Hedge Fund LIVE - An Interactive Trading Community
New to Hedge Fund LIVE?

Judah F. - Senior Analyst

Steve is dead…

Steve Jobs Is Dead

A little conspiracy theory for you all…

Apple recently appropriated the rights to sell Beatles songs on iTunes.  Perhaps they took another page out of the Fab 4′s book; fake the death of your founder.  The “Paul is dead” rumor began in late 1969 when college students claimed that hints to Paul McCartney’s demise could be found in Beatles lyrics and cover art.  At the time, the Beatles were at an inflection point.  The group was in the process of a break-up and its members were pondering their solo careers.  The sources of the rumor are vague, but what better way to reinvent one’s self, and in turn catapult the next phase of one’s career, than to emerge from beyond the grave?  It worked for a guy from Nazareth.

Apple too is at an inflection point, I think.  Sure the stock is at 52-week highs and they just crushed earnings expectations, but a company that for the past several years was untouchable in the consumer electronics segment is seeing some competition.  Samsung, HTC,  and Motorola are producing worthy adversaries of  both the iPhone and iPad.  By all accounts the stock is cheap given its cash hoard and growth prospects, but a good kick in the pants from Steve and his medical team probably wouldn’t be a bad thing.

Rangers making strides

Last night the Rangers beat a smoking hot Pittsburgh Penguins team.  Up until a loss to the Flyers the previous night (a frequent thorn in Pitt’s side lately) the Pens were on a 12-game win streak.  Malkin scored a very pretty goal with 13 seconds left in the first period, which left Hank looking quite silly as he flailed aimlessly trying to stop the Russian.  Sid also kept his point-scoring streak a live with an assist on Malkin’s goal.  Second period was fairly uneventful.  The third, however, was all Rangers all the time; or at least for the last 10 minutes it was.  In a brief stretch of 6 minutes and 20 seconds the Rangers scored 4 goals.  What’s interesting is who scored the goals - Christensen, Frolov, Anisimov, Boyle.  Not Gaborik or…Gaborik.  It’s great to see the hardworking, third and fourth line grinders win a game against, arguably, the best team in the league.  Perhaps the strategy of grooming young talent (read Stahl, Dubinsky, Callahan, Girardi) and building a team around them, as opposed to several 12 year veterans whose best years are behind them, is starting to pay dividends.  Then again, I can’t get too excited as these are the Rangers and there’s a lot of season left.  Let’s see if the Knicks can borrow some of what the Rangers are drinking and beat a streaking Miami Heat team tonight.

Rangers getting it right

S&P 500 Futures Performance During Hannukah

mini Lloyd vs. mini Steve

Tickle-Me-Elmo can go suck a lemon.  The hottest dolls this holiday season are Steve and Lloyd; err maybe just Lloyd.  After an initial batch of 300 sold, Apple couldn’t stand to have their founder exploited in miniature and sent Chinese toy manufacturer, M.I.C. Gadget, a cease and desist order.  Little Lloyd, however, can still be yours for $100 at www.thatsmyface.com.  In many ways Steve and Lloyd are each other’s foils - Steve worshiped by the masses, Lloyd not; Lloyd changes his clothes, Steve doesn’t; and maybe, as evidenced by this latest figurine fiasco, Lloyd is a little more comfortable with self-promotion.

Fantasy hockey update

Judah = Legend of Dirty Joe

Jeff = Saskatoon Swamp Donkeys

Sam = Taco’s Naginta

Schwartz = Deuce

How good are the Rangers?

After demolishing Edmonton at home on Sunday in a game that included a hat trick by Gaborik and some excellent fights, mostly spurred by Avery (duh), the Rangers did something very un-Ranger-ly; they backed it up.  The actually went into Pittsburgh and won a tight game in overtime.  Official stars of the game were both teams’ goalies, King Henrik had 37 saves, but you gotta give some props to Stahl and, most of all, Dubinsky.  Down 2-1 in the third with 1:26 left, Dubs thread the needle with a pass to Stahl deep in the offensive zone and Stahl flipped in what looked like a trick-shot for a crowd-deflating shorty.  Then, with 1:28 left in OT, Callahan played some nice D and got a little lucky when Zbynek Michalek tripped over his own feet giving Callahan and Dubinsky a wide open 2 on 1, Paul Martin being the 1.  Martin hit the ice trying to block the pass, but Dubinsky dangled around him and fed RyCal for an easy one-timer.  I considered picking Dubinsky up in my fantasy league a few games ago, but figured his production would taper as all Rangers’ production does.  Nonetheless, the kid from Alaska has done nothing but impress me this season.   Speaking of Stahl, Dubinsky actually reminds me a little of Jordan Stahl, but with more talent.  In fact, Dubs is now tied with O-V for a T-5 10 goals on the season - probably should have grabbed him when I had the chance.

So you can put a price tag on curing cancer…

On April 29, 2010 the FDA approved Provenge, Dendreon’s (DNDN) late-stage prostate cancer-fighting vaccine.  Soon after the approval was announced, CMS said they would organize a national coverage analysis for Provenge.  While most Medicare reimbursement is decided at the local level, CMS will occasionally make a National Coverage Determination (NCD).  This is often the case when a new, unprecedented drug or treatment comes to market, and Provenge fits both of those criteria.  There is one aspect of Provenge, however, that some think is getting more attention than it should as a November 17 public advisory panel approaches- its price.

