Off The Beaten Track

I've been doing some research and biotech/life sciences sector seems to be very interesting.

Yep, I know it's renowned for hype and sexy stories but when they are beaten down it's often time to take a look at one or two. The specific area I'm interested in is Herbal Remedies - making medicines from plants. There are two listed in London which might be worth a look.

First is GW Pharma - which are working on treatments made from Cannabis - they've been around for over 5yrs - and very little seems to have been approved yet despite claims of grass having magical powers - from some quarters. My theory is this they were recently close to all time lows circa 60p ....... but maybe one or more of their treatments will work and receive approval. They claim to be able to treat obesity, MS, and other widely known ailments - my memory fails me.

Their backers are savvy investors who have not budged since ipo and they had a placing in January 06 at around 130p- so in the 60ish zone they were interesting. They are now around 100p and seem set for better things. Naturally this is very very speculative or maybe just one very - but anyway if there is something to medicinal powers of grass then this one will go crazy and for good reason. Keep an open mind - Ticker GWP.

Second is Phytopharm - I'm not as confident of this one but it has collapsed and is now less than 20% of its highs and has been trying to base around the high 30's. Their main claim to fame is an appetite suppressant made from the exotic Hoodia plant. They also have plant based remedies for skin ailments too - one for dogs! This has been a consistent disappointment but it is a long term story so perhaps the early hype was a bit premature. Nevertheless its one to watch as it tickles 55/57p long term and short term. It has a habit of flying 50-100% in the autumn so there is something for you even if you don't believe in the long term story. Keep an open mind - Ticker Pym

Maybe nothing will come of either company save a few speculative surges - but if they do manage to get something commercial going .....................

Just a thought.

Hook Shot

What if Gold is not dead but resting ?

More random thoughts....

I keep reading about this great bull market in Gold which will take it to new highs at least over $800. Naturally, with the recent slide confidence in this notion has been severely shaken. However, what if dollar really is in trouble and Gold is in the process of re-asserting itself as a Global Currency or something similar ....?

To be frank I haven't got a clue whether this is plausible or more importantly whether this will mean you can make money in the potential rise in Gold .............despite listening to Gold bugs/smart investors who told me to buy the yellow stuff at 300!

What I do believe is that the risk/reward of the Gold story, if those sages are still right, is moving nicely into our favour. As I mentioned somewhere else cheap Gold could be good for investors paradoxically. I envisage escalating Geopolitical tensions in coming months and further Economic turmoil - as the global imbalances seek to adjust themselves - every expert on the planet seems to believe they must and will.

Now to the meat of it.... IF Gold is about to mount a major comeback taking it to new highs perhaps next 6-12 months... then gold stocks are looking very attractive. Add to that the M&A which seems to be sweeping the sector right now and we could have something which develops into a BUBBLE!

Whilst this viewpoint is miles away from the mainstream - it just might happen so don't right it off entirely. Many gold stocks in US are up at least 5x since their lows - and some more than 10x and yet you don't hear much about it. In the UK you had Peter Hambro Mining which has done extremely well (up 10x since float and 18x at its peak). In addition, you also have Golden Prospect the one time Gold investment company- turned gold investment bank which I saw at 7p and is now over 50p. So money has been made in Gold and gold stocks without much of a fanfare.

The bottom line is this - there is a possibility that Gold makes a roaring comeback in the months ahead and this might become a MANIA - just like the technology bubble. If this plays out Joe Public will be buying gold/silver funds, stocks and coins as greed becomes rampant and demand overwhelms supply. Maybe this may never happen - maybe it's just around the corner - in any case it might be a good idea to put together an investment plan just in case this crazy idea becomes a reality.

For what it's worth, I have my eye on the classic Golden bubble stock - DRD Gold (formerly known as Durban Deep) US ticker DROOY - it's listed in South Africa and also traded in New York. In Jan 2002 I bought some at $1.39 (belatedly) and they fizzed to almost $6 plus by Easter same year. They then crashed to 66c and almost went out of business Apr/May 2005. They are now $1.31 having been to £2 earlier in the year.... Needless to say this is highly speculative and only for the brave (or stupid ?) - nevertheless if this outlandish scenario outlined above takes shape this stock could hit $6 at least.

It won't be the only one there will be lots of penny stocks which may do even better! During the bubble days I remember a textile company which turned itself into an internet company and became a 10 bagger in 3m. The same sort of thing could happen again.

What if Gold is not dead ... but resting ?

AS EVER DO YOUR OWN RESEARCH - THIS IS NOT A RECOMMENDATION TO BUY.


Hook Shot

Where there's Muck there's Brass....

Recently, due to a peculiar request, I had to try and find some stock ideas from scratch. Due to my passion for buying low I went into the bucket labelled 52 Week Lows - usually neatly assembled in the daily FT but can be got elsewhere but extra work!

What I found amazed me .......... it doesn't take much these days. No ..... I found some really interesting stuff

a) An investment company with two stakes jointly worth more than the whole company
b) A new bank - with wealthly backers
c) A property investment company - investing in one of the large high growth regions of the world
d) A high tech component manufacturer - about to go global at last!

plus the usual assortment of recovery situations.

Now it has to be said that most are small companies and the usual caveats apply. However, there are others which you might have heard off...which recently made 52Lows

Glaxo
Bp
ITV
Gcap Media - former Capital Radio
Northern Foods - big restructuring
Tomkins - made low Wed 4th Oct.
Qinetiq - Government high tech research laboratory floated earlier this year.


The point I'm tring to make here is that with US and European markets near their highs there is still value out there and one of the ways to find it is to kick the tyres on some of the companies which everyone has left for dead ................. and usually appear in the 52L section.
To be fair some of them deserve to be in the dog house but some of the are just misunderstood or are ready to make a comeback. In any case ......... as ONE of the ways of finding value........ New 52 Lows can be quite useful. Moreover, it's not unknown for some of these comanies to attract the attention of a bidder!

Happy Hunting

Hook Shot