A Secret about Your Heart December 29, 2005March 3, 2017 Speaking last year at the memorial service for her grandmother – Al Gore’s mother – novelist Kristin Gore passed on a lesson that struck me as worth sharing, especially in this holiday week: I had just turned seven and my Aunt Nancy had just passed away, and I didn’t understand and I missed her. I’d locked myself in my grandparents’ room and I was crying on the bed, and my grandmother came and knocked on the door. I let her in and she sat on the bed with me and said, ‘Now, if you stop crying, I’m going to tell you a secret about your heart.’ When you’re a little kid, you really want to know secrets, so this was very good motivation. I stopped crying and she said, ‘The secret to your heart is that it can be filled up by lots of different things. It can be filled up by sadness, or it can be filled up by anger, or bitterness, but it can also get filled up by love, and joy, and happiness.’ She told me that the job for my life was to make sure there was always a whole lot of room for love. That those other things would come in, and when they did, I had to make an extra effort to value love above all else. It’s a very simple lesson, but really the most important one I’ve ever received. Pass it on. Happy New Year. If I don’t get around to a column tomorrow, see you in 2006.
$32 a Share No Matter WHAT December 28, 2005March 3, 2017 RELATIVE VALUE Joe Cherner: ‘Pfizer and Philip Morris are both worth about $150 billion. Both pay about 4% dividend. Both trade at similar P/Es. One cures diseases for millions of people worldwide. One kills millions of people worldwide. PFE is at a yearly low. MO is trading near an all time high.’ ☞ Actually, since Joe sent me that earlier in the month, PFE is up a bit – but the irony remains. NTMD Sales seem to be on track to come in at about $2 million for the quarter just ending – down from the $20 million UBS Securities had first estimated when it set a $32 target price for the stock, and even down from the $4.7 million to which it revised its estimate (while retaining the $32 price target). As of 12/24, the 7-day rolling average for BiDil prescriptions was 131. For the week ending December 16th, according to weekly IMS data, prescriptions totaled 1082, down from 1114 the week before. Anything is possible, but – with the company currently losing about $25 million a quarter – if you bought them with money you can truly afford to lose, don’t sell your puts. POLITICS Jason Frey: ‘I used to enjoy and respect you as a financial commentator, I found your blog recently and unfortunately find it to be a monomaniacal political rant. Yikes, what happened to you?’ ☞ I started believing in evolution, fiscal restraint, and the general message of the Sermon on the Mount.
Honey, Can You Get the Christmas Lights from Down in the Basement? December 27, 2005March 3, 2017 Daniel H: ‘Sound is a must for this. Carson Williams created it, and he set it up so that the sound transmits to your radio via a low power FM transmitter as you drive by. Unfortunately he was asked to shut it down after accidents occurred and emergency vehicles couldn’t get through due to the crowd.’ ☞ Yep. If you have broadband, you need to watch this one. Keep the holidays alive that much longer. Can you say ‘hobbyist gone mad?’ I love it. FREE DELIVERY Douglas Hutchison: “I see that the free QuickBrowse delivery of your column has ended.” ☞ No, not intentionally. Those of you who were getting free daily delivery of this column are still supposed to get it free. There was a goof. It’s being fixed. Anyone else who wants it delivered free is welcome to it, too – it drives up the ad rates i can charge – but wait a little while until we figure out how to get it working again.
