I Feel Giddy. Oh, So Giddy . . . June 11, 2013 With our SODA LEAPS now up 130% in the two months since we bought them, I’m getting giddy. Never a good sign. If you haven’t already sold half, why not do it now — and then just sit back and see where SODA goes in the next year and a half? Meanwhile, there seems to have been no trading in Borealis shares over in Prague yesterday, but there it is, listed alphabetically right after a thing called BIGBOARD and before what appears to be some kind of bet on BRENT CRUDE OIL. Perhaps one reason an unusually heavy 10,688 shares of Borealis traded in the US yesterday was Czech market makers buying some to have in inventory, should European buyers come by wanting some. (But who knows?) Yesterday I mentioned the three principal goals of the loyal opposition: lowering taxes on the rich; economic austerity; and opposing anything — even things they themselves first proposed — that the President supports. I forgot the fourth: voter suppression. Making it as hard as possible for poor folks and students and minorities to vote. Their justification for that one is “voter fraud” — surely if you need photo ID to borrow a library book you should need it to vote — but this is a solution in search of a problem. In a chapter of The Center Holds: Obama and His Enemies titled “The Voter-Suppression Project,” Jonathan Alter writes: After five years of investigations and prosecutions, the Bush Justice Department acknowledged in 2007 that no evidence existed of a widespread problem with vote fraud. In a nation of more than 200 million citizens of voting age, fewer than fifty people were convicted of voting illegally, almost all of whom offered convincing explanations that they had done so unintentionally. And don’t get me started on Chris Christy needlessly spending $12 million to hold New Jersey’s special election to fill the late Frank Lautenberg’s Senate seat three weeks before the regularly-scheduled November election, just so all those folks likely to turn out for Cory Booker (who is African American) will not likely turn out again three weeks later to vote against Chris Christie and his Republican state legislative colleagues. To a Republican, that’s $12 million in taxpayer funds well spent.
Fun and Profit – The Center Holds June 10, 2013 FUN So Buyer & Cellar reopens June 18. As I’ve mentioned, I liked it so much when I saw the 99-seat version, I threw caution to the wind and invested. But see it anyway. Its star, Michael Urie, beat out five others — even including Bette Midler (“I’ll Eat You Last”) and Holland Taylor (“Ann”) — for the Drama Desk “Outstanding Solo Performance” Award. Here’s the story. “A fantasy so delightful,” says The New Yorker, “you’ll wish it were true.” PRA-HA-FIT Prague, in Czech, is “Praha,” which I know because I was a Slavic Languages and Literatures major in college (which meant reading War & Peace in English) and took Czech for a day. It turned out that all Czech words are stressed on the first syllable — PRA-ha — except, the instructor went on to explain, those stressed also on the second syllable. “What,” I asked, “are you just supposed to shout the whole word?” No, she explained, “listen to the difference.” After twenty minutes of not being able to discern the difference, I dropped Czech. And today Borealis begins trading on the Prague Exchange. Symbol: BOREY. Newsflash: there is a Prague exchange. Indeed, it is 20 years old. Here are current quotes. I don’t see BOREY yet, and I’m not sure when we first will, but I’m bookmarking this dollar-corona currency converter to be ready. Go ahead, laugh. Pra-ha-ha-ha-ha. But Gregor Mendel, founder of the science of genetics, was Czech, as were Franz Kafka and Antonin Dvorak, and as is Milos Forman, whose “One Flew Over the Cuckoo’s Nest” in 1975 won all five major Academy Awards — and what company, I ask you, is more cuckoo than Borealis? Or, well, not cuckoo — I think it may have passed that stage. Let’s just say unusual. In any event, the more interesting near-term action could be in Paris, June 