Wednesday, May 27, 2009

Bookkeeping: Closing Mastercard (MA) & Sequenom (SQNM)

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I am not liking the action the past few weeks in Mastercard (MA) - until the stock gets back over $174 (the 200 day moving average) this looks more like a short to me than a long. I've slowly bled out the position and only have a 0.3% stake left so I am going to close it for now and head for the exits. I've owned this name on and off for going on 2 years so I am sure I will be back, but the stock is not saying good things to me right now. Visa (V) despite a much higher valuation seems to be the current favorite by the institutional money based on the debit vs credit exposure compared to MA. [May 2, 2009: WSJ - Debit Card Use Overtakes Credit] [Apr 30, 2009: Visa (V) Beats the Street]


I've been debating shorting Mastercard here for about 10 days but it really doesn't fall much either - it just sorts of sits in a defined range. Plus shorting is now clearly unAmerican. (per government decree)

I am trying to stick to 40ish positions in the portfolio, and this looked like a good candidate to clear out as I look to cull. Sequenom (SQNM) appears to be a lost cause for now - until more data comes out late in the year it might just be stuck in a range here between $2-$5. I was hoping for some quick rebound to maybe $5 but with a 0.3% stake it really is a moot point. I am not ready to commit one more dime to this name until there is a lot more clarity. Lazard upgraded it today so it's as good of a time as any to sell...

  • Shares of Sequenom Inc. jumped Wednesday after a Lazard Capital Markets analyst took a neutral stance on the company's prospects, still cautioning that issues with a Down syndrome test could hurt the diagnostic test maker.
  • In April, the stock crashed after the company said it will delay launching its SEQureDx Down syndrome test because of "employee mishandling" that the company said appeared to affect all studies of the test.
  • Lazard analyst Dr. Sean Lavin upgraded the stock Wednesday to "Hold" from "Sell" and said the rewards for investors are likely greater than the risks with the stock trading so low. Future study results for the test could boost the stock if they are positive, he added. Those results are expected toward the end of the year or possibly in 2010.
  • Lavin meanwhile said a move by competitor Qiagen to launch its DNA extraction technology could be a good sign for Sequenom, adding credibility to the company's market. We believe Qiagen's interest helps validate the robustness of the potential market for diagnostic assays," Lavin said, citing the focus on the two key markets of prenatal and cancer tests.
  • The stock will likely remain flat for some time, he added, with future independent study data bringing the possibility of boosting the stock value past $20 per share if successful. Negative results, though, could send the stock below $2, he said.
The key here is independent... internal controls as Sequenom (SQNM) have been deemed FAIL WHALE. I expect the stock to move ahead of the news available to the public when results start piling in internally - since the market (leaks) "knows all". Will revisit post Halloween.

No positions

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