1. Bought 100 Theragenics (TGX) at $1.28-Speculative- Lottery Ticket Category (see Disclaimer): I have about 50 micro caps on a monitor list, which I defined as having a market cap of less than 100 million. TGX has been on that list for several years and I have had no desire to buy any shares until today. The market cap of this company based on the current price is just 43.5 million or so. TGX: Summary for THERAGENICS CORP Both the price to book and price to sales are close to .5. TGX: Key Statistics While Yahoo says there is an analyst covering the firm who is making earnings and revenue projections, I do not know who that might be, so I will just ignore it and focus on the hard data. S & P does have a report on TGX which I read this morning, but does not have a price target on the shares. So this firm is another one off the radar screen.
Prior to 2005, this company had one product, a brachytheraphy seed business for the treatment of prostrate cancer. The sole product prior to 2002 was the palladium 103 TheraSeed and the firm launched an iodine-125 based I-Seed treatment for prostrate cancer in 2003. My main reason for avoiding this company was based on a view that sales of this product were declining. In the latest quarterly report for Q/E 7/5/09, the brachytherapy seed segment sales declined 12.5% compared to the year ago quarter and 12.4% for the comparable 6 month period. Theragenics Form 10-q Q/E 7/5/2009 The company claims that this decline is due to an industry wide decline of brachytheraphy procedures. The company acknowledges that newer procedures, such as Intensity Modulated Radiation Therapy and robotic surgery are gaining market share. And TGX discloses potential changes in Medicare reimbursement for brachytherapy that would adversely impact the company. So, I would not buy even 100 shares at $1.27 based on this part of the business.
The reason for buying 100 shares as a Lottery Ticket today has nothing to do with the seed part of the business, but TGX's growing surgical products business. This part of Theragencis is growing, mostly as a result of acquisitions, but also due to organic growth. The most recent acquisition was a company called NeedleTech, purchased in July 2008 for 44.1 million in cash. That firm is a manufacturer of coaxial needles, biopsy needles, access trocars, brachytherapy needles, guidewire introducer needles, spinal needles, and other needle products -a medical needle company in short. Although TGX paid for NeedleTech in cash, it still has 46.697 million in cash on the balance sheet as of 7/5/09. The acquisition was at least partly financed with debt, and TGX has 28.389 million in long term borrowings as of Q/E 7/5/09. TGX thus has net cash after subtracting debt. It has started to pay down the borrowings used to finance the NeedleTech business. Along with two earlier acquisitions, CP Medical for approximately 26.7 million in 2005 and Galt Medical Corp in 2006 for 32.7 million (net of cash acquired), the surgical products part of the business now accounts for about 67% of revenues. And, it represents the future of the company in my opinion. Annual Report
The company is currently profitable earning 4 cents per share in the last quarter and 6 cents over the past six months. Cash provided by operations was 7.6 million in the last two quarters.
There is nothing in the near future that is likely to spark this stock. A near term issue relates to Medicare reimbursement rates for the seed business. Over time, the success or failure of my immaterial investment in TGX will depend on the company growing organically its surgical products business, improving margins on that part of the business, and paying down the debt. So, after buying the shares today, this is a wait and see investment, needing time before an assessment can be made of its contribution, or lack thereof, to the Headknocker's capital base.
2. RB Flies off the Reservation Again and Violated one of LB's Most Cherish Trading Rules : It is virtually impossible to control the RB. Everything conceivable has been done for almost 50 years to squash it, wringing the RB through every mental shredder known to mankind. Both Headknocker and the LB try to control it, a constant struggle, but sometimes RB pushes its way forward, in spite of all of the obstacles placed in its way and does something that is always initially regretted here at HQ. Embarrassing is a word sometimes used to describe LB's response. Disgusted is the other word. Of course, LB's rule book, particularly the one for a bear market, is so dense with rules, exceptions to rules, exceptions to exceptions, and so on, that it would put the IRS code to shame if anyone bothered to actually type them out on paper. Today, without mentioning the security since we are ashamed of what happened, RB bought a bank trust preferred issue maturing in 2048. Before today, Headknocker was considering letting the RB have more capital to invest, having done so well in advancing the Great Leader's capital base with its frolic and detour in the stock market starting in early March. Now, with what happened today, that is kaput. RB said that it wanted a bond lottery ticket to go with a stock lottery ticket from the same firm.
One reader opined in an email recently that the profile picture was a sign or an indicator of an ongoing bear market. When the picture is changed back to the old geezer, that will be some kind of bullish indicator. Sure, the guy shown in the profile picture, with that steely, cool, analytical look (with blue eyes as his only shortcoming in the serious department), the kind of look that says bring it on, that is the guy I want managing my portfolio right now. That is the LB personified in graphic fashion. Maybe I will keep it up because of the nice hair, so maybe it is not that much of an indicator. Besides, the RB brought HQ kicking and screaming back into stocks in March so we are not entirely bearish here anymore.
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