17-23, rather than Prague. Borealis will be at the Paris Air Show, Hall 5, E-264. THE CENTER HOLDS So the Republicans stand for basically three things: cutting taxes on the wealthy; austerity; and blocking everything the President tries to do — even if it was originally their idea. They justify the first by dubbing the wealthy “the job creators.” But as serial entrepreneur multi-billionaire Nick Hanauer shows so clearly in under six minutes, it is actually the middle class who are the job creators. They justify austerity by citing a “massively influential” study by two Harvard professors that turns out to have been massively wrong. And they justify the third — well, they don’t even try. They’re just determined to see the President fail, whatever damage that may do the country. For more on that, see Jonathan Alter’s The Center Holds: Obama and His Enemies, just out. Will someone please bring back the Grand Old Party? The party of Lincoln, who subsidized construction of the railroads (infrastructure!) and launched the first land-grant colleges and the National Academy of Sciences . . . of Teddy Roosevelt, who busted the trusts and championed meat inspection and honest food and drug labeling . . . of Eisenhower, who gave us the Interstate Highway System (infrastructure!) and, lamenting a bloated military, warned of what he called the “military-industrial complex” . . . of Nixon (yikes!), who launched the Environmental Protection Agency and the Occupational Safety and Health Administration . . . and so many moderate Republican members of the House and Senate. Virtually all gone. The center held this last time. But our friends across the aisle, with their three goals (and their four “pillars of deceit” — government, the media, academia, and science), remain determined.
Limit Orders June 7, 2013 Oh, God, oh God. One of you must have put in an order to buy BOREF yesterday morning without a limit, so it jumped from $8.63 to $11 on, like, 500 shares. I usually remember to say, “on thinly traded stocks, let alone one as thinly traded as this, be sure to use limit orders!” Forgot this time. Not that it much matters in this case: Two years from now, if the shares are $100, you’ll be quite pleased you snagged yours at $11. And if they’re 30 cents, your percentage loss will have been pretty much the same. Still, mea culpa for not reminding everyone: with a thinly traded stock — and few are more thinly traded than this one — always use “limit orders.” (With a limit order, you tell your broker — or click the appropriate boxes on his trading screen — that you want to buy 100 shares, say, but only at a price of $9 or better. If you set the limit too low, you may not get the shares right away, or ever. But neither will you find yourself involuntarily gouged. Similarly, with a limit sell order, the broker will only accept a price for you equal to or higher than the one you set. If you set the limit too high, you may not make the sale right away, or ever. But neither will you find yourself robbed. ) As it happens, more shares were traded as the day went on and the stock closed at $11 and change. But it was fewer than 4,000 shares that drove this 28% gain . . . so imagine if someone tried to sell 4,000 shares today. The gain could vanish. Let’s see where it is two years from now. SPEC-ULATION M.: “Just wanted to say thanks. I got fitted for new spectacles and bought a pair from a national chain. Cost: close to $400. As a backup (I have kids, who break things) I went to Warby Parker, per your post. Total cost: $125. The $400 pair are now my backups and I can’t believe the quality, speed to fill (faster than the national chain by 4 days) and the low cost. Not to mention the fact that another pair was donated to someone in need. These guys will be my go-to from now on.” SODA I hope they go much higher, but now that SODA LEAPS have more than doubled in the two months we’ve owned them, this is a reminder to sell half, if you haven’t already, so that from now on — as they say in Las Vegas — you are playing with the house’s money.
