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BioRocks, You are so right about the nasty shake and the smart money picking up cheap shares on Friday. I say "cheap shares" because they know this is going to "at least" the low or mid twenties and that type of return for any entity (hedge funds and institutions) becomes easy money especially at this point in the Ariad saga.
My advice to all here is to hold and get through some more uncertainty (as to the timing and BO pps level) albeit not nearly what Ariad shareholders have been through in the past. I know that most advice would be to take some money off the table and take some profit yet I think we all know that Ariad has not been a "normal" stock with the disaster three years ago and all of the shorting antics since then as far as trading is concerned. Conversely during that same time period, Ariad has operationally and creatively developed many, many good and optimistic elements that will enhance the future value.
That said, the shorts still are a presence and the pundits here (including myself) have no idea why they haven't covered at 10, 11, 12, 13 or even 14. To me it must have to do with hedging and a complex way of controlling risk heretofore. IMHO, the squeeze has to happen and will be even more painful as I don't see a significant dip and at any reasonable level it has to be painful as many here have opined that the average short level is most probably around $10. Also, IMO the shorts are still fighting for their life with the recent demonstrated increase to $29M shares and is/has been their only way of marginally controlling the pps.
A few short months ago we were in the $4-$7 range and then anyone would have relished a $13.60 level even though we imagined that when we got to this point the shorts would have been mostly eliminated. Perhaps, it is a good sign that they are still here in that it might provide a way to get to even a higher jump off point prior to the BO which will only increase that level.
IMHO as always and definitely with doubts regarding the how's and why's of the future pps other than it going to a higher level.
Jess, thanks for reminding us that Japan is one of many "building blocks" to increasing shareholder value and that Denner is working the many avenues in maximizing a BO pps. Surely, we don't know about timing and all of the behind the scenes maneuvers going on yet obviously it's worth what both a seller and buyer can agree upon. My opinion is that a buyer will want to do it sooner rather than later to avoid paying a lot more as the "building blocks" of value increase. Either way, I know that Denner will come up with a win for all shareholders as it is in his best interest for 12 million reasons.
Longx, Great Post and what a difference a year, 2 years and 3 years makes. Last year at this time I seriously doubted whether the search for new leadership really was in the offing or they were just going through the motions. NOW, I can see the absolutely brilliant strategy by Dr. Denner in giving Ariad a myriad of options for both a BO or operating into the future.
As most of you may know by now I don't pump, have cautious optimism, try and be realistic and now it looks like the outlook for Ariad is improving every single day. With that, I think that the information provided by so many here has been extremely valuable and with that many varied, valid opinions. Always, IMHO.
Jess, your kayak will most probably cross paths with "The Slow Boat to China"
Vid, great insight and there are so many positive factors that will drive the ultimate value. For sure there is a balance between "potential value" vs, "time frame" of the BO and it definitely gets more subjective (higher) as events unfold. Denner will hold his cards close and play it for all it is worth with a very precise target in his mind. I have a lot of condidence with his abilities, background, strategic moves and laser focus on the brass ring. IMHO
Biotech R I like your attitude very much and some of us (myself included) watch with optimism still with a LOT of caution knowing the history that is out there.
With that I have been pleasantly surprised and happy with the pps response since late July. For sure, it is uncharted territory in the climb with so many new positive dynamics and very exciting to see and think about the future.
Vid, Ariafan, & many more here.....IMHO "intestinal fortitude" with Ariad can only be adequately and accurately measured by the time that people have been with this stock as follows:
On a scale of 1-10 (with 10 being shareholders with the highest amount of "courage in pain and adversity")
10 - Precrash, oldtimers, surviors who I for one have the utmost in respect and empathy with waking up one morning and seeing, feeling, etc trauma and extreme stress who were willing/needed to ride it out with so, so, so many unknowns to come
5 - Post crash (34 months now) like myself where this has been a roller coaster ride with a lot of ups and downs YET with some forward thinking and reading all the great posters on this board supporting each other and providing ability to keep the faith.
2 - Those here for less than a year who even though went through a low of $4's, waited it out and are so rewarded without a lot of stress.
