Trick, Some Treat

Today's market is back in panic mode as Hallowe'en will not be celebrated by the kiddies for the first time I can remember. But there is plenty of trick in stocks today. I am looking into filing a complaint with the better business bureau over our tech support team refusing to even discuss when the upgrade of our website will be done, after promising it would only take 3-4 weeks.

I wanted to start off with some good news so here is how to find breast cancers more quickly and cheaply. The breakthrough was found by Harvard and is called CytoPAN after trials at Mass General Hospital, and others mostly in South Korea, but also in Singapore, and other US hospitals.

It by-passes the costly and slow examination of tissue samples by using automated analysis from cells taken from patients that find bio-markers for breast cancer in blood samples and determine which of 4 types the cells show up by rapid testing. The program not only finds cancer cells without biopsy with 90%-plus accuracy, but also tells the form, stage, and treatment likeliest to work in an hour, versus up to 6 months in emerging markets when tissue sampling is used. The CytoPAN machine costs $3500 and needs only $5 of testing material. Using it requires very little training.

Breast cancer, the leading cause of female premature deaths, is a growing threat as women live longer in developing countries. Two years ago there were 18.1 million new cases and nearly 10 million deaths, the last year for which we have data. By 2040, there will be 30 million new cases per year.

The Harvard team on CytoPAN was headed by Joshua Min who wrote up the results as a post-doc fellow at Harvard's Mass General. He has now founded a company called Aikili funded by the University and other entities to bring CytoPAN to market. It is private and cannot be bought.

Now for the news about our portfolio companies:

Cement

*CRH of Ireland is up another 0.5%+ on hopes for an infrastructure spending spree in its largest market, the USA.

*Fellow cement maker Cemex (CX) of Mexico is up 5% after it reported Q3 results yesterday, which now show earnings before interest, taxes, depreciation, and amortization growing at double digits, while EBITDA margins and free cash flow hit a record high last seen in 2016. The rise was general, in Mexico, Central America, and the Caribbean. Profits were also boosted by cost savings.

It boasted that its jv with Swiss Synhelion will use solar power to make cement, and another deal with Carbon Clean will develop low-cost carbon capture. It also has a lot of cash despite paying down some of its term loans. Unfortunately, the only thing my newly combined brokerage provided was the CC, not the numbers

Drugs

*Novo Nordisk (NVO) reported today in Danish Kroner (each equal to just under 16 US cents) that Q3 sales rose 2% to DKK 30.927 bn, broken out to: Diabetes and Obesity DKK 26.346 (+3%); Biopharma DKK 4.581bn (-5%); long-acting insulin DKK 4.04 bn (-19%); fast-acting insulin: DKK4.589M (-1%); premixed insulin DKK 2.572 bn (-1%); human-sourced insulin: DKK 2.194 bn (-2%); Glucagon-like peptide-1 DKK 10.65 bn (+25%); Saxenda for obesity care DKK 1.338 bn (-7%).

Other lines like hemophilia and growth disorders drugs were negative to flat. Haemophilia 2,311M (-8%); Growth disorders (Norditropin): 1,890M (flat). Its new drug portfolio included NovoRapid with sales of DKK4.244bn; Victoza at DKK 4.765 bn; Ozempic at DKK 5.432M, Tresiba at DKK 2.10; Novo Mix at DKK 2.276 bn, and lower\ levels for Levemir and NovoSeven. The sales overall missed the $4.75 bn Zacks target at $4.58 bn but were up 7% at constant exchange rates.

NVO net income was DKK 10.298bn, up 1% from the prior year but thanks to share buybacks, the rise in EPS was up 3% to DKK 4.42 or 68¢ per ADR, according to Zacks. Cash flow from operations soared by 24.4% to DKK 51.779 bn.

Novo upped its full-year currency-neutral sales guidance to 5-8% up from prior 3-6%, and its operating profit guidance to 5-8% from prior 1-5%. Its capital spend will be DKK 6,5 bn, unchanged but its free cash flow is now expected at DKK34-39 bn, down from prior expectation by DKK 2 bn.

Despite the good numbers stock fell 0.7% in Europe and 3.16% on Wall Street. Zacks warned about competition from Astra-Zeneca in the GLP-1 business. And of course, loss of insurance and worries about visiting healthcare offices damaged the stock. AZN is down 1.4% today, by the way.

*Bioline RX (BLNEF), an Israeli small-cap was the treat, rising $1.23 on Q to $2.71, which means it jumped 83%. This was not only the result of its reporting that its stem cell mobilization drug motixafortide to treat multiple myeloma cancer, but also the result of its being Friday when Israeli markets are closed for the Muslim Sabbath. The trial is called Genesis and is in phase III. BLRX started rising in the premarket when more than a normal day's 100.000 shares changed hands and this continued in Nasdaq trading. Before this news BLRX share lost 34% YTD. It is now up over 74%. Small caps outperform but this is ridiculous.

Value Plays

*My trick way to play the options market without taking on the risk of puts and calls is via Chicago CBOE stock, CBOE Global Markets. The company operates options markets there and in many financial centers outside the USA. Its shares are up over 3% today after it produced bang-up Q3 results thanks to lower expenses and recent acquisitions. Q3 operating expenses at $108.9 mn were $10 mn below what Oppenheimer analyst Owen Lau expected, and offset worries that the site was running up heavy costs. EPS at $1.11 beat the consensus forecast of $1.07 but was lower than the prior Q3 level, before the virus, of $1.29. Revenues minus costs of revenues came in at $292 mn, down 1% from last year but nicely over the consensus forecast of $285 mn.

It further boosted its price by predicting that full-year adjusted operating expenses and capital spending will be lower than its prior estimate of $436-444 mn, at $415-410 mn.and capital spending lower than prior $65-70 mn at $45-50 mn. Mainly from lower spending and stretched timing. However, it warned that its tax rate from adjusted earnings will rise 0.5% from prior guidance to 27-29% for the current year. previously expected, reflecting a shift in the timing of certain expenditures as well as lower spending from some projects.

CEO Edward T. Tilly said: "Our third-quarter results highlight continued robust engagement among retail customers offset by decreased trading among institutional investors as a result of ongoing uncertainty regarding the global macro-environment." CBOE is up 2.53%. It is safer than options.

*Naspers and Prosus plan to buy back their own shares to cut the discount from net asset value, with a $5 bn program. The best-known gap is in the valuation of Tencent, but the whole portfolio is affected. Citi says investors have long pushed for PROSY to use its cash at hand to boost its share price to closer to its NAV. NPSNY is up over 3% to $38.69 on the news while PROSY is up 2.65% to $20.08 because it is less scary than a Johannesburg stock, being listed in European markets. The start is planned for Nov. 23 after the latest earnings result. The shares will be excluded from future EPS. This also counts as a treat.

*Banco Santander (SAN) is now firmly over $2 today, up 2.3%. It is reacting to the poor results of the other large Spanish company, Telefonica.

*NTT Docomo (DCMYY) of Japan is up another 0.7%. It will be bought by its parent. We will wait for this and not sell now because of hopes for the yen.

Energy and Infrastructure

*BP plc (BP) gained 0.5% today. Royal Dutch Shell B (RDS-B), which raised its dividend is up 2.95% and Schlumberger Ltd (SLB) rose 0.62%. All are cutting their oil dependence and spending on alternative fuel, unlike US majors.