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Weekend Edition

The Best of The S&A Digest
Saturday, April 11, 2009

Since the start of April, shares of biotech company Dendreon have surged 50%. The company announced it will unveil final results from Provenge, its prostate-cancer vaccine, by the end of the month. Rumors of positive results sent short sellers rushing to cover their positions.
 
But the Dendreon mania is just getting started...
 
In 2007, Dendreon stock shot up more than 500% after an independent advisory panel recommended approval of Provenge. But a few weeks later, the FDA rejected Provenge. The stock tumbled 80% from its feverish peak. Astute traders made millions from the extreme volatility.
 
This time around, our biotech analyst George Huang expects the same crazy volatility when Dendreon releases its data. If the results are poor, the stock will drop 90% or more. If the results are positive, Dendreon stock could easily triple from current levels.
 
George has structured a trade for his FDA Report readers to make huge profits – no matter the outcome.
 
Precious-metals research firm GFMS released its annual gold survey last week. The survey concluded gold could push to $1,100 an ounce this year. It also reported on higher demand for physical gold with official minting of gold coins up 40% last year and sales of gold bars up 62%.
 
At least 10 states (Arizona, Connecticut, Delaware, Illinois, Massachusetts, Minnesota, New Jersey, Oregon, Washington, and Wisconsin) are considering both sales and income tax hikes. Of course, that's in addition to the massive hikes already in effect in California and New York.
 
Now that's a franchise. The government has endless pricing power and an unassailable monopoly with no chance of antitrust lawsuits.
 
I've been writing for several months about the inevitable fate of highly leveraged commercial real estate firms, like mall owners.
 
One of the world's largest shopping-center owners, Kimco Realty, is demonstrating one possible escape – though it's plenty painful to existing shareholders. Kimco will issue 70 million shares of stock – an increase of 25% to the total shares outstanding, for $500 million. That values the company at roughly $7.14 a share. In October, the stock was trading above $40.
 
That's an 82% decline – and Kimco is probably the best managed of all the mall owners. It has total debt of $5.4 billion and net tangible shareholder equity of $3.9 billion – about 1.4 times leverage.
 
Contrast this with Macerich, another large mall owner. Macerich has $1.3 billion of tangible equity supporting total debt of $6.7 billion – 5.1 times leverage. It earned $50 million in rents last quarter... and paid $70 million in interest. Think Macerich will be able to raise new equity? No freakin' way.
 
The market disagrees with me: Macerich gained about 30% last week, almost certainly because of the Kimco news. A lot of stock traders aren't very good at math.
 
When we launched Retirement Millionaire, editor Doc Eifrig gave his readers great secrets, like how to eat at top restaurants for 75% off and how to take a cross-country vacation at one-tenth the normal cost.
 
In the April issue, he's uncovered a story that could provide tens of thousands of dollars for you and your family...
 
On April 8, one large insurance company lowered the numbers in its life-expectancy tables. This might have made your life-insurance policy more valuable than it ever was before. In the issue, he shows how you could take advantage of this if you're at least 70 years old and have life insurance.
 
That's just the beginning of what Eifrig has planned for his newsletter...
 
As we've said, Eifrig has already retired twice... once from a job as a bond trader at Goldman Sachs and next as an eye doctor. He's spent a lifetime gathering health-improving and money-saving secrets and tips... And we recently hired him to tell our readers about all sorts of loopholes that guarantee you a happier and wealthier retirement.
 
Regards,
 
Porter Stansberry




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