I've been meaning to do another post on Generex, the company that says it's developing an oral spray form of insulin as an alternative to the injected forms. This is the outfit that's suing Adam Feuerstein of TheStreet.com over his dismissive comments on their business, and here I stated that after looking the operation over a bit, that I agreed with him. In short, I have doubts about the real-world efficacy of buccal insulin delivery, doubts about the acceptance of it in the diabetes patient (and physician) population, and doubts that spring from Generex's own statements about the drug's development. A handful of patients in Ecuador does not make for a convincing reason to move into Phase III - not to me - and you don't press-release your Phase III results when you've only enrolled 10% of your targeted number of patients. And so on. . .but who am I to question the buccal spray delivery technology, when (as Generex states on their web site) it's also being used to develop an "energy spray" called Ba-Boom? (Be sure to turn up your speakers so you can hear the theme music; it's going to play when you click that link. And yes, that is Generex - look at the bottom of the page).
It's been a very busy week around here, but what I do have time to do is take a look at the recent infusion of capital the company has experienced. An investment group called Seaside 88 has announced their intention to buy a large amount of Generex stock. Among the Generex investors calling for my head (and other parts of my anatomy), opinion seems divided about Seaside 88 and my relationship to them (which, let me state right up front, is completely nonexistent - I'd never heard of the outfit until this stuff came up). Some of the hardy GNBT folks point to this deal as evidence that I'm a fool, because here's this big investment outfit pouring money into this wonderful company and its promising product. Others seem to think that I'm being paid off by said big investment outfit, that I'm a black-hatted stock-basher out to secure Seaside 88 a better deal as it scoops up this wonderful stock on the cheap.
Which exciting story to believe? Not for the first time, I'm reminded that too many people who invest in small "story" stocks have worldviews that resemble the story lines of profession wrestling. I'd call it Manichean, but that's a bit too elevated. No, it's all Good Guys and Bad Guys, and there's no room for someone like me, a person with no money in the game who finds the whole thing bizarre and amusing. The smaller the stock prices involved, by the way, the crazier the investors seem to be.
So, Seaside 88. If you go do an EDGAR search on them, you find that they've done similar stock-purchase deals with a number of small companies (and other deals show up as you Google for press releases). Flywheel energy storage companies, obscure fuel-cell makers - it's quite a collection. My personal favorite is Ensurge, Inc., and if you'd like to know what business they're in, you'll just have to read the language in their 10-K. If you're not snorting in derision by the time you get to the South-American-gold-mining stuff, then you're a born penny-stock investor. You'd have to use threats of bodily harm to make these things a centerpiece of my own investment strategy - but hey, that's why I'm going to finish up eating off-label cat food in a trailer while the Generex shareholders are sailing their yachts through the Greek islands. These things have a way of evening out.
So, who are these Seaside 88 people, anyway? Well, as is often the case, there's a whole little constellation of related companies. There's your Seaside Analytics, your Seaside Capital Management, your Seaside Capital II, and so on. One person who figures prominently in all of them is William Ritger, who's been in the investment business for some years now. Here's a biography of him from one of the companies he's helped to found.
In fact, he's been in the business long enough for this article from the the New York Times to turn up. It refers to a former venture of his, Research Works, which seems to have issued favorable reports on obscure stocks - causing their prices to jump - but without making much of the fact that he was being paid by the companies involved to write those reports. One hopes that he is no longer in the business of promoting small stocks in this manner.
Another name that shows up when you search the Seaside family of investment partnerships is Denis O'Donnell. Looking over the EDGAR filings featuring his name, you find his ongoing relationship with a company called American Bio Medica, which I note has also been listed as one of the house favorites of a micro-cap "pump and dump" junk-fax operation. He's also been involved with Columbia Laboratories - now of New Jersey, but formerly of Hollywood, Florida, where (interestingly enough) they were mentioned in that same New York Times article as the subject of one of those paid-for investment reports back in the 1990s. One hopes that he is keeping better company now.
So, Generex investors, enjoy your stock, and enjoy the company of the others who have seen fit to invest in it. I will not be putting any of my own money into it, and they won't let a person short companies that trade at 60 cents a share. Which is too bad, in a way, because the great majority of such companies go to zero.