What – You’ve Never Seen “The Maltese Falcon”? Seriously? June 6, 2013 Following on yesterday‘s graduation speech . . . here’s a story about young graduates out to make a lot of money — but mainly to give it away. Do you know Peter Singer’s classic question about the toddler drowning in a shallow pond? Would you muddy your shoes and be late to work to save her if no one else were around to help? Do you know about GiveWell.org? If you have a minute, read the story. Hoping to make a lot of money myself one day, I’m still enjoying Tuesday’s airberlin announcement, wherein WheelTug picked up 110 more potential planes to retrofit. Trading in Borealis stock barely budged. But airberlin stock was up — choose the three-day chart here to best see it — even in the face of an unrelated sell recommendation (if I’m reading this translation right). You could say that the difference is that airberlin has some credibility in the financial market, so when it announced what it believed to be good news, some people bought shares; whereas Borealis, after 14 years of bold projections and no revenue, has earned a first class baggage allowance of skepticism. And yet . . . the thing works. Pick your magician: it’s one thing to make a jet vanish (it was a small jet, and, even if it really did vanish, how is that valuable?); quite another to drive one around for hours with no assist from the main engines, potentially saving a fortune (try that, David Copperfield). If the system gets FAA Certification, what airline would not want this money-saving capability? And because the system is not flight critical . . . and because so many airlines want it and so many experienced partners are working to make it happen . . . why is it crazy to think it may get certified? The system is estimated to save more than $700,000 a year per plane. Why is it nuts to think WheelTug (a subsidiary of Chorus Motors, which is a subsidiary of Borealis) could net $50,000 a year in profit from each leased system? There are something north of 10,000 jets that could be retrofitted with WheelTug. So multiply $50,000 times 10,000 planes and you get half a billion dollars a year. In profit. Assign that a multiple of 10 and you get a $5 billion value, which would make for a hundred-fold jump in the price of the stock. Sure, there could be competitors; but as of yet, no airline I know of has signed with one. And sure, I’m not taking into account that Borealis owns only most — not all — of Chorus Motors and that Chorus owns only most — not all — of WheelTug. But then again I’m also not assigning any value to the possible value of the company’s various technologies for, say, automobiles. Or its other potentially valuable assets. So I frankly don’t get why the stock isn’t higher. It remains highly speculative — and bizarre, with its headquarters in Gibraltar and all the rest. But is there not by now a reasonable chance — a 50% chance or a 30% chance or a 20% chance — the vision will be realized? If so, this is one heck of an under-priced lottery ticket. But I’m in no rush. What was that Sydney Greenstreet said at the end of “The Maltese Falcon” once he knew the real jewel-encrusted falcon had eluded him? “Seventeen years I’ve wanted that item, and have been trying to get it. If we must spend another year on the quest . . . well, sir, it will be an additional expenditure in time of only [he pauses to calculate] five and fifteen-seventeenths percent.”
How We’re Doing Vs. Other Humans June 4, 2013June 5, 2013 Monday, how we’re doing versus the S&P, with a little day-dreaming about Borealis thrown in. (I can’t help myself.) # Yesterday — which the service I pay to post these things just randomly decided not to post (grrrr) so here it is now — this Silicon Valley high school graduation speech by Nipun Mehta that starts out with what he calls the good news . . . You might be surprised to hear this, but you are about to step out into a world that’s in good shape — in fact the best shape that that it’s ever been in. The average person has never been better fed than today. Infant mortality has never been lower; on average we’re leading longer, healthier lives. Child labor, illiteracy and unsafe water have ceased to be global norms. Democracy is in, as slavery is disappearing. People don’t have to work as hard to just survive. A bicycle in 1895 used to cost 260 working hours, today we’ve gotten that number down to 7.2. . . . and moves immediately to the bad: This week, Time Magazine’s cover story labeled you guys as the “Me, Me, Me” generation; the week before, NY Times reported that the suicide rate for Gen X went up by 30% in the last decade, and 50% for the boomer generation. We’ve just learned that atmospheric carbon levels surpassed 400 PPM for the first time in human history. Our honeybee colonies are collapsing, thereby threatening the future of our food supply. And all this is just the tip of the iceberg. What we’re handing over to you is a world full of inspiring realities coupled with incredibly daunting ones. In other words: miserable and magical isn’t just a pop-song lyric — it’s the paradox that you are inheriting from us. He goes on to pitch the joy in reconnecting through generosity. I found some of the specifics a bit dubious. (E.g., he cites a study on generosity that showed people — when suddenly given an unexpected gift — instinctively more likely to give it away than keep it. But I clicked the link to the study and it turns out the gift was trivial. Something tells me that if it had been $5,000, say, fewer would have instinctively given it away.) But you know what? It’s worth reading the whole thing. Just as every youngster (and every adult Republican and libertarian) needs to see “It’s A Wonderful Life” several times — and the rest of the Capra oeuvre — even if it may all be just a tiny bit simplistic. (You think?) Food for the soul nonetheless. # Today, back to Borealis again. They signed airberlin, Germany’s second largest airline, with 110 more planes for WheelTug. That brings the number of airlines with letters of intent to 10, on three continents, and the total number of planes to 549. So far as I know, no competitor has signed a single airline as yet.