Thanks again for all the wonderful information, opinions and support here of course with varied takes on the past, present and future. Respectfully, IMHO
Vid, Biorocks, et al I agree about being short anytime now either overnight or over a weekend as any type of news could significantly increase the pops. Also it makes a lot of sense that the short position would actually go up because of the firepower necessary to control the pps even at this level. No matter, I don't get the logic of playing with fire (the shorts) and hanging in above $10 as it's like burning money. IMHO
Recently, trying to keep a perspective at this juncture between premature exuberance vs. remembering the unreliable trading patterns in (especially the past 3 years) has been a challenge for me. Also, I acknowledge the pre crash, old timers who not only went through the past 3 years but also held on to the steering wheel as the car went over the cliff in Oct 2013. No matter the degree of “PTSD” of sorts, we are all in a good place right now and dealing from an optimistic position of strength with new leadership, a BO possibility and science that could be a game changer as well.
For the past 2 months now, we have seen a huge difference in the way Ariad has been traded where now the “bulls” (as Clay Trader calls them) have been mostly in control and coming in whenever the shorts try and walk down the pps through their tactics of jumping the line on the ask and covering at a lower bid price. Day in and out since the earnings report (for 6/30) in late July this profound difference along with the pps climbing has buoyed all the retail longs here with their significant positions.
Even though I am reluctant to predict the pps level and timing of a BO, I think that there is an agreement by almost all here that it will happen within at least a year. Most of all, surely Denner knows the players in the likely group of BO players and there has to be ongoing communications, expectations, strategies and professional tactics in place by both sides.
My hope is that there are several interested companies who have expressed an interest and now it turns into a bidding war where the buyer wants in before the price gets too high. If I was Denner, when he took control (by the way, I think that the announcement and process of getting rid of HB and his group has impacted Ariad more than we might ever realize) I would have set a price at say $35 and even though it might have seemed outrageous at the time was a starting point IF they wanted to start a negotiation. I picked $35 because if I was Denner I would say “Ariad was selling in the mid $20 before the FDA screwed them and now the outlook is even better with Pona maturing, Brig coming on, 788 being exciting and the ability to come up with even more exciting applications. If he did that, then there would at least a first volley where “they” would know what he wanted and also communicated (at least his opinion) the “potential” gem that he had found in Ariad. If he had done this, NOW it is a matter of negotiating with several BP players in coming up with a final price (I think less than say $35) that is not a fire sale. Further, I think that the incentive for a company to buy now is significant because he could basically say “this is not going to get any cheaper” and thus if you want it you need to pay say $28-$30 now vs. say $35-$45 (or more) when all is done with trials and the potential fully exposed.
My feeling about the value of Ariad is that it is not just a value associated with a Balance Sheet, Income Statement, Debt Service, Cash Flow, Tax Loss Carry or the like but rather a combination of those factors along with Ariad’s ability to “innovate” and “create” in their lab and with their ability to come up with new science that no one has done. Certainly, this is a grey area and subject to much debate. In the last conference with Morgan Stanley, I think that Tim Clackson’s remarks at the end about his excitement with the new molecule aspect was particularly significant and could absolutely make the BO pps much higher. Also, I think it is significant that of all the “old guard” management, Tim Clackson is the ONE that survived and hopefully is being taken care of with options, stock and incentives. Many here know a LOT more than I do about the history of Ariad and players but this is what I see as an outsider (not in the science community) and someone who is basically an average investor who has followed this company closely along with a significant position.
Bottom line, I appreciate the contributions so much of all the posters here who debate the issues, know the history, realize the potential of the science and have waited for a payday that will reward those who have stuck through a risk laden ride. Of course IMHO and a heartfelt thank you.
Vid, TC, Jess, et al, I agree that the higher the pre BO run up the higher the BO pps will be. As stated before, it is a lot easier to get to (say) $30 from $20 than from $10 as an example.
For sure it is a balance between sooner vs. later because of the "in process science" and other commercial considerations that will/could out vs the BP wanting to buy at a “reduced” pps (I didn’t say fire sale) vs. a much higher price that would be warranted when all is finalized.
Also, I would think that the BP’s that are interested don’t want the other players to get what Ariad has to offer and therefore a bidding war would be anticipated which moreover would both drive up the price and shorten the time frame (from now to the BO). All is interesting and a fascinating discussion that will only be confirmed when it actually happens of course. The points by all here who contribute are well taken, thankfully received and respected and without reproach.