The Perfect December 26 Message And a Word about Free Delivery December 24, 2005March 3, 2017 Hope you had a great Christmukah. We got to hear Emma, 11, play the flute and Brendan spell “Renaissance” on the first try. Timmy taught Charles to snowboard on the snowboarding equivalent of a mechanical bull. Laura could make a beloved city councilwoman — if she didn’t have to finish ninth grade and go to Dartmouth first. Mackie, 11, high fived me when he saw we have the same lanyard earphones for our Nanos . . . I can’t reach Darius to high five because, at 18, he’s six-ten (I remember when I was taller and he couldn’t swim) — but he, too, has those earphones (so I must be cooler than I thought). Chris had a hundred and two, but took it like the cheerful little guy that he is. Edward discoursed on Star Wars esoterica. And Melissa Marie, 18 months, bonked her head on my knee and didn’t so much as yelp, let alone cry. Who am I leaving out? Beth! At five, she was in China with her parents, going to pick up her baby sister, just as she had been adopted three years earlier. Such are the blessings of marrying into a large Irish Catholic family. Spectacular nieces and nephews, and nary a finger for the uncles to lift. (Except — finger lifted politely — “could I have some more of those amazing yams?”) We returned to find both Time Warner and RCN cable down somehow — even connecting directly to the modem, and on three different laptops — so I think what happened is that Santa’s sleigh got caught on the cables and just ripped them all out. Hence posting this via dial-up, which makes for disparate type faces . . . a “rerun” from Saturday (below) . . . but also this housekeeping announcement: THOSE OF YOU WHO WERE GETTING FREE DAILY DELIVERY OF THIS COLUMN ARE STILL SUPPOSED TO GET IT FREE. THERE WAS A GOOF. IT’S BEING FIXED. ANYONE ELSE WHO WANTS IT DELIVERED FREE IS WELCOME TO IT, TOO — IT DRIVES UP THE AD RATES I CAN CHARGE — BUT WAIT A LITTLE WHILE UNTIL WE FIGURE OUT HOW TO GET IT WORKING AGAIN. And now back to our regularly scheduled re-run, in case you missed it: Cole Lannum: ‘Thank you for sharing Ben Stein’s thoughts last week. I think particularly at this time of year it is very important to keep perspective. Last month, I unexpectedly lost my job. This – after only being here for three months, moving my family 3,000 miles from the only home they had ever known, forcing them to leave their friends and schools, buying an outrageously expensive home at the peak of the largest housing bubble in the history of mankind in the most overpriced market in the country, and trusting people in the new company who assured me during my due diligence that they were ‘committed’ to keeping the California office open and would ‘certainly not send my family out here otherwise’ (a true quote!). ‘When I found out – only 82 days after closing on my outrageously overpriced house – that it was all going away, I was quite bitter. My lovely wife, however, helped me put things in perspective. This happened in late September when the implications of Katrina were still being felt. My wife said to me, ‘Our situation is unfortunate, but this is not a tragedy. A tragedy is living in New Orleans and losing your job (because they are ALL gone), AND watching your house float away . . . and losing loved ones in the process.’ ‘It is easy to feel angry and think the world is unfair, but I applaud anyone who can channel those energies toward trying to improve their situation – instead of just going out and trying to find someone else to blame for it. I wish you a wonderful holiday season. I myself will be spending it with my lovely healthy family, enjoying my ‘temporary retirement,’ and feeling like the luckiest man in the world.’ ☞ You may not be the luckiest man in the world (because where would that leave me?), but you – and your wife – have got to be two of the most gracious and best centered people in the world. Here’s wishing you – and the rest of my exceptional readers – the healthiest and happiest of holidays . . . and a terrific New Year.