How We’re Doing Vs. The S&P June 3, 2013June 2, 2013 Patrick Johnson: “At last I have finished the update I promised you weeks ago. I compared the return of someone buying and selling [the Standard & Poor’s 500 Index, symbol SPY] on the same dates you recommend buying and selling your 194 picks. Here’s the file: Tobias v S&P v2 05 updated thru 04092013. The S&P is on rows 286 to 479. SPY grows $194,000 to $258,000. But your picks grow to $346,000. Both figures count dividends.” ☞ The only things about this I know for sure are: (1) This had to be a lot of work. Thank you, Patrick! (2) If it’s accurate and fairly constructed — as I know Patrick intended, but if the entire Republican case for austerity can rest on a faulty Excel spreadsheet, who am I to assume I really did beat the S&P? — then it’s worth noting that past performance is no guarantee of future success. Though I have to say that I’m more hopeful about that lottery ticket we call Borealis now, at $8 and change, than I was when I first suggested it 14 years ago at $3. Yes, in some ways, it just gets more and more laughable — e.g., it looks as though the stock will finally be listed for trading on a national stock exchange . . . in Prague. Click here for links to the prospectus . . . the 1200-page prospectus. Headquartered in Gibraltar, located in the U.S., traded in Prague, still sitting on hoped-for mineral wealth in Canada . . . you can’t tell me that, at the very least, this is not a colorful lottery ticket. But as faithful readers know, the company’s WheelTug subsidiary does seem to keep signing up airlines you’ve heard of, like El Al, Alitalia, and KLM, and partners you may have heard of, like Parker Hannifin. And you may by now have watched the video of the thing seeming to work. So I continue to imagine a $50,000 annual profit from what could theoretically be equipment leased to airlines with more than 10,000 planes — which right there would make the the company worth billions. It’s market cap today? Forty million. That’s barely more than the $35 million they’re asking for this gorgeous 4-bedroom penthouse at 55 Central Park West (I’d grab it, but the $157,006 monthly maintenance is a little out of my league) and just more than half the price to which the Versace mansion has been reduced (from $125 million to $75 million) on South Beach. But I digress.
The Unexpected Highlight May 31, 2013June 1, 2013 I took yesterday off — it’s a lot of work having 285 people over for dinner. (Not to my place, mind you. My place seats 8.) It was a mainly LGBT fundraiser with the First Lady t0 celebrate the progress we’ve made since the last time, as a senator’s wife, she spoke at our dinner. Here‘s the video we showed. It begins with an excerpt from her remarks five years ago. There were many highlights — Super Bowl champ Brendon Ayanbadejo was there! Inaugural poet Richard Blanco was there! P-FAW’s Michael Keegan, GLSEN’s Eliza Byard, Lambda’s Kevin Cathcart, and GMHC’s Marjorie Hill were there! A JIHAD FOR LOVE’s gay Muslim documentarian Parvez Sharma was there! Rabbi Sharon Kleinbaum and Freedom to Marry’s Evan Wolfson and the ACLU’s James Esseks and the Victory Fund’s Chuck Wolfe were there! Media Matters founder David Brock and Athlete Ally founder Hudson Taylor and All Out co-founder Andre Banks and SLDN’s Aubrey Sarvis were there! The first transgender member of the DNC’s executive committee, Babs Siperstein, was there! Robbie Kaplan, who argued Edie Windsor’s case before the Supreme Court, was there! Edie Windsor HERSELF was there! – along with Members of Congress, gay and straight, two gubernatorial candidates, the nation’s first openly gay ambassador and, for a few minutes, the President’s Chief of Staff . . . . . . Sara Bareilles sat herself down at a grand piano and sang three great songs . . . . . . and it was no surprise that Bravo’s Andy Cohen would do a fine job emceeing and that NBA center Jason Collins would give the First Lady a great intro and that the First Lady herself would bring the assembled to their feet and leave them cheering . . . all that went as planned . . . but the unexpected highlight of the evening was a 22-year-old transgender woman who did a lovely job of introducing DNC Chair Debbie Wasserman-Schultz and then turned to the portal through which the Congresswoman was to emerge. But was not emerging. She waited a few moments . . . waited a few more . . . nervous, supportive laughter rising from the crowd . . . and then — far from freezing in the headlights — won us over completely by telling us “her story,” taking questions, making us laugh — the transgender CEO of a $3.4 billion-dollar biotech firm at my table with her wife was loving every minute of it — until, at last, DWS appeared . . . by which time young Evie Renee Arroyo was, at least in our eyes, a star.
