MIND-READING THE TAPE

Yesterday, the market decided that HAPN’s InfuSystems acquisition will go through. I infer this from the fact that the stock traded 3.4 million shares and closed down 27 cents at $5.37. The selling would have come from owners who had been holding on for their nearly $6 in cash in a few months if the deal failed – but now no longer expected it to fail and, thus, no longer expected a cash pay-out.

Meanwhile, more than two million changed hands, closing at 36.5 cents, essentially unchanged.

Anything’s possible, of course, but by the time you read this, we may well be in the ambulatory infusion pump business.

From the company’s web page:

InfuSystem is a rapidly growing healthcare services company that provides state-of-the-art electronic continuous ambulatory infusion pumps, supplies and support to oncology practices and clinics throughout the United States. More than 60% of oncologists across all 50 states turn to InfuSystem as their single, full-service source for cost-effective infusion pump management.

InfuSystem maintains a complete inventory from every leading manufacturer, including single and dual-channel portable pumps and supplies. Oncology-certified nurses staff our Call Center 24 hours a day, every day of the year.

The self-monitoring pumps supplied by InfuSystem reduce the need for costly home care and lower health plan costs and patient out-of-pocket expenses while improving the quality of patient care and eliminating the need for your practice or clinic to maintain costly equipment inventories.

My current plan is to hold the warrants for quite a while, hoping to see the stock eventually get past $8.50 to repeat our success with the Aldabra warrants that put us in the mud-moving business with GLDD (currently $8.96). This may of course never happen. But with the warrants selling for zero premium over their intrinsic value, it seems to me they are – albeit only with money you can truly afford to lose – a steal.

Meanwhile, the Aldabra 2 warrants that some of us bought around $1.47, and then again perhaps as recently as last month at $1.18, closed last night at $1.73, and should soon put us in the paper business when that acquisition closes.

Mud, paper, and ambulatory infusion pumps. Such a portfolio!

(With AII, the underlying Aldabra stock, closing last night at $9.43, the warrants – which will give you the right to buy the stock at $7.50 – currently sell for 20 cents less than their intrinsic value. You get the three years of ‘time value’ for free.)

Finally, just to be clear, can we all just chant it in unison? Although these seem to be reasonable bets to take, there is absolutely the chance with any of them – or even all of them – that you will lose all your money. So don’t take risks you can’t comfortable afford to take.

WA-MOOPS

Which is the perfect segue to my dreadful timing on Washington Mutual 2010 LEAPS. The bank announced even worse earnings than expected and the stock – about $36 when I suggested the January, 2010 $30 calls at $8 last week – closed last night barely over $30, with the LEAPS down to about $5.70.

I bought some of the stock today. If the dividend can be maintained, it’s a 6.7% pay-out. And if the bank gets through the next couple of years’ turmoil (expect turmoil!), there could be nice price appreciation to boot.

Today may have been the bottom, or with hindsight my purchase may turn out to have been nothing more than an attempt to ‘catch a falling knife’ (in common Wall Street parlance).

FOREIGN FUNDS

The dollar has fallen spectacularly under Republican management. Where the euro bought just 85 cents when George Bush appeared to win the presidency at the end of 2000, it bought $1.42 last night. (So in Euro terms, the Dow is not 14,000, up from 11,000 – it’s 8,400, down from 11,000.)

Unfortunately, as we have discussed, the dollar is going to keep falling, most likely for a long time. Such is the structural damage that has been done. Earlier this month, I mentioned a foreign bond fund, PFUIX, with a $5 million minimum.

Less Antman: ‘I assume you know that PFBDX is a low-minimum alternative to PFUIX, but just couldn’t resist a good joke. T. Rowe Price International Bond Fund (RPIBX) and American Century International Bond (BEGBX) are two other solid alternatives for unhedged foreign exposure, assuming someone wants to expose themselves to foreigners.’ (Less can’t resist a good joke, either.)

Smart friends I’ve consulted suggest that foreign currency ETF’s – Exchange Traded Funds – are the best way to keep your cash in . . . well, ‘not dollars.’ Click here and here for just a couple of easy places to get a start thinking about this.

 

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