Scott Hennessy
Account Manager at Avalanche Enterprise Ltd
Pernix Therapeutics Holdings: The End Is Near
April 26, 2017 • 7 Likes • 1 Comment
In a recent article I outlined my case for why Pernix Therapeutics Holdings (PTX) is a suitable and favourable buyout target based on fundamental and technical analysis. Since John Sedor took the CEO position, the thesis has developed into a real possibility with substantial evidence and events pre-empting my interpretation that this company is severely undervalued and holds significant upside potential from it's current trading price of $3.95.
However, the longs have been screaming buyout since September 2016 when rumours circulated that the company was being bought imminently. Severn months later and with no buyout announcement as of yet, the stock has suffered day to day fluctuations which indicate that day traders are in control. It should be noted though that the stock is up 104% since it's $1.94 low on December 27th 2016.
A recent 8k filing and communication from John Sedor himself in the Q4 full results and conference call has led me to believe that a buyout THIS time is literally around the corner, by July 31st to be exact. Lets start with the 8k. The company filed documents last week with the SEC regarding details of an amendment to it's credit facility with Wells Fargo. Again the document is littered with buyout hints as a result of the legal, profound and style of communication that the document is written in. It's not just retail investors that are getting excited about this, the increase in institutional ownership has grown double digits with short interest declining; creating an increase in investor sentiment.
Without going into intricate detail of the material released in the 8k, there are a few essential points to identify and explain that adds to my buyout thesis. The common theme of the 8k detailed how the potential of an investment bank would partner with Pernix Therapeutics Holdings to assist the company ''with the marketing, negotiation, documentation and consummation of an acceptable sale'' , as well as outlining certain terms based around the outcomes of a buyout with regards to the credit agreement with Wells Fargo.
The 8k was released Thursday after hours, with the stock spiking 40% in the early hours of opening on Friday morning. Granted the stock sold off as a result of day traders locking in their profits, but for the long term fundamental investors; these signs are taken with a sense of prosperity and positivity.
Whats next?
The next big catalyst for the bull theory is the official announcement of an acquisition. Shareholders are looking for a substantial premium to current trading prices, with some analysts stating $30 is a fair valuation. However with the potential of Silenor OTC, sequential Q on Q sales growth, John Sedor's glittered company buyout history, relaxed litigation payments to GSK, increased institutional ownership, this stock is poised for lift off imminently. The stock is trading on bankruptcy levels and beaten down sentiment, which is largely unfair, however a wise investor will understand that the value and potential of Pernix's assets in the hands of big pharma far outweigh the net debt value, creating extraordinary value for shareholders in the process.
If anyone wants to chat about value investing, stocks or business in general; please feel free to reach out and drop me a message!
Scott Hennessy