72 Hours – No Time for DeLay December 23, 2005March 3, 2017 72 HOURS On the ‘Today’ show yesterday morning, in arguing that the President was right not to seek wiretap warrants from the FISA court, Pat Buchanan said: ‘You cannot go to a bureaucratic court and wait 72 hours for a warrant after we’ve been hit by something like 9/11.’ Katie Couric just let it pass and that was that. Well, the ’72 hours’ part was right, but otherwise it’s quite the opposite: the law says you can do the wire taps FIRST, so long as you go to the FISA court within 72 hours for retroactive approval. Kinda totally different, no? But the millions of viewers who watch the ‘Today’ show may never know it. On to the story of the missing penguin. And so does democracy erode. TWO GREAT QUOTES The first by Tom DeLay, the second about Tom DeLay. As noted by David Sirota: [1995] ‘The time has come that the American people know exactly what their Representatives are doing here in Washington. Are they feeding at the public trough, taking lobbyist-paid vacations, getting wined and dined by special interest groups? Or are they working hard to represent their constituents? The people, the American people, have a right to know.’ –Tom DeLay (R-TX), House floor speech, November 16, 1995 [2005] ‘Donors underwrite jet-setting, luxury travel for DeLay, aides . . . at least 48 visits to golf clubs and resorts; 100 flights aboard company planes; 200 stays at hotels, many world-class; and 500 meals at restaurants, some averaging nearly $200 for a dinner for two. Instead of his personal expense, the meals and trips for DeLay and his associates were paid with donations collected by the campaign committees, political action committees and children’s charity the Texas Republican created during his rise to the top of Congress.” – AP, 12/20/05
Ad Homonym December 22, 2005March 3, 2017 You would think after all that hoopla for ‘the best Christmas card of the year’ I would have tested the link. Ah well, fixed now. · So Elton John tied the knot yesterday. Gays and lesbians can do that now, more or less, in the U.K., Canada, Spain, Holland, Belgium, Germany, Denmark, Finland, Norway and Sweden, but not in any of the fundamentalist countries. (In America, it’s perfectly legal for gays and lesbians to marry, so long as it’s not the person they love. For example, Sir Elton could marry Ellen DeGeneres without the slightest legal hiccup. He just couldn’t marry his partner of 12 years, David Furnish.) · What a language we speak. It’s fine to grind pepper, but there’s a fine, you’ll find, for grinding it too fine. Ewes use yews to rub up against and scratch their backs. · Mike Albert: “You are SO unfair! The Senate Intelligence Committee report found no evidence that the Administration influenced intelligence, the British Butler report found the same thing, the March 2005 Robb-Silberman report on WMD found the same thing. All THREE found no misdeeds by Bush, all three are bipartisan, and all three had no dissenting minority report at all. Yet you chose to publish a partisan minority report critical of Bush. How can you claim to be fair when you don’t even acknowledge these more credible and numerous positive reports?” ☞ Those three came out before the Downing Street memo (“the intelligence and the facts were being fixed around the policy”) was revealed on May 1, 2005. So to the extent they affirmatively stated what you believe they stated, Mike, maybe they have a little egg on their faces. But, as detailed here, the Robb-Silberman report did not purport to answer this question – and neither, I believe, did the Senate Intelligence Committee report or, really, the Butler report (which focused on the Blair, not the Bush, Administration). I don’t claim expertise here, but the more that comes out about WHIG (the White House Iraq Group), the more one doubts the Administration was straight with Congress or the people. Turns out, the experts said those “aluminum tubes” were not suitable for nuclear reactors. Turns out we did not attack Iraq only as a last resort. Turns out that, though we don’t torture, dozens died during our questioning. (Turns out that “by far the vast majority” of the tax cut did not go to “people at the bottom of the economic ladder” – surprise, surprise.) But with Hanukkah and Christmas fast upon us – and what a synchronicity that is – I think it’s time to give the politics a (brief) rest.
