Follow The Money! Pulse Biosciences (PLSE) Rips Higher

Feb. 21, 2017 4:12 PM ETPLSE1 Comment
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Long Only, Growth, Special Situations, Momentum

Contributor Since 2009

My trading experience includes over twenty five years of intense investment analysis, trend analysis and deep level due diligence studies. My interest is to find small company opportunities that have established funding sources, have a plan of action and are in the preliminary to first stages of pipeline development and execution. My coverage and investment interest includes biotech, small cap and emerging growth companies, regardless of sector. I am a contributing writer at CNA Finance and cover emerging opportunities as well as breaking news events.

On February 9, 2016, PLSE closed at a modest price of $7.55 per share. On February 17, 2016, the closing price was $13.75 per share. The last time I checked, that amounted to a gain of slightly over 82% in the course of six consecutive trading sessions.

Now, while we all wish we could have the intuition to buy stocks like PLSE prior to the massive spikes, there is one thing that we can do once the jealousy subsides....follow the money!

What Happened To Pulse?

Active investors are no strangers to the volatile markets, so when stocks spike 50% these days, it may raise an eyebrow, but it does not cause a whole lot of extra attention around the water cooler. Absent stellar earnings or a "pump and dump" share price that begins at sub zero levels, these spikes do warrant continued attention, because if there is a motive behind the enthusiasm, then opportunity may still exist.

For PLSE shareholders, the invigorating interest may be very good indicator for stock.

On February 10, 2016, news broke that a pair of investors, Robert "Bob" Duggan and Maky Zanganeh, the former CEO and COO of Pharmacyclics, Inc. have purchased a stake in PLSE that amounts to an interest of 17.1% of PLSE outstanding common stock. The transactions included open market purchases, direct purchases from the company, and shares purchased from existing shareholders that have been released from a one year lock-up restriction.

That's What Happened, But Why?

Keeping in mind that the PLSE traded as high as $15.00 during the prior 52-week period, a return to these levels may be warranted and these two investors may certainly have gotten themselves some stock at a steep discount, especially when taking into account their stated belief in the long term vision of the company.

In a joint statement, Duggan and Zanganeh said that they have studied PLSE's core technology, their strength of leadership, and their perceived long term sense of the robust potential of NPS technology in healthcare. Fortifying their statement, they continued by highlighting their enthusiasm for the company by citing the working relationship they have had with several members of the PLSE management team, including the CEO, Darrin Uecker.

Trust Mr. Duggan's opinion, he knoweth of what he speaketh. Mr. Duggan has been a private investor in many healthcare related companies for over 30 years, and is the former CEO and Chairman of Pharmacyclics, a biopharmaceutical company focused on developing novel therapies to treat cancer and immune-mediated diseases. Fortune followed Mr. Duggan there as well, as AbbVie, inc. purchased Pharmacyclics for a cool $21 billion in 2015. Mr. Duggan was also named as one of the top 20 most influential executives in the biopharmaceutical field during that same year.

Now, since neither of these two investors appear to have the same pedigree of say, a Shkreli, it may be wise to treat their purchases as a clue that some interesting things may be on the PLSE horizon.

The PLSE Technology

But, just because a couple of billionaires bought some stock, should it lead others to the trough? I think so, at least in the case of PLSE. PLSE is innovative, to say the least. They specialize in medical technology geared toward developing a therapeutic tissue treatment platform based on nano-pulse stimulation, a proprietary cell signaling technology

Pre-clinical studies have published some already intriguing results, demonstrating that a single, brief exposure of Nano-Pulse Stimulation to target tissue, stimulates a cascade of events within cells and in the surrounding microenvireonment that results in cell death, as well as for the priming of a durable adaptive immune response.

Other than hiring a few key executive positions to round out an already robust team, PLSE has not provided investors with more data about what has been transpiring at the company.

And, that's why it's important to read the tea leaves, especially when its likely that the two investors might have simply read into the enthusiastic nature of the PLSE executive team. After all, they all know each other, and it's highly likely that they can sense positive vibes in each other. Perhaps that PLSE vibe inspired a sudden wealth of interest. As an investor who has witnessed early investor stakes get larger by the year, this 17% stake has the earmarks of getting even larger.

In fact, PLSE shares have continued to perform extremely well even after the announcement, retracing only about 3% of its gains before returning to its significant upward channel. Volume has remained strong and if I was a betting man, I would speculate that these investors have continued to build upon their stake, absorbing shares from the market in order to build a long term stake in the company.

Far different than institutional investors, who can buy and sell shares as quickly as the direction of a wind change, the investments by Mr's. Duggan and Zanganeh wreak of being long term all of the way. They bought for a reason and the shares are likely in very strong hands, both good reasons to consider ownership in the stock.

Even more appealing is that PLSE did not trade in the millions of shares during this run. While the stock traded at about 20X its daily average volume, hitting upwards of 438,000 shares on February 10, the volume has been stable, but not absurd. The previous five days volume is averaging about 270,000 shares in trading volume. I would be far more concerned of being late to the party if day traders had not already made their play in the game, but by not seeing massive volume, I believe that both momentum and day traders have already bought and sold their positions, creating that ever so brief pause before the next leg higher.

What Now For PLSE?

I can't say that there is really a dilemma here, nor do I think I would be late to the party by purchasing shares at these levels. With a cost average approach, investors may be able to build a position in PLSE at current levels, buying a few spikes and buying a few pullbacks. But, at the same time, while I would be scolded by made for TV personalities who preach only buying stock on a cost averaging basis, buying a long term position at these levels would be just as rewarding, at least in my humble opinion.

I like the company, and as long as my fellow billionaire PLSE shareholders are happy, then so am I.

Disclosure: This article was written by Investor Initiatives and reflects his own opinion and analysis. He has not been paid by any company, inclusive of Pulse Biosciences (PLSE), for any content presented in this article, or for its publication rights.

At his discretion, and at any time preceding or after this article is published, Investor Initiatives may elect to buy shares in PLSE, sell shares in PLSE, or , elect to neither buy or sell shares in PLSE. Market conditions may affect Investor Initiatives's trading activity. If PLSE reacts favorably to this commentary, he may sell shares at higher prices. If PLSE reacts negatively to this commentary, he may sell shares at lower prices. However, Investor Initiatives reserves the right to either buy or sell shares in PLSE regardless of how the stock reacts to this commentary.

Investor Initiatives does not offer investment advice or replace the need for investors to perform their own due diligence prior to making buy and sell decisions in any particular stock. His commentary is for informational and entertainment purposes only, and as such, investors should not rely solely on his opinion when making investment decisions.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in PLSE over the next 72 hours.

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