Peregrine Pharmaceuticals Preferreds: Yea Or Nay: Update

Summary

• It's official PPHM has reverse split 7 to 1.
• How does this preferred investor now view its commons as a worthy investment?
• Not favorably, at least not at present.

Although Peregrine Pharmaceuticals (PPHM) had the authority to do a reverse split of up to 7 to 1, Frankly, I was surprised by it. I had expected a 3 to 1 split, which would have kept them comfortably in compliance. I guess the board of directors felt otherwise and opted for the added safety of the greater reverse split, which brought the price of PPHM up to $4.34/share, which made the possibility of its delisting a remote possibility.

As many of my followers know, uncharacteristically, I held both Peregrine's preferred and common shares. Because prices of its commons were sub-forty cents at the time I recommended their purchase, I bought 6,000 myself and was happy I did. As most well know, I have little fear of this company going bankrupt, specifically because of Avid Bioservices, its rapidly expanding and profitable arm of the business that functions as primarily a biomanufacturer of monoclonal antibodies. This link is to the recent article I am updating, which also contains links to my other articles concerning this company and why I believe a preferred investment in it is a worthy investment.

However, this article primarily concerns PPHM, its common shares. Are they a worth investment presently? My answer is a big fat NO!

The moment I learned that the split would be 7 to 1 was the moment I headed for the closest exit and sold my 6000 shares for a tidy profit. Admittedly, I expected a dramatic fall of its price at today's open, which thus far has not happened. One of the many reasons I am not a day trader or a regular investor in common stocks. Honestly, I have a history of buying high and selling low, not a great resumé for a stock trader worthy of being followed.

However, I still believe that buying PPHM at prices below 0.40 was a no-brainer that I took advantage of, as did several of my followers that I know about. Some sold previously for an even greater profit at a time when PPHM crested at around 0.80. I sold when I learned of the split's details, and I assume some are still holding.

I now urge my followers, who are still holding, to take your profits and run. Not because PPHM is doomed to failure or even that its commons will radically fall in price; no I urge an exit because at $4.33/share (current price) I feel it is no longer a buy with a tremendous upside. At least not at present. Of course Bavituximab, it's current R&D hoped-for bonanza, might strike gold, but there's no guarantee it will, and if it does you now have only one common in the place of the seven you held prior to the reverse split, which means your potential home run, at best might be a double.

Consequently, reverting back to form as the consummate and dedicated preferred investor, PPHMP looks to be a better investment than it was prior to the reverse split that rescued PPHM for being de-listed.

That's just my opinion, I'll leave the DD up to you.

Analyst’s Disclosure: I am/we are long PPHMP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.