Best Christmas Card of the Year December 21, 2005March 3, 2017 SO LET’S REVIEW From the House Judiciary Minority Staff: In brief, we have found that there is substantial evidence the President, the Vice President and other high ranking members of the Bush Administration misled Congress and the American people regarding the decision to go to war with Iraq; misstated and manipulated intelligence information regarding the justification for such war; countenanced torture and cruel, inhuman and degrading treatment and other legal violations in Iraq; and permitted inappropriate retaliation against critics of their Administration. Of course, this comes from the Democratic side of the aisle, just as calls for impeachment over President Clinton’s affair came from the Republican side. But that didn’t make the allegations about President Clinton any less true – though, arguably, they were somewhat less important. (One gauge of this: our allies, far from being outraged by President Clinton’s behavior, never quite got what the fuss was about, whereas the behavior of the current leadership has cost us the goodwill of much of the world.) LESBIAN TERRORISTS Back in the Seventies, someone made a cheap porn flick called ‘Help! Help! The Dykes Have My Daughter!’ Or maybe they were just planning to – I can’t remember. I think I was asked to invest. It was a joke of course (and I was way too prudish, and still am, you’ll be relieved to know, to have considered it). But it came to mind as I read this from the Servicemembers Legal Defense Network yesterday – which was apparently not a joke: WASHINGTON, DC – According to recent press reports, Pentagon officials have been spying on what they call ‘suspicious’ meetings by civilian groups, including student groups opposed to the military’s ‘Don’t Ask, Don’t Tell’ ban on lesbian, gay and bisexual military personnel. The story, first reported by Lisa Myers and NBC News last week, noted that Pentagon investigators had records pertaining to April protests at the State University of New York at Albany and William Patterson College in New Jersey. A February protest at NYU was also listed, along with the law school’s LGBT advocacy group OUTlaw, which was classified as ‘possibly violent’ by the Pentagon. A UC-Santa Cruz ‘Don’t Ask, Don’t Tell’ protest, which included a gay kiss-in, was labeled as a ‘credible threat’ of terrorism. NTMD SE: ‘I certainly can’t argue about the prospects for their current drug. But is NTMD working on some other drugs that could justify its current market cap?’ ☞ I don’t think so. Drugs take SO long to develop and approve that it’s sort of impossible that anything really significant could be secretly around the corner. And I’m not sure the company is riddled with future Nobel laureates. As I understand it, BiDil was not the result of brilliant researchers coming up with a new drug, it was the result of someone noticing the marketing opportunity in a 20-year-old study that showed no overall positive result from the combination of hyralazine and Isordil taken in tandem, but a positive result for blacks . . . and then doing a separate study to prove to the satisfaction of the FDA that this combo (which by then docs were widely prescribing generically) really did work. The scientific talent required here, I would say (as a layman), was modest. BEST CHRISTMAS CARD OF THE YEAR Click here. It is the best Christmas card of the year. (Of course, we still haven’t gotten yours.) And if Christmas is not your thing – humbug! – click here for a wonderfully patriotic card, here for a Mother’s Day card – it’s never too early to start planning for Mother’s Day – or here to get the big picture. (The big picture is that for $8, you can send cards like this all year without ever having to lift a finger, lick a stamp, or violate a copyright.) These cards are especially good if your computer is hooked in to decent speakers.
WWJD, TIVO, BOREF, NTMD December 20, 2005March 3, 2017 WWJD So the Republicans in the House passed a $50 billion tax cut for the best off . . . no relief from the Alternative Minimum Tax that will soon bite millions more middle-class taxpayers . . . and a $40 billion cut in things like health care for the poor. Got it? Cut taxes on the rich, let them rise for the middle class, reduce aid to the poor. Very Republican. Very Christmassy. TIVO Jim Roberts: You SAY, ‘With most TiVo setups, you can only watch a previously recorded show while recording another.’ Many TVs have multiple inputs on the back. It is easy to split the cable wire signal so that Tivo can record one channel while you can watch another.’ ☞ To mask my ineptitude and have the luxury of watching both shows on my own time, and fast-forwarding through the commercials, I prefer the even easier, albeit less economical solution: a separate TiVo on each of two separate sets. (With help from a genius down the hall, I even managed to get them talking together over my home network, so I can transfer programs from one to another. All this as a stopgap until, in a few years, you’ll just be able to look at any wall in your house – or your iPod if you’re in a pup-tent – and say: ‘Wall – show me the latest episode of Malcolm in the Middle.’ Which, by then, will be the episode in which Malcolm graduates from Law School.) BOREF Slowly but steadily – I like to think – Borealis bee-bops along. You will recall that its Chorus Motors subsidiary has an electric motor the size of a watermelon that drove a fully loaded Boeing 767 around in 120 degree heat as if it were a golf cart. Yesterday, the company announced a deal with Magnetek to develop a motor to power underground mining equipment. “Magnetek is an excellent partner for us”; said Isaiah Cox, Chorus’s President. “The underground mining market has very rigorous requirements in which reliability and performance are at a premium, and Magnetek will ensure that the products we make will meet and exceed the industry’s expectations.” ‘The Chorus technology allows Magnetek to provide an AC motor and drive package with torque performance equal or greater than the existing Series DC controls’ according to Ed Butte, Magnetek VP Product Management. ‘It also provides a level of redundancy that will allow greater up-time and throughput for our mining customers.’ The agreement provides for the development of Chorus® motors for haulage equipment, shuttle cars, and regenerative traction drives, with further products envisaged over time. Marketing, integration, sales and ongoing service and repair contracts will be handled by Magnetek. ☞ It’s a fairly safe bet that if I can’t handle a cable-splitting hook-up of my TiVo, I don’t have any idea what a regenerative traction drive is. But I take this announcement as another reason that our shares in the parent company might more properly be selling for $100 than the current $14 or so. At that level (as argued here August 3), you have a lottery ticket that could still rise tenfold or more (which is why someone might not be stupid to pay that much) but that could certainly still go to zero (which is why I might then part with a few shares). NTMD Jim Taylor: “You write: ‘If you bought the December 30 NTMD puts five months ago when we started this discussion, you were up around 85% (before taxes) when they expired Friday afternoon.’ Does this mean that you collect the money at expiration? I always thought that options expired at no value if not exercised.” ☞ Three things can happen on the third Friday of the month in which options expire (it’s like Thanksgiving but on Fridays instead of Thursdays and the third instead of the fourth and every month not just November): If your options have no value, because they’re “out of the money” (the right to sell your house for $300,000 has not value if people are knocking down your door to pay $500,000), then they just expire worthless and you take the loss on your taxes as if you sold them.Sorry it didn’t work out. If they do have value, then you can just sell them at any time before the market closes that day.(Of course, in many cases you might not have waited – you might have sold them days or weeks or even months earlier, to take your profit and not risk seeing it disappear.) This is simplest and cleanest, even though you may get clipped for a few pennies by the market makers, who never seem to go to bed hungry. (You ordinarily won’t get clipped too badly, because the options market makers know you could always just exercise your option – buying the stock if it’s a call, selling it if it’s a put, and then more or less instantly selling or buying those shares in the open market to close things out.) If you forget to sell an option that has significant value, your broker’s computer will exercise it for you, which may make for some confusion or a small heart attack when you first see that you bought or sold 100 or 1000 or 10,000 shares of some stock you never actually planned to own, but should nonetheless put you in a position to unwind the position with more or less the same profit as if you had remembered to sell the options sometime before Friday afternoon. Of course, this is dangerous stuff to know. Ordinarily, puts and calls are NOT something people should speculate in. Gambling is gambling, and rarely a good idea. With NTMD, I’ve thought the odds were unusually good. PS – One of the firms that follow NTMD, Friedman, Billings, Ramsey & Co., apparently reduced their sales and earnings estimates yesterday and lowered their price target for the stock from $29 to $13.