Spending Versus Doing May 29, 2013May 29, 2013 A FURTHER CASE FOR CAUTION Yesterday, Chris Brown sobered us up a bit. Today, someone going by the name Tyler Durden (“Fight Club”) smacks us around a bit more. Here. SIGA After all that, the stock traded up 18 cents to $3.84 on 2-plus million shares in volume. This suggests people are a little positive, as they assess the Delaware Supreme Court’s ruling, but so far, only a little. Wedbush, which “Ranked 2012 Top Stock Picking Firm” according to its website, raised its target price to $11, with this comment: We view the decision of the Supreme Court to reverse the lower court’s 50% profit remedy and direct the court to restrict its damages to “contract expectation damages” as a victory for SIGA, and expect any subsequent damage remedy to be immaterial to SIGA. Expectation damages are designed to put the aggrieved party in the position they would have enjoyed at the time of the breach of contract, in this case, in 2006, which was prior to any ST-246 procurement contract. PIP’s “legal victory” is hollow as Vice Chancellor Parson’s has already ruled that a specific lump sum for expectation damages is “speculative, uncertain, contingent and conjectural” and therefore, inappropriate.” The market does not agree, at least so far, and I’ve got to say that if I were the judge being overturned on appeal, I wouldn’t suddenly think the company I had branded as the villains in this dispute (SIGA) deserved to be let off with “immaterial” damages. But I sure hope Wedbush is right. Even if they’re not, I’m happy to hold on for the reasons discussed yesterday. And just in case they are right, I couldn’t resist some July and December calls, which at their closing prices last night seemed cheap to me. (If you don’t know what calls are, good. You’ll just lose money. When will I ever learn?) On the bullish side, here is Glenn Hudson’s take. THE VANISHING DEFICIT — II Joe Devney: “I agree with you. Let’s just repeal the sequester. No need to replace it, or tie it to other Congressional actions. There already exists a bill, H.R. 900, to do just that. One sentence: ‘Section 251A of the Balanced Budget and Emergency Deficit Control Act of 1985 is repealed.’ I’ve already written to my Congresswoman (twice!) and my two Senators asking them to support it.” ☞ The idea was to force a grand bargain; but because the only piece that really affected Congressmen was flight delays — and that could be quickly fixed once it began to bite — no grand bargain was reached. So repeal the sequester — but then keep pushing for that grand bargain. We need modestly more tax revenue for the next couple of decades, because for the last three we’ve been leaning too heavily in the direction of private consumption — which has been great for the makers of Korean TV’s, of which I have 7 — and not quite heavily enough in the direction of public consumption — which has led to things like bridges collapsing. We need to cut the size of the military — but let’s start by cutting the programs the Pentagon doesn’t even want, not by cutting indiscriminately. We need to invest in infrastructure — that has to be part of the grand bargain, even though (the crazy way the government does its accounting) it adds to the deficit. And, yes, we need to cut the growth in entitlement spending in “the out years” to show the financial markets around the world that we’re on a sustainable track . . . because if we do, we’ll have a much better chance of building the kind of economic strength that will in fact render those cuts unnecessary before they even begin to kick in. (And if we don’t, we’d more likely have to make the cuts anyway — only with less time to prepare for them, and without having had the benefit of that economic confidence along the way.) SPEND VERSUS DO So one more thing on this. As you know, many average Americans hate government spending. But the indispensable Rachel Maddow