If nothing happens within the next year, the stock could easily drift back down to five or six dollars a share. But, I do expect activity, given my recent conversation with management.

    In the past when I've spoken with these guys, they have been very forthcoming with their plans and opportunities. This conversation was markedly different. Basically I was told that their new attorneys have told them not to speak with shareholders, because they didn't want to run the risk of jeopardizing current negotiations. I was told that the current situation was intense, and that management believes the outcome would be positive.

    Given the change in management's tone, I am going to be a buyer of January 2012 calls. If there were to be a buyout, we should see an announcement before 2012. That's just my guess, but given the tone conveyed by management, I believe that's accurate. I would expect volatility going forward, and these calls could double or drop in half, throughout this unstable time.

    Disclosure: I am long VHC.
    Tags: VHC
    Dec 22 7:50 PM | Link | 2 Comments
  • Insmed's new deal

    Insmed did exactly what they said they were going to do.  They acquired a latter stage Pharma Company, creating dilution, but very little use of cash.  In the big picture, this looks like a good deal.  With $1 billion in revenue potential, now it's just a waiting game.  As biotech companies go, at this point, they look pretty good.  Two to three years for commercialization, isn't that long.  There shouldn't be any more dilution, given that they have enough cash to get to that point.  It looks like their product will be best in class, and should dominate the market.

    Why the selloff?  Well, it could've been a lot worse.  Long-term investors were disappointed that the cash wasn't instantly translated into a higher stock price.  On a conference call, the retail investors expressed their anger quite freely.  In the long run, the share price should do well as a result of this deal.  By long-term, I mean, a couple years.

    If you're looking to get in, there's no rush.  The share price should drift lower from here, providing better buying opportunities.  We could get a small pop following the probable NASDQ extension approval, but I don't expect that to be long lasting, if it even happens.
    Tags: INSM
    Dec 07 3:34 PM | Link | 3 Comments
  • When things look bad, opportunity exists

    I remember a very bleak time at one of the early companies I worked with. We had a good product, that was fully developed and entering the market in prototype form. It was well received by doctors and hospitals, and the success of our company look like a slam dunk. But we needed money. We went to banks, no dice! Venture capital firms, the same story. We issued stock and began selling to family and friends, but even at $1 a share, it barely moved. Finally, Mitsubishi bank in Japan loaned us enough money to pay salaries and rent for six months. That gave us enough time to approach the large pharmaceutical companies and give them our pitch. Right away we hit a home run, and were bought out at $8 a share. The family and friends who got in for $1 were thrilled. Those who didn't invest were kicking themselves.

    Later on, another company I was invested in went through a similar situation. They had a commercial product on the market, but since it was somewhat revolutionary, the adoption rate was slow. With a questionable future, the stock price dropped to $3 a share, and stayed there for a while. The venture capital firm that back them was still bullish, so I held on to my position, even though I had lost 75% of my original investment. Finally, the market realized this was a truly great product, and sales took off. The company was bought out at $30 a share.

    What's my point? With most companies, there is a time when the market questions the viability and success of its products. That questioning is what creates opportunity for investors, because along with it goes a lower share price. Our job as investors is to determine whether or not the products are viable and if management is capable of executing a workable game plan.

    Remember, the best time to invest is when you believe in the future of a company's products, and the market isn't sure. Look at the early days of Microsoft, Intel, and Google. At that point of questioning, the opportunity was great. Now that the market is certain that these companies will succeed, most of the opportunity is gone. You're probably not going to double your money on any of these companies.

    It takes guts to invest in companies with low share prices and questionable futures. Especially when the market is telling you that this company is a dog! But, that's how we make money. With time, you will learn that the market is often wrong, and occasionally great companies are undervalued and overlooked. Your job, should you choose to accept it, is to find these companies, and take your position.

    Nov 13 9:46 AM | Link | Comment!
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