One more question Vid…..does your "actuarial expertise" involve a Ouija Board? as all resources are vitally needed with this endeavor. (kidding). Most of all, we are in a good place and dealing from a place of strength, steady pps rise and more to come. IMHO
Longx, I think that you are on to a "formula" of sorts with finding possible gems who have had a rough time and still have great fundamentals with their science and mission. Thanks so much for sharing your finds and please keep it up.
We have to be very, very close to a "trigger" point where "they" (the shorts) just can't wait any longer. As someone posted "delicious" is a great term!!
IMHO , Covering has to come soon if not right now.
Vid....you are darn right with Ariad wanting to run today. With that you are right on with the other factors and most of all it can not be soon enough. IMHO
2da....Thanks for your thoughtful and informative reply as usual along with questions. To clarify, see below the definition of "conspiracy theory"
Conspiracy Theory
Noun
1.
a theory that explains an event as being the result of a plot by a covert group or organization; a belief that a particular unexplained event was caused by such a group.
2.
the idea that many important political events or economic and social trends are the products of secret plots that are largely unknown to the general public.
I was attempting in my post to differentiate between an organized illegal conspiracy (which I assumed the poster was referring to) vs. the interaction by many entities (hedges, institutions, MM's, etc) with an effect about which "we" here can not explain empirically (at least right now).
With that I appreciate your informative take on the short position at $28M vs higher levels and don't know (as I stated) the who, what and why that it represents. Do you have an opinion about why they still would be at risk with more positive sentiment about Ariad at this time?
Also, it is good to know that you have modified your BO pps level based on where the launch point starts.
Thanks again for all that you contribute with superb information and input.
AK-Pro.....I agree and also am not into conspiracy theories either YET there is so much about past and present trading patterns, interaction between hedge funds and other institutions, why $28M+ shorts are still there, etc, etc that we all DO NOT understand and fully appreciate.
My personal opinion is that all of the factors involved are all about positioning for the future and doesn't have a lot to do with current parameters. The shorts need to clear out before anything will signifcantly happen with the pps. They (the shorts) are there for a reason at this time and in my opinion have nothing to do with negative sentiment which I think would normally be the case for being short? When we look back in the coming months, it might then all make sense. IMHO
BioTech....I think your thoughts are right now and a very objective and realistic take on what is happening. Also, I believe that much is going on behind the scenes which "we" don't have a clue about.
It is in Denner's DNA as you mentioned to be an activist which is all about coming in and getting out of companies with "opportunity".. In the case of Ariad he knows that there is much value with the science and the many, many avenues that creates an appetite for BP. His job at this point in time is to create a situation that is both an ongoing operation along with an attractive target for BO. Therefore he is in no rush and therefore wants to maximize shareholder value which benefits Sarissa along with many more. We the "retail longs" are literally the minnows swimming behind the shark (I for one like that position).
For sure, we don't know the exact timing and it is very difficult to predict when the BO will happen yet we all know it is coming. Thanks again for your cogent posts along with many others here as well. IMHO
The shorts have been around for a reason which I have underestimated during the past 2.5 years. As MichaelAriad has pointed out, there is a sort of "murky stew" between the MM"s, hedge funds and institutions which purposely has been unclear and been a source of distress for so many of us retail longs. I believe that much money has been made with playing both sides in all of the ups and downs since Feb 2014 in particular.
We all are now UNSURE at this moment in time whether there is another shake coming (to $8.50) or not. Nevertheless, we all need to keep the faith and not take the bait as accumulation and covering can both be advantageous to the big boys at that level.
Right now, I do not see much covering happening and the short report coming out on 9/12 for period ending 9/1 IMHO will not show much change. We will see and always IMHO with thanks to all here who voice their points of view which I think are valuable to our community....both the good and bad.
Agreed Vid and I hope that Japan gives the boost to get to a mezzanine level in pps as I think that is needed for big pharma to bid the BO up to a more favorable area. Much easier to get to the $20's from $14-15 than $10 IMHO. $4-5 more would be huge along with the shorts clearing out as that will be the sign that bigger things are coming.