notes that they love much of what government does. They love those Medicare and Social Security checks, love our military, love that our meat is inspected and our planes don’t collide . . . so Rachel suggests we remind people what they’re saying when they demand the government spend less: they are demanding government do less. That won’t end the discussion, because many people think we spend 10% of our budget on foreign aid (it’s less than 1%), or that there are tens of billions of dollars to be saved in waste and fraud (you purchase one lousy $600 hammer . . . ) — which there surely are, but (a) in a three point seven trillion dollar budget, tens of billions, while surely worth saving, don’t really mean that much; and (b) no government can operate with zero waste and fraud, hard though every government should try. So let’s get our Republican uncles to come out for maintaining fewer bridges, helping fewer kids get the nourishment they need to concentrate in school, investing less in basic research, providing less care to wounded veterans — not let them off the hook without specifics. Deal?
The Case for Caution May 28, 2013May 27, 2013 Yesterday: these 31 charts to restore your faith in humanity. If you were off barbecuing, take a look! Also, an item on SIGA. If you own it, take a look at that, too. Jim has now posted follow-ups: SIGA: The Judge Is Boxed In and SIGA: The Judge’s Paradox and SIGA: The Parasite’s Dilemma. His conclusion (loosely paraphrased): who the hell knows? But neither he nor I nor my heavily invested institutional friend would be selling at anything like Friday’s $4.40 after-hours close. Finally, there was Matt Yglesias’s The Case for Stocks, citing an argument by Joshua Brown that the S&P earnings and dividends have doubled since 1999, when the index was last so lofty . . . so in a sense, those 500 stocks are only half as expensive as they were then: you get twice the bang for the buck. I called it all “perhaps a little blithe,” hoping to inject a note of caution, but my pal Chris Brown, of Aristides Capital — whose work ethic and rigor exceed mine in the same proportion as, say, chess exceeds checkers or bridge, go fish — responded with a case for caution: While I like Josh Brown to the extent he swears a lot and may be a distant relative, there are two key errors in his piece: (1) the words “profit margin” never appear. Sure, earnings are high, but margins (and the closely related corporate profits as % of gdp) are also near record highs. Corporate profit margins are sustainable to the extent that both (1) we continue to run massive fiscal deficits, and (2) business fixed-investment and new business creation lag. Here’s a nice graph from Hussman: [it shows corporate profits as a share of GDP rising from little more than 4% in 1974 to more than 10% now — in a pretty tight inverse correlation to the level of government and household saving, which was about 8% of GDP in 1974, compared with negative 5% or so now]. (2) Brown writes: “The marginal speculators are doing futures, currencies or some other sort of crack cocaine, and it’s almost impossible to find a regular person who has any interest in talking about the stocks they own.” This is flat out wrong. In the last month, I’ve seen university professors trading solar stocks at >30x next year’s revenue, and a recent dinner guest reported that he and 7-8 buddies had been trading in $10k chunks on such wisdom as “Ford is going up. We should get some.” The 52-week high list is peppered with day trader darlings. A broker told me Friday that hedge fund clients who would normally be 40% net long are 80% net long, just because they see the market going up so much and they want to participate. Some statistics show a lot of speculation as well—the last time there was this much margin debt out there as a % of the whole equity market was the last time the period surrounding the 2007-2009 crash. There’s no reason this has to end tomorrow. Between the Fed printing $85 billion a month, and Japan printing nearly as much (and three times as much relative to the size of their economy), there is a lot of money that needs to go somewhere. We could be early in 1999, or even in 1998 at this point, with the denouement still in the distance. But 2Q 2009 was the time to be buying stocks with both hands; right now is a time to be tilted towards caution.
