A free cash trade?

Before I’m talking about today’s trade, just a few words on my call about Yahoo a few months ago. As I said, either Yahoo was to be sold orthe CEO Marissa Mayer had to go. Looks like Mayer heard my call and decided to sell Yahoo finally. It is official now that Yahoo will be sold to Verizon at a price tag of $4.8 Billion. I just feel really sorry for Yahoo, once a glory Internet story worth over $100 Billion at its top and now on sale for 95% less. While I’m correct for this call, it is nothing exciting in terms of the deal. I believe Yahoo was around $30 when I made the call and now it is around $39. Not bad for a few months but I don’t think you can expect anything more from here. If you got in then, it is better to take the profit now to move on.

 

We may have a short-term trade to consider now. The company I’m talking about is a clinical stage biopharmaceutical company developing novel antibiotics to treat life-threatening multidrug-resistant (MDR) infections. It is Tetraphase (TTPH) that has just completed a phase III study for its leading compound, IV eravacycline. But unfortunately it was notified by the FDA back in May that clinical data from an additional positive phase 3 trial will be needed to support an NDA submission. As such TTPH plans to conduct another phase 3 trial that won’t be complete until the fourth quarter of 2017 or later. Its price dropped by 20% due to the news to below $4. Since then, TTPH appears to have stabilized and is now trading just above $4 as I’m writing. I think TTPH has likely found its bottom at this level and technically is showing a higher highs and higher lows in the past few months. The thing most interesting me is the fact that this is a company with no debt but has $5 per share cash in hands. As such, I really don’t think there is much downside for TTPH but the technicals support for a quick move to the upside. I’m not sure I will hold this stock for long-term but I’m quite interested to trade it on the short-term basis.