Thesaud, it will come out on 9/12 for period ending 8/31 (see below link). Like you, I will be very interested to see the change. IMHO, nothing appreciable with the pps is going to happen until the shorts clear out significantly. How that happens is intriguing to say the least.
http://www.nasdaqtrader.com/Trader.aspx?id=ShortIntPubSch
Hogar, very succinctly, no one wins them all! I didn't say that he was infallible.
The fact is that it is all about Opinions here:
That said, I “think” it is all about “Timing” and “Risk” with regard to both when the Buyout will happen and how much will be paid.
There seems to be two types of posters here which are: 1. Pre Crash and 2. Post Crash.
With that fact, both want to elaborate what, why and how Ariad will evolve based on those two perspectives.
If I were Pre Crash, I would want to get back to where I was plus add some to makeup for lost time along with eliminating the risk of another crash. If I am Post Crash (which I am) I want to get a good return and get out without the risk of another Crash.
Therefore, IMHO I think that Denner has done a masterful job so far in engineering a comeback along with developing the needed ingredients in science, management and acquisition window dressing to get the best price in a reasonable time frame. If he had come in, eliminated problems (CEO, BOD and key executives) and tried to sell without the above ingredients, it would have been a fire sale. Denner is absolutely, totally in the business of getting into companies, turning them around, making them attractive and therefore maximizing the return to investors including his hedge fund.
I think it was absolutely brilliant in recruiting top notch new blood that gives him a lot of flexibility in making decisions on his terms and not because of being painted into a nasty corner. I am sure that the new management was recruited NOT with the intent of making careers out of running Ariad but rather to turn it around and then exercise very attractive low priced options at multiples that are incredibly worth their while. Denner has to be looking at this as a win-win for everyone including his fund, other institutions, retail longs, BP buying and last but not least his new team.
To me it all makes sense and I believe the last thing he is thinking is that he will build a company long term (years) and then sell. I say that because for his MO to work he needs relative short term (3-4 years in this case) timing and minimizing risk (yes folks another Crash could happen down the road which is out of the control of anyone one involved… just ask the FDA).
Anyway, I do believe that the BO will happen in the next 4-8 months, maximizing shareholder interests (not a fire sale) and most of all it is “worth” what a buyer is willing to pay based on so many, many tangible and intangible variables which are too numerous to list. It's not just about revenues, an income statement or balance sheet.
Again, all of this is IMHO as I respect so much the opinions of so many here who have a vast amount of knowledge about Ariad, the industry and likely scenarios as well. Thank you.
Interesting new article this morning about BioTech M&A activity
http://www.cbsnews.com/news/pfizer-m-a-blitz-could-heighten-investor-interest-in-biotechnology-sector/
Vid, it looks like a "holding pattern" which is a technical trading term I just made up. So glad to see the strong support and fighting for position by the longs. They are probably adding as well along with the shorts not able to cover much. IMHO
Vid, I think your points are very realistic in it is how the system works.
What Ariad does is very sophisticated and thankfully can not be compared as if it were a commodity. There is absolutely nothing wrong with business as usual in this area in literally saving lives. Thanks always for thinking outside of the box. IMHO
It seems that most here agree that a BO will happen and the discussion is primarily about “when” and “how much”. Below are some thoughts about how the TWO parties may look at it from different points of view:
Ariad
Looking at Denner running a hedge fund and negotiating from a position of strength this is what he may be thinking:
$18-$22 This isn’t even the pps of Ariad pre-crash and since then so many good things have happened with: Pona…re-approved, improved dosing, growing sales….Brig…in trials and excellent outlook, 788…shows ability to create, innovate and more. New and improved management, decent cash position and better operating results to boot. If I were running the show this level is a non-starter just from a psychological standpoint and would do nothing to advance reputation in the industry for future deals for one.
$22-26 This is in the area of pre-crash and Denner could say that at least they got back to where they were in 2013. Given that a lot of things have happened with Pona, Brig, the BOD and Management changes, they might take the high end of this range and say “we are good” in that the institutions (assuming they are all in from $4-$8ish average) could get a 3-6 multiple return. Right now this is where I think we would be in 4-8 months.
$26 + This is above my pay grade to predict and I absolutely don’t know enough about Denner, what he is thinking, or the approach that he might take in waiting for this level and above.
