A Recap Of My MannKind Experience

I would like to bring attention to a Seeking Alpha article on MannKind MNKD, accessible here. In light of the article's negative reception, I felt that now would be an appropriate time to recap my thoughts on MannKind's declining share price, but more importantly, to counter what I believe is unwarranted criticism of my own MannKind articles. Thank you for reading.

I think the risk factors are pretty generic in MannKind's case in that the company is obviously exposed to commercial and market risk, the possibility of clinical failure and the various trends of the overall market. Therefore, it is my opinion that an investment in MannKind should be structured to effectively address those risks (click Here or Here for some of my previous examples). And what do such investors that employ structured investment strategies receive in return? Insurance in the case of significant downside (which MannKind has clearly suffered from ever since the FDA approval for Afrezza), as well as varied opportunities for a ROI that is superior to the standard buy-and-hold strategy.

Moreover, why do a myriad of commentators -- as well as some contributors -- attack me for proposing such investment strategies? Is it because I justify such strategies by referencing elements of the MannKind bear thesis? While I may never know the true reason, I suspect that some of these individuals have a clear agenda -- that is, to publicly and routinely dismiss contributors who elucidate the bear thesis in order to influence current and prospective MannKind investors; an act of which I find wreckless and unethical.

To gain a better grasp of what I'm talking about, here is an example as is shown below my latest MannKind article in the comments section, where I was, again, attacked for my fundamental and technical analysis. On the one hand, I argued that MannKind is susceptible to various external events, including the ongoing conflict in Syria and Iraq, the turmoil in Ukraine and the regional instability following Israel's ground invasion into Gaza. And what was the reception to my assessment? Here are a few comments that stood out:

• When the article mentioned ISIS as a risk I got a laugh
• I am also wondering about your 4 risk categories. It seems so weak and you struggled googling others response to the risk possibilities. Most of the impact of your risk discussion talks about world or segment failures in general. Pretty lame stuff here. Most of the content is 2012 
• He forgot to mention a few risks, like global warming, rogue meteors and the possibility that a stem cell company in Scotland will announce a cure for diabetes later this year. You should probably sell the house before it's too late. Since when does making bets on the exact price of a stock at a particular point in the future constitute a "conservative" investment strategy? It sounds more like a gambling addiction to me"

In reflecting on the comments above, all I will say is this: since my article was released, MannKind has fallen more than $1.50/share, proving that anyone who, for the second time in a row, followed any of my structured investment strategies would have outperformed the standard buy-and-hold strategy. Regarding my analysis in which I argue that the massive short position and the bearish options sentiment warrants consideration, I find it puzzling that many individuals are so quick to dismiss what is clearly a gigantic elephant in the room that only continues to grow larger and larger. Nevertheless, all I suggested was that both of these factors indicate that many professionals are positioning for a drop in MannKind shares. After all, let's be honest: shares have dropped from a high of roughly $11 immediately following the FDA approval for Afrezza to roughly around $5.50 in the several months following. So, which side of the trade predicted this correctly? The enormous drop in share price clearly speaks for itself.

Now moving on to why the stock has depreciated in value to such an extent. From my perspective, it's clear that there are a multitude of factors for why MannKind shares have lost around half their value in such a short time -- some of which are specific to the company while others are completely unrelated. On the one hand, investors weren't pleased about the terms of the Sanofi partnership for the various reasons that have been discussed by analysts and contributors. On the other hand, I would argue that MannKind's downfall as far as the stock is concerned is somewhat attributable to external events. In my discussion of external risk, I simply stated that a conservative options strategy could effectively mitigate the impact of external events for those interested in a protective MannKind position. As I accurately predicted, the terrorist group known as ISIL has become a larger problem than at the time of writing, Ukraine continues to battle Russian counterparts for its sovereignty, and Israel and Hamas remain hostile with each other in spite of the peace agreement. Another noteworthy external event is the ongoing Ebola outbreak which has now claimed the lives of over 3,000 Africans and has permeated the United States. Given that MannKind shares have declined almost in sync with the general market in reaction to the above crises, can't we conclude with some level of certainty that MannKind shares have been adversely affected by such events? 

Let's move onto what Seeking Alpha contributor Psycho Analyst discusses in his report, accessible Here:

"But the shorts can't hold on forever, and the critical thing to keep in mind is that 63,995,678 MNKD shares were held short on March 29, 2014, just before the ADCOM meeting where Afrezza received the near unanimous expert recommendations that led to its approval. That tells us a lot about the prices at which most of these shares were shorted. That's because, at the time of the ADCOM when those roughly 64 million share were held short, MNKD stock had not traded over $6/share since 2010 except for three months in the summer of 2013. During much of this time it traded under $3. Over the months right before the ADCOM, the price mostly traded in the $5 range."

Indeed, he correctly recaps the obvious in that shorts certainly got it wrong leading up to the ADCOM date. But what is he actually implying? In my opinion, to suggest that shorts will likely need to cover in the future based on an analysis of their past behavior under completely different circumstances defies logical reasoning. For if a short acted one way prior to a binary event, does that have any bearing on how a short will act prior to a completely unrelated binary event? Of course not. Nevertheless, no one felt inclined to publicly question Psycho Analyst for his "prediction"; no one called him out for suggesting that "shorts will likely need to cover" at a time when the stock traded exponentially higher than its current price. But why? I strongly believe that very few will chastise or challenge a bullish claim regardless of how fallacious and damaging it truly is, for as long as the claim aligns with the bulls, they will, in turn, lack any incentive to step in and confront it.

Finally, I find it puzzling that some lash out at me -- and often resort to ad hominem attacks -- instead of coming to terms with the cold hard facts of my accurate predictions. Indeed, I'm young and many think that I'm not qualified to write on the subject. However, years of experience doesn't necessarily make one a successful investor, nor is all that experience necessarily conducive to knowledge or success as a financial writer. Next time one feels inclined to attack me, please consider my perspective. Consider the fact that my record on assessing MannKind stock fluctuations speaks for itself. My intentions are sincere and I only wish the best for all MannKind shareholders.