Days of the Week Don't Sell Your Puts December 19, 2005March 3, 2017 SUNDAY MORNING CBS Sunday Morning with Charles Osgood, formerly with Charles Kuralt, is just so good. I don’t mean good the way ‘Scrubs’ or ‘Seinfeld’ reruns or ‘Malcolm in the Middle’ are good – though they’re great. I mean good as in deeply civil, intelligent, the best-of-our-natures. I mean ‘Ted Koppel’ good. ‘Walter Cronkite narrating ‘I Can Hear It Now – the Sixties” good. So if by chance you’ve never given it a try . . . do. And if its time slot interferes with going to church, well (ironically), that’s why God invented TiVo. Yesterday morning I learned, among other things, that Donovan is not gay – I had just assumed – and that (get this!) film director Norman Jewison (Moonstruck, In the Heat of the Night, Fiddler on the Roof) is not Jewish. These tidbits are hardly examples of reasons to watch CBS Sunday Morning – they are not good – but I thought you might be able to win a little money with them in bar bets. If CBS Sunday Morning overlaps with This Week With George Stephanopoulos where you live, then you have a problem; but that’s why God invented two television sets – one to watch, one to TiVo for later. Or else why He invented the service that many of the cable companies now offer where you can watch one live show while recording another. (With most TiVo setups, you can only watch a previously recorded show while recording another. Which is one of the reasons I own just a few shares of TiVo – I think they will somehow pull this out, but they well may not. I own these shares for love, not money. If Charles Osgood started selling shares in CBS Sunday Morning, I’d buy a few of them, too.) THURSDAY Hats off to the people of Iraq for turning out to vote last Thursday, and to our military for their incredible work and sacrifice in helping to make it happen. It’s heartbreaking to think of the costs and maddening to think of the mismanagement – we really did rush to war without a plan to win the peace. And one would be foolhardy to think it’s necessarily going to end well even now. But Thursday’s election was still a great step in the right direction. FRIDAY Nitromed closed Friday at $15. If you bought the December 30 puts five months ago when we started this discussion, you were up around 85% (before taxes) when they expired Friday afternoon. (Why? Because you paid $800 or so for the right to sell 100 shares at $30 each that, as things turned out, were worth only $15. That’s a valuable right to own! It’s like having the right to sell your $150,000 house for $300,000. Wouldn’t that be a valuable little slip of paper to carry around in your wallet?) If you bought puts at a different strike price back then – the 25s or the 20s, say – you made a similarly good profit. Not bad for five months, although the gain did not come without risk. I felt pretty good about this one, or would not have written about it over and over; but there are no sure things on Wall Street (apart from the fees and commissions), so those who did not have money you could truly afford to lose were wise not to take this this bet. If you waited and bought puts after the stock had fallen somewhat, you made less (unless you had the exceptional timing to cash in your puts a few days ago, when the stock got as low as $13.24). But what if you bought puts that didn’t expire Friday? What if you bought puts that don’t expire until March or June? Now what? Take your profit? On the one hand, the NAACP has joined the bandwagon of organizations friendly to Nitromed’s sole product, BiDil. (This could be in part because Nitromed has given the NAACP $1.5 million.) And bulls on the stock are hoping Medicare and others will soon begin to require only minimum co-pays in covering the drug, and that sales will really begin to take off – especially now that the free sampling is winding down. On the other hand, the analysts at UBS have lowered their 2005 sales estimate from $30 million to $4.7 million (while leaving their $32 price target for the stock unchanged) and the company is losing several million dollars a month. Over on the Yahoo Finance message board, interspersed with all the messages with people calling each other stupid (and worse), there have been a few doctors, like the one whose post I linked to last week. All pretty much back up the thesis of the guru who pointed me to this in the first place: BiDil is not for all 750,000 African Americans suffering from congestive heart failure, just for a small subset quite far along with the disease. And for them, it seems dubious to prescribe BiDil for $4,000 a year (six pills a day), when its two generic ingredients have long been widely prescribed and are available at perhaps a sixth the cost. Prescriptions are slowly rising; but they are just not in the right ballpark. As of December 14, the 7-day rolling average of prescriptions written was 132.9. (This is actually down from 240 a few days back, but the general trend seems to be up.) At 90 pills per prescription, that would be about $8 million in sales for the coming year, versus $120 million in expenses. UBS thinks the stock should be $32 – about $1 billion for the whole company – because it expects sales to skyrocket. Yet even at Friday’s price, buyers were valuing the company at $450 million. If the sales rate quadruples from here, the company would lose “only” $80 million next year instead of $110 million – nothing to rush out and pay $450 million for. One never knows (really!), but I wouldn’t be surprised to see the stock in single digits before too long, which would be good for our puts.