Big Pharma Buyer
I think they would look at Ariad as an entity with science in all phases that they want to add to their repertoire and would want to buy earlier vs. later. Given their willingness, expertise and ability to take some risk, I would think that they would not want to wait for all of the formal approvals on Brig and therefore pay a lot more.
$18-$22 For them this would be a “ super deal” and Denner knows that and therefore will wait out a reasonable amount of time (months) for more.
$22-26 This is still very doable and internally by rationalizing that Ariad was selling at this pre crash and NOW things are a lot better thus still a “good deal” with some risk yet not to the point of looking like they were overpaying.
$26+ Again, the stars would have to line up, the bidders making offers, trying to fend off competitors, wanting the science that no one else has the approved drugs, etc,etc, etc.
Overall, none of these are out of the realm of possibility and I think trying to look at it from both sides might be helpful in attempting to predict the future with a myriad of variables being taken into consideration by both sides. I think it is difficult for many to look down the road YET when trying to project using all of the factors that many here know and watched, it might be easier than we think.
The players involved are smart, sophisticated, projecting forward and also wanting to protect both what they have and maximize future possibilities. Perhaps my main point here is that “things” can be in many phases of development in order to create “value” and therefore the BO quite likely will happen sooner than later and it’s all about Win-Win and give and take by both sides
Many more here can expand on these ideas and I would love to hear how the sages on this board might look at it. IMHO
TC, not disagreeing but I believe on Wednesday the "Day Traders" probably made money both on the way up & down. What I would NOT want to be is "overnight Short" IMHO
Vid, my feeling is that this is all about trading with both shorts covering and longs buying at better prices. This goes with what MichaelAria was referring to this morning about the tactics in play and what might come.
We (many here) have felt (been concerned) for days now that inevitably a shake was coming and it could go on tomorrow as well. There are still $28M shorts out there fighting like crazy and this will go on until they cover one way or another knowing the scarcity of cheap shares.
IMHO, "they" will use any excuse to do their thing and this is temporary and part of a short term general news cycle (Hillary) at worst. Many traders made a lot of money today shorting the sector which had nothing to do with long term fundamentals.
Of course, we don't like it and IMO brighter days are ahead. My advice to many here is "please don't panic or get down about this". Note: Easier said than done for sure. IMHO
FYI, Short Interest as of 8/15 is down to $28.4M or almost 9%.
They can't cover fast enough or cheaply enough.......maybe some today.
Again Michael very helpful.
With that do you have any take on what the average short pps is? Right now, they must be sweating it and their risk tolerance is only so much before they will have to cover?
Just to confirm, you think the shakes will be relatively mild? Based on the price action recently and last short interest report (8/9) going to $31M, I don't see any appreciable covering yet. Today 8/24 the 8/15 is due out...will be interesting yet probably little change?
By the way, these are questions I have had for a long time. Your input for me is valuable. Regards,
Michael, I like your thinking yet the many retailers here (like me) dread a shake.
That said, with the limited shares available how do you see it working with buyers (both shorts covering and institutions) at lower levels getting what they need? Do you see a squeeze then? How much? Also, in order to take the pps down, the long buyers will have to step aside for a period and then load up along with the shorts? Doesn't seem like enough float to let everyone in (or out for the shorts) at lower prices?
Your knowledge and insight about the trading and institutional strategy is extremely helpful. For me it is always good to try and take out the mystery of what is or might happen. Thanks again.
Vid and Jess, I can understand both of your points of view and I think is all about "perspective" and "perception".
Perspective
When we were at $4.37 not long ago, thinking that $10.60 would be achieved took some imagination and now being at $10.60 (and holding), going to $18-$20 IMHO is the same sort of mental exercise. It all comes down to where you are looking at it from. Also as you pointed out Vid, some shareholders (depending on their tenure and going through hell and back with the crash) have a totally different take than people like me who have been here coming up on 3 years. Each to their own and I can see that getting out before a BO at $18-$20 would be very enticing. Risk tolerance is impacted for every individual by so many factors....goals, history, patience and a lot more both personal and Ariad related as well. Also, I do think that the crash has created an exaggerated perspective whereby time seems of the essence in escaping vs. really looking at the potential value. To some, 2 months is an eternity and to others 2 years seems reasonable.
