DRAD – Getting out of entire position. Happy with 50% gain. I hope someone will share this info with those on the Motherboard, since I’m just a freebie member.
After larrybaz posted the stock, I did some research and found it a compelling choice on the surface. The turnaround story sounded good, along with the cash cushion and return to profitability. I immediately started a 5% position at avg of 1.51. I was looking to increase my position, after doing some further due diligence. I am now selling because of the issue regarding the shutdown of the Chalk River facility and the Petten facility, which produces about 60% of the output of nuclear isotopes used in the imaging machines of DRAD. They mentioned in their recent 10Q that the Chalk River issue could have an impact on their business. From the 10Q “As of the end of June 2009, there was a significant reduction in the availability of radioactive medical isotopes worldwide. For example, a nuclear reactor in Chalk River, Ontario, which supplies 50% of certain medical isotopes to the United States market, is currently off-line for repairs and will not return to service before late 2009 or early 2010.”. This was not an insurmountable problem, however now the Petten facility is going to be offline until August for routine maintenance. Given the decay rate of the isotopes, this will probably have an immediate impact because new isotope supplies are constantly needed. These two facilities offline reduces the supply of isotopes by 60%. While smaller doses of the isotopes can be given and alternatives can be used, there are difficulties with each. The US has no facility of its own to produce nuclear isotopes, so DRAD will have to import supplies. In this depressed dollar environment, they will have to purchase against appreciated currency. Some of the other reactors are looking at increasing production, but apparently the other reactors can only ramp up to at most 80% of needed capacity. Given all these facilities are 40 years old, the supply chain for DRAD is a bit too unstable for my taste. I’m guessing this will affect next quarters numbers, since the June 30 quarter already experienced part of the Chalk River shutdown.
