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Common Cents Investment Group

Common Cents Investment Group. Monday February 24 th Biotechnology & Trading the News. Agenda. Market Updates CCIG Leadership Elections BitCoin Update - Weiyi Trading the News - Lindsey Biotechnology - Max. Market Update. Investopedia Simulator Game. Will end March 31 st , 2014

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Common Cents Investment Group

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  1. Common Cents Investment Group Monday February 24th Biotechnology & Trading the News

  2. Agenda • Market Updates • CCIG Leadership Elections • BitCoin Update - Weiyi • Trading the News - Lindsey • Biotechnology - Max

  3. Market Update

  4. Investopedia Simulator Game • Will end March 31st, 2014 • Top 3 winners will receive book(s) on investing 2014 • U.S. Equity Markets +2% • Random Equity Picks +5%

  5. Leadership Elections • Apply for 2014-2015 school year • Applications due March 17th (right before Spring Break) • Great resume booster • Learn more about investing

  6. BitCoin Update WeiyiXie

  7. Old News on BitCoins • “Chase-ingBitcoin: Is JPM Preparing To Unveil Its Own Electronic Currency?”http://www.zerohedge.com/news/2013-12-10/chasing-bitcoin-jpm-preparing-unveil-its-own-electronic-currency • News: 7/11 Convenience Store in Mexico decided to accept BitCoin.  • (But some of us are still talking about whether bitcoin is ponzi ...)http://www.cryptocoinsnews.com/2014/02/01/bitcoin-accepted-7-eleven-mexico/ • Wall Street's first ever Bitcoin report (December 2013) from Bank of America Merrill Lynch • http://cryptome.org/2013/12/boa-bitcoin.pdf • About BitCoin Investment Funds, earning 700% within 2013 • http://finance.yahoo.com/news/secondmarket-ceo-wall-street-put-203000747.html • “Recession-Plagued Nation Demands New Bubble To Invest In” • http://www.theonion.com/articles/recessionplagued-nation-demands-new-bubble-to-inve,2486/

  8. Debates on Risks of BitCoin • What if the government doesn’t accept it? • Ideology: Do you trust the centralization / centralized government or not? • Risk on BitCoin: 51% attack • Risk on bitcoins: price variability

  9. Valuation of bitcoin

  10. Functions of BitCoin Three Directions: 1. Inflation protection 2. e-business (PayPal, Visa, MasterCard, American Express) 3. International money transfer (Western Union, MoneyGram, SWIFT, ACH) • Black Market? • Regulation?

  11. Trading on News Lindsey Kathmann

  12. Trading on the News • All is speculative • How much of a risk are you willing to take • Make money on people reacting to bad news • Better for short term trades • Buy before estimated positive earning: speculative increase • Buy after bad earnings: “Sick puppy” • Pay attention to: • Stocks near 52 week low • Potential Earnings • Up and coming industries/stocks

  13. Where to look

  14. Groupon (GRPN) • Went down 22% in 1 day • WHY?

  15. GRPN • Coupon business deteriorating, so focusing on physical goods • Reorganizing the business can hurt their profit for an extended period of time • Groupon experienced high growth in 2013 • Investors question whether reorganization of the business will be successful

  16. American Apparel (AAP)

  17. Honda (HMC) • News: Reported near 52 week low • Why? • Ford has become more competitive • Anti-Japanese sentiments in China • Why is it a good time to buy? • December 2013: able to grow its sales in China by 60% • Show acceptance of Honda globally • Honda was in the negative column for January • Only down 2% vs 7% industry average • CR-V had a 2.4% sales increase • Introduced an Accord in all electric and gas-electric hybrid model for 2015 • Priced at 91% book value

  18. Potentially Massive Moving Stocks this Week

  19. SandRidge Energy (SD) • SandRidgeEnergy, an Oklahoma-based oil and gas company. • Some disappointment over the past year • Paid to acquire land in the Gulf of Mexico • Determined there wasn't enough available in the region to continue drilling • SandRidgeis now focusing intensely on its operations in the mid-continent: Mississippi, Kansas, Oklahoma, and North Dakota • Many believe this is where the real organic growth can come from for the company • 2 Key Variables to make or break stock prices: • Underlying price of the commodities- SandRidge is selling: gas and oil • How well the company did in predicting is validated reserves

  20. Biotechnology & Pharmaceuticals Max Layman iShares Nasdaq Biotechnology [IBB]: 88%(1-yr)

  21. Characteristics • Huge advances in medical technology in recent years • Obama Care • High Risk – High Reward Industry • Few companies are profitable • 319 Biotech companies • 143 Pharmaceutical companies

  22. Size Matters • Small Companies • Make it or break it • Operate without profit • May issue shares to raise capital • Acquisition target • Big Companies • Not gaining FDA approval doesn’t destroy company

  23. 3 Investment Strategies • FDA approval • Trade in anticipation of drug approval • Possible Acquisition Targets • Invest in small company with proven drug • Fundamental Investment • Invest in large company with large portfolio of drugs

  24. Approval Process • Phase I • Test on humans • Determine if side effects are serious • Phase II • Effectiveness at predetermined doses • Phase III • Compared to existing drugs • Blind tests • Is it effective, safe, and better than current treatments?

  25. What Type of Drug is it? • Cancer? • Gastro-Intestinal? • Headaches? • Diabetes? • Heart Disease? • Ruconest for hereditary angioedema?

  26. FDA Drug Approval Decision Calendar • March 21st 2014 • Celgene (CELG) - Apremilast for psoriatic arthritis • April 15th 2014 • Mankind (MNKD) - Afrezza for Type 1 and 2 diabetes  • Glaxo Smith Kline (GSK) - Abiglutide for diabetes • May 5th 2014 • AstraZeneca (AZN) - Epanova for hypercholesterolemia

  27. Example 1 of Approval Approval

  28. Example 2 of Approval Approval Pre-Decision Run Up

  29. Approval Not Given No Approval Pre-Decision Run Up

  30. Oxygen Biotherapeutics [OXBT] • FDA granted fast track for Levosimendan • Drug reduces morbidity in patients who have undergone cardiac surgery • Already approved in 50 countries • Phase III trials start in June 2014 • Single successful trial needed for apporoval • Market Cap $65M

  31. Oxygen Biotherapeutics [OXBT]

  32. Acquisition Targets • Small Cap companies • Already have drug approval

  33. Acquisition Targets – Example 1 • Galena Biopharma [GALE] • FDA approved pain medicine • Partnership with Teva Pharmaceuticals • Pipeline of drugs

  34. Acquisition Targets – Example 2 • Zogenix [ZGNX] • FDA approved pain medicine

  35. Looking for Good Fundamentals • Return on Assets > 0 • Return on Equity > 0 • Return on Investment > 0 • Debt/Equity <1 • Operating Margin > 15% • Price/Earnings > 0 • Performance [ttm] > 0 Results CELG – JAZZ – PRGO – QCOR – UTHR

  36. Looking For Good Fundamentals

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