Perception
I would think that Denner's job is to become a master at creating a perception/image along with performance of Ariad including science, stability (not being cash poor), partnerships, strong management , a lot of options (preventing a fire sale ), the ability to get the pps up thus a potential buyer wants to buy early (less $) than later (more $) and more. My hope is that we could have a perfect storm where in short period of time (sometime in the relative near future) many aspects of the factors above would come together and create a unique situation as a convergence of sorts where a pre BO pps would be a launch pad to maximization.
Certainly all of this is conjecture yet my opinion is that it is going to happen in a 5-9 month window because that is the time necessary to create the setup in not jumping the gun (there is plenty of time) and at the same time not allowing negative factors (economy, M&A environment, less cheap money) to intervene
As always, IMHO. And so good to see really great posts here with so much valuable information. Thanks
MikeA, I agree and also know there is a recent gap from July 28 in the mid $8' and I hope that one NEVER gets filled. Also, it makes sense to me that the institutions are finished accumulating (at lower pps levels) and therefore are holding their ground as the $10's are very significant in that some here think that we are around the short's breakeven level. Your thoughts?
Vid, you are exactly right about today and the situation of the shorts and the constant "dog fight" going on for weeks now. I like very much that the trading patterns have changed and like you think that something is up with bright days ahead with caution of course we don't know the exact timing.
Good point Vid, Over confidence especially with the history of the shorts being in control for so long is NOT something I am feeling either. We will see and yet I am hopeful too that the next leg up is not long in coming.
With all respect, there are endless possibilities and nothing is a sure thing until it happens. That said, I like what I am seeing now vs. before yet I am not one to say I know it all or that I am a sage as to what exactly is coming down the road.IMHGO (Humble being the operative word there, the "G" is for grateful).
I agree Vid. No matter the exact date it is JUST a matter of time for it all to work out upward. To me the 80% shows:
1. The smart money knowing where to find opportunity in Ariad
2. That as expected they were accumulating when we thought that was the case therefore a confirmation of what we thought we were seeing
3. The more shares that are held by institutional longs the more that the shorts do not have a cheap way to cover without a squeeze
4. And now they are apparently where they want to be and thus drawing a line in the sand and standing firm with no more games.Perhaps they are adding even a bit more as well.
I like the fact that it appears that we (the retailers-longs) no longer have to sit here and watch the shorts being in control and therefore the day to day unstable trading patterns with the walkdowns, shakes, scare tactics and more. I am sure that a lot of retailers got out because of the all of that. IMHO
Ariafan, actually I agree with Vid and think the recent run up has/had to do with the earnings back in July along with the great anticipation of the science AND IMHO most of all the long institutions taking a totally different approach to their support of the pps. I think this is huge and may indicate that their accumulation is over (by the institutions at the lower pps levels of the past) and now they are wanting this to climb with a lot of support.
To me the announcement from Japan would enhance and back up the credibility of the new management group in "doing what they say they are going to do". I remember well over a year ago, being told (by the old team) that the Japan announcement would be before the end of 2015. Perhaps, someone can verify that remembrance on my part? Anyway, to me credibility, stability and honesty are very important and will go a long, long way to giving the investment community more faith.
Again, always IMHO.
Vid, The announcement from Japan would absolutely help the cause in a very big way. Can you elaborate why you think this is coming soon? You have more insight with such matters. Thanks
Vid, here is another minor theory about the shorts...see what you think?
Until late July after earnings, the shorts would allow the pps to go up and then take it back down almost at will. We had seen this over and over again and again for the past couple of years. During this time, the long institutions and hedges took the position of allowing this behavior except thought that the day would come when the pps would rise and THEN they would draw a line in the sand and make it even worse for the shorts.
NOW is that time and with the huge volume right after earnings the shorts could only do so much in not allowing the pps to explode (albeit rising) THINKING that at the end of the run (rise of the pps) they could AGAIN take it down.
NOW after even adding more short positions (during the later half of July), they are stuck and in even a worse position. And with some institutional accumulation (as we have seen with reports) they are or should be getting desperate with a squeeze coming. I hate to beat a dead horse with this subject but I know we are all looking at this with almost amazement and piqued interest.