Good News. Ish. May 27, 2013May 26, 2013 31 CHARTS TO RESTORE YOUR FAITH IN HUMANITY Matt Ball linked me to these. War is down, democracy’s up, slavery’s down, leisure’s up, illiteracy’s out, we’re shooting each other less, living longer . . . Yes, yes, I know: but take a look. All the more reason for us to keep pressing forward, investing in an ever brighter future instead of throwing ourselves off a self-defeating austerity cliff. THE CASE FOR STOCKS Matthew Yglesias’s view, earlier this month in Slate: With the S&P 500 at levels that haven’t been reached since the go-go days of the late-1990s, there’s talk of 2013 being the new 1999. Joshua Brown devastates that comparison in a lengthy post, but the core of it is right here: Here’s a very rudimentary but essential thing to be aware of – in 1999 the S&P finished at 1469, earned 53 bucks per share, and paid out $16 in dividends. These are nominal figures, not adjusted for inflation. The 2013 S&P 500 is earning double that amount – over $100 per share. The index will also be paying out double the dividend this year, more than $30 per share, and returning even more cash with record-setting share repurchases. So that’s the fundamentals. Earnings are double what they were, and dividends have doubled accordingly. It’s a very different market. Gillian Tett, who I normally think is one of the most reliable financial journalists around, recently pooh-poohed current share prices as based on unsustainable central bank interventions. This seems to me to be superficially correct but fundamentally mistaken. What is true is that had the Federal Reserve implemented tighter monetary policy over the past two years, share prices would be much lower today than they are. But under the Fed’s status quo policies, inflation has been below target and unemployment has been high. There’s a strong case money’s been too tight, and zero case that money’s been too loose. Looking forward, you get much the same situation. If the FOMC implements new tight money policies at its next meeting, that will, indeed, crush the market. And that’s something investors should consider. But why would the Fed implement tight money policies with unemployment high and inflation low? Are they deranged sociopaths? A little blithe, perhaps. But this is definitely not 1999. SIGA Delaware’s Supreme Court affirmed much of the lower court’s ruling against SIGA. Yet the stock rose in after-hours trading. A large institutional holder: “In my opinion SIGA has a much stronger position now because the Chancery Judge [to whom the case has now been remanded to reassess damages] is limited to how much he can award Pharmathene. Yes SIGA is liable; but I think a large expectancy award is highly unlikely.” Jim Leff: “I’m not a lawyer, but here’s my read: The precedent-setting approach that yielded the bizarre split-the-baby decision has been overturned. Damages will be assessed with a more rational approach. At the time of the alleged breach, SIGA was a small company with an unproven drug of uncertain potential. Only from the perspective of the current day does Pharmathene deserve billions from this. Damages should be assessed based according to conditions at the time. So I see this is a mild win for SIGA (repeat: I am not a lawyer).” He goes on to say that even in a worst-case scenario, if the Chancery judge still slams SIGA, there should still be tons of profits from the smallpox drug to go around — and the decision only applies to that drug, not to the pipeline of other drugs under development, which may have value as well. “The thing to remember is they have an outstanding product, well-recognized by the scientific community. This was never an exuberance play, there’s value here — a safe/effective drug in late stage development and a contract in hand — which is more than you can say for 95% of biotech plays. Due to the legal (and other) clouds, SIGA’s been undervalued even for the worst case scenario (which accounts for the 20% uptick in after-hours trading).” Here is the company’s own press release. If you bought shares with money you could truly afford to lose — as by now I am certain that you did — hang on. Have a great Memorial Day, as we honor those far braver than I could ever be.