StemCells, Inc. (NASDAQ:STEM)

This name repersents the amplification of near term collection of "false hopes" IMHO. I think investors will be dissapointed and dissillusioned in a significant way. I'd like to short this on weakness and buy after exhaustion selling over and over again. Just not in my focus to track.

recently hyped up on the basis of worthless very preliminary animal studies. They don't even have the money to follow up.

OK, here we go. I really wanted to get this out yesterday when everyone was paying attention to StemCells, but other things came up and no one's paying me for this.

StemCells used to be a stem cell therapy frontrunner. along with Geron and Osiris, but in the last few years fell to the back of the pack with uninspiring progress from their rare disease pipeline. Throughout that time, management has demonstrated itself to be an enthusiastic obscurer of poor trial results and shown a willingness to manipulate their stock to facilitate dilution.

Some lowlights:
1. In late 2008 the stock suddenly spiked from 0.8 to 2 (not split-adjusted) without any clear precipitant and the company immediately announced a 20M financing. The stock promptly declined back below 1.
2. The company never clearly reported the results of their phase I trial of HuCNS-SC in neuronal ceroid lipofuscinosis, likely because no clinical benefit was observed. A second trial in less severe illness was canceled due to a lack of patients meeting enrollment criteria. They were attempting to treat a condition so rare that the therapy couldn't be tested.
3. A 10:1 reverse split in July 2011 was followed by a share price deterioration so steep that the stock was almost back down to the pre-split price by December.

As you can see, I'm not a big fan of StemCells. My CAPS strategy up until this week was to green thumb them if they dropped to the 50 cent threshold, or to red thumb them if they climbed over 0.9. They never reached 0.5, and fortunately didn't rise over 0.9 before the big move yesterday.

That brings us to July 17, 2012. In the pre-market the company issued this press release: StemCells, Inc. Announces Its Human Neural Stem Cells Restore Memory in Models of Alzheimer's Disease. http://investor.stemcellsinc.com/phoenix.zhtml?c=86230&p=irol-newsArticle&ID=1715297&highlight=

The announcement is basically junk. I've lost count of how many times misrepresented data from in vitro or animal studies has been used to manipulate a flagging share price in order to facilitate dilution. The one I remember best came from Prana in early 2011, and that share price jump quickly returned to equilibrium. It's very telling that StemCells can't even bring themselves to provide any information about their animal model in the body of their press release. What kind of animal? What kind of model? You won't find that information in any of the echo chamber articles on the news feed that parrot the company's press release. The PR has nothing to do with the company's real pipeline or prospects, and simply uses a hot-button topic to attract interest to the stock. This from the company that fails to issue PR's when they complete actual clinical trials.

After closing at 0.87 on Monday, the stock opened in the 1.2's and traded in that range until about 2 PM. Between 1:30 and 2 the stock began a steep upward leg that would culminate in a share price of 1.8 at the close on Tuesday. The only catalyst in the later part of the day was publication of this article in Seeking Alpha: StemCells Huge Tuesday Gain Is Only The Beginning In 2012. http://seekingalpha.com/article/726971-stemcells-huge-tuesday-gain-is-only-the-beginning-in-2012

The timestamp on the article in the Yahoo Finance news feed was 3:19 PM. I don't know if the article was actually published on Seeking Alpha a couple of hours earlier and had a delayed entrance into the feed, or if buyers who had access to the article before publication bought in front of the wave. It does seem interesting that the upward momentum peaked at 1.72 around 3 PM, then reversed to 1.56, then shot back up to 1.8 immediately after the article hit the Yahoo feed.

The Seeking Alpha article itself is also junk. The hyperenthusiastic title is followed by a recap of the company PR and some vague, non-insightful commentary about the company's pipeline and historical stock movement. The author concludes with a paragraph of empty, platitudinous statements about how "time will show" if "anyone of these areas can be successfully targeted". My favorite quote: "Shares nearly doubled today on results from pre-clinical trials. With two drugs in clinical development, and four more in pre-clinical stage, shares could see more swings like this in the near or long term future."

Yes, the share price of a speculative company might see price swings in the near or long-term future. Thank you. The lack of any useful or objective analysis is unsurprising given that the author publishes several articles a day on Seeking Alpha and has little experience with biotech. The article adheres to a formula of recycling info from company PR and websites, followed by a series of vague platitudes.

In summary:
1. Company releases misleading and inflammatory PR in pre-market and successfully engineers a 50% gap up in share price.
2. Stock pumper writes "article" within a couple of hours recycling company PR and providing vague and empty commentary and submits it to Seeking Alpha.
3. Seeking Alpha publishes article within a couple more hours after what is no doubt a comprehensive editorial review.
4. Share price gaps up 50% again with the new upward leg beginning either before or shortly after article was published on Seeking Alpha.
5. StemCells announces 20M dilutive financing.

Oops, sorry. 5 didn't happen yet. There's still time to buy your popcorn.

Will need to sell stock later this year or early 2013.

These are long haul companies. There's LOTS of break through movements in stem cell research and applications. Texas just made law to free up stem cell research, development and experimental treatments, that do not require FDA approval. (The governor just had stem cell therapy on his back, and is a big advocate.) Though not all the companies may flourish, at penny stock rates, the loss possibility is marginal. The gain potential however, is phenomenal. I'm betting some of these companies will easily break $10/share in the next 3 years.. with potential into the mid $30's in 5 yrs.

Technical Monthly

this research will be very beneficial to help humans in so many ways, should also make $$$ if succesufull and managed correctly, and used for good not bad.

TSIF

stemcells

Stem cells

Covestor Model Manager Joe Agresti bought STEM in his China & India Covestor Model ( http://covestor.com/Joe-Agresti )

Long term buy.

I keep doing screens to find new ideas, and I always run into this one, I like the sector and the fundamentals aren't TOO bad. Plus with a possible first mover in a hyped sector, this could pop on speculation alone.

Mostly intuition (sorry, could have better explanation). I picked AMRN in 2008 from my intuition, which gave me 300% return in 2 years. So, trusting my intuition again.

nice

I am not going to try to time this one. I think that this will be worth a billion USD in 5 more years.

Hard to value a stock like this. It's a long-term buy. Eventually stem cells will play a huge rule in modern medicine. When is only a matter of time, and Bush or Jesus or any of their pals can always set science back

Obama is infavor of this research and will remove restrictions and possibly add funding.

Stem cell research will be one of the major technologies in the years to come, at this moment is like buying the coke recipe for a peanuts, in my time frame I'm suggesting a 2 to 4 year period, but this baby is a one to keep for at least 10 years where we will see a major change in the way we know health industry.