The late-stage prostate cancer victim gets blood drawn.  The white blood cells in the blood are then separated via leukapheresis and sent to Dendreon’s manufacturing facility.  Dendreon technicians then introduce a recombinant human protein found on ~95% of prostate tumor cells to the patient’s antigen-presenting cells (APCs) and formulate a vaccine.  The vaccine is then sent back to the patient’s doctor who injects the vaccine into the patient.  This process is quite a to-do and, understandably, is quite expensive.  Each vaccine developed brings with it a price tag of $31,000 and the standard regimen is 3 vaccines for a grand total of $93,000 per treatment.

National coverage analyses are supposed to focus only on therapeutic effects (Provenge does prolong life by several weeks for prostate cancer victims), but with spending cuts and repealing health reform on everyone’s mind after last week’s election, price just may creep into the minds of those whose opinions matter.

Is this a white iPhone or a unicorn?

Recent news out of Apple indicated that the white iPhone 4 is proving more challenging to manufacture than previously anticipated.  For this reason, AAPL will be delaying the white phone’s release until “later this year”.  Some websites are reporting that the problem is “light seepage”; the phone’s backlight is visible through the rear cover of the phone, while others believe it has something to do with the white paint on the front of the phone.  I am no more of an Apple-phile than the next guy, but I can understand that Apple wants to get it right, what I have trouble wrapping my head around is that true, die-hard Apple fans are actually upset over the delayed launch of this phone.  Kudos to Steve Jobs for training a generation of unsuspecting youth to believe that the color (or hue) of their phone is more important than the reception it gets.  Even more amazing to me is that what people are waiting for is a white phone – white.  Isn’t Apple the computer manufacturer that used to charge more for its non-white MacBooks?  When it comes to MacBooks white is uncool, but when it comes to phones, white is, all of the sudden, this season’s must-have color?  I honestly don’t get it, but I am most impressed that it works.  Perhaps Dilbert creator, Scott Adams wasn’t too far off when he postulated in a recent blog: “I’ve wondered for some time if Jobs studied hypnosis…”

Health Reform: The Honeymoon is Over

All you have to do is look at Massachusetts to realize that we just may be screwed.  In 2006, Mitt Romney touted a state-wide health reform plan to residents of the seventh smallest state in the nation.  That plan is now law and espouses many of the mandates and legislations that can be found in the federal version of health reform that was signed into law just a few months ago: strict regulation of health insurance premiums, mandates on individuals and businesses, taxpayer-funded subsidies, and major Medicaid expansion.  The primary selling point of the Massachusetts plan, like the federal one, was that it would bring down healthcare costs.  Unfortunately, according to an article out of Kaiser today, that isn’t exactly working out as planned.  Health insurance for a family of 4 in Massachusetts now costs about $14,700 compared to a national average around $13,000; and insurance costs in the state have grown 14% faster than the national average between 2006 and 2008.  One theory, in particular, seems not to be working out as planned.  Romney’s camp assumed that more people having insurance would lead to fewer emergency room visits at hospitals – if people can visit primary care doctors they should remain healthier, catch problems before they become emergencies.  However, the opposite has occurred.  Emergency room visits are up.  Primary care doctors are simply shutting their doors to new patients.  Whereas 70% of docs were accepting new patients in 2007, only 44% are accepting new patients now.  Health reform may be a good idea in theory, but the most obvious test case does not seem to be working out as planned.

Apple Kicking RIMM While It’s Down

Yesterday, after the close, BlackBerry manufacturer Research in Motion (NSDQ: RIMM) reported its first fiscal quarter of 2011.  Earnings per share were better than expected at $1.38 versus $1.34 consensus.  Sales missed expectations and came in at $4.24 billion for the quarter versus $4.35 billion consensus estimates.  In their press release, RIMM also announced a 31 million share buyback program which may be what took the stock up briefly.  But, it was disappointing unit shipments during the quarter which seems to be what the market is focusing on.  RIMM shipped 11.2 million devices during the first quarter, just hitting the low end of the range of consensus expectations which were for 11.2-11.8 million units.  All indicators point to sales of smartphones escalating, which leaves only one explanation for the disappointing level of shipments – someone is taking market share from RIMM.  Prime suspect: Apple (NSDQ: AAPL).

BlackBerrys just don’t garner the excitement that a new iPhone does.  The lines at Apple’s stores yesterday were as insane as ever (check out this guy’s slideshow of his travails outside the 14th street store in Manhattan), Japanese iPhone fans, dressed up as phones, waited 3 days to get their hands on the 4th iteration of the smart phone.  Jason Bateman, of Silver Spoons and Arrested Development fame, was caught cutting the line outside a Los Angeles Apple store and was incessantly booed by the crowd despite the movie role hot streak he has been on.  Sell-side analysts across Wall Street have been handicapping the iPhone 4’s first day sales numbers.  Piper Jaffray’s Gene Munster is casting a wide net with 1-1.5 million units sold , while Oppenheimer analyst, Yair Reiner, is comfortable with the 1.5 million number (600,000 units were pre-ordered).  Of particular interest is the survey the Piper Jaffray team conducted among iPhone customers in San Francisco, Minneapolis, and New York, as they waited in line.  608 customers were interviewed and 77% of them said they upgrading to the iPhone 4 from a previous version of the iPhone.  That number is staggering.  But it got me thinking – how many people do you know who have owned every single iteration of the iPod?  Personally, I have owned 5 versions (and I’ve only lost one); and I’m not even particularly Apple-philic.  Apple has done what only high end pocket book manufacturers have been able to do in this languishing global economy – convince their customers they need a new one every year.  In more bad news for RIMM, 6% of the iPhone 4 buyers surveyed by the Piper team were switching from a BlackBerry (3% were switching from Android phones and 2% were switching from Nokia).