Senesco Technologies: Optimism, Though Time is Short

Investors in Senesco Technologies are a pretty optimistic group: On the day in 2009 when stocks hit 1997 levels, shares of Senesco rose 19% on no apparent news.

Even before today, investors appeared to be placing a lot of faith in the New Brunswick, N.J.-based biotech. After today's run-up, it carries a market cap of $8 million. That's despite net losses totaling $33 million since the company's start-up in 1998. Those include $1.62 million,  amounting to 9 cents a share, that Senesco lost in the quarter ending in December.

Senesco's value is in the genetic technology it is developing, for agricultural and medical uses.

It's difficult to get excited about much of anything in the current market. But some investors were still pleased with the results of a study performed on mice for Senesco's cancer drug candidate, SNS-01. The study found that the drug could shrink tumors in mice by as much 91%. And the mice could tolerate doses of the drug that were two to four times what was necessary to shrink the tumors before showing toxic effects.

"Imagine a chemotherapy drug for cancer treatment that was non-toxic and was very effective in killing tumours," wrote one blogger on Motley Fool's Caps Forum last week. "It didn't even kill the mice given massive doses. By the end of 2009 this one may hit the media big." 

But for Senesco, neither media stardom nor the end of 2009 are the finish line. The company has years of study and multiple FDA trials ahead of it before SNS-01 could be offered for humans and Senesco could even begin to generate revenue.

The company has no where near the financial resources to get that point on its own. As of Dec. 31, it had cash and liquid investments of only $3.62 million, according to a filing with the SEC. Senesco estimates that that would be enough to allow it to continue operating only through July.

Raising capital is of course harder than usual at the moment and any fundraising that Sensco does is likely to be dilutive to its current investors.

The company raised $10 million back in June in a private placement of convertible notes to two investors. At least one of those isn't likely to be around for any fundraising Senesco needs in the future, as $5 million of the note offering was made to Stanford Venture Capital Holdings, the venture capital arm Stanford Financial.

 

Questionable Timing: A New Blog About Penny Stocks

It could easily be argued that my decision to start this blog now shows that I'm not qualified to write a blog on stocks.
But even now, I think there's an important service to offer in helping investors research microcaps. And I imagine that if you've found your way here, you probably agree and understand why.

The stock market will eventually come back. And when it does, small company stocks are likely to outperform just as they usually have in the past.

At some point between when the market hits bottom and before the comeback is widely recognized, there will likely be a lot of money to be made if you can get positioned in the right microcap stocks.

So let me introduce myself and explain why I think I can help.

For now, you can call me A. I am writing this blog in the evenings and early mornings, when I am not at work.

My regular job involves writing and editing research publication used by market professionals. I've been working in similar positions for years. 

My experience around the markets has given me two main insights that will guide this blog.

The first one is this: Despite the fact that small cap stocks often offer some of the best investment opportunities, the sources of information available for microcap investors are generally pretty crappy. 

Google around for information about microcap stocks, and you'll generally find a lot of headlines in all capital letters with lots exclamation points, naming the stock that are sure to DOUBLE! OR TRIPLE!

Even for market professionals, the research available is relatively limited. The major investment bank research teams tend to ignore penny stock companies in favor of larger companies that can afford to hire those banks for merger advice or to arrange public offerings.

Publications you may come across that might look like professional, independent research are likely to be reports arranged by the a company's investor relations consultant, or put out by a "sponsored" research firm that is paid by the company.

I will never accept any compensation from a company whose stock I'm writing about.

I hope to keep this blog focused largely on highlighting risks in individual stocks, as I don't think there are many others out there who are publishing on penny stocks who will help you do that.

That brings me to the second insight I've had over the course of my career: I don't know which stock you should buy.

I hope that you're not disappointed. But the thing you should understand is that the others out there who are supposed to know which stocks you should buy, actually don't either.

The writers of the web sites with the capital letters and exclamation points certainly don't.

And even the professionals screw it up on a regular basis. Leaving the Bernie Madoffs of the world out of the discussion for the moment, I have met hard-working and well-intentioned professional fund managers with Wharton MBAs and teams of researchers to help them. And still, they get it wrong over and over.

That's why most people are likely to be better off invested in an index fund. That's why there have been studies that have found random surveys of untrained market amateurs can often pick a stock portfolio that will outperform one chosen by professionals.

None of this is to say that you might not be able to successfully pick penny stocks. Perhaps, you have insight on an industry or an  area of the world that can help you spot a successful company of the future while its still in its youth.

And if so, I'm happy to help by bringing forth some interesting points about companies that might better inform your decisions.

I just don't intend to claim this web sight to be the source of wisdom that no one may really have. The best I can do is to help you make better informed decisions