No one of sound mind enjoys fighting, which is why The Business Press Maven tries to put himself in the middle of a good one as often as possible.
A stock price is, in the end, the numerical representation of a pitched disagreement between those who think that the company will do well and those who think it won't. But occasionally we get a real hair-pulling, thumbs-in-the-eyes screaming match with no neutral corners to retire to. On one side are those who think a company has tremendous potential -- to, say, cure cancer -- and on the other are those who think the company is nearly full of hot air, operating as little more than a press-release factory.
We have one of these -- be still my beating heart -- developing with
. With such a division of opinion, the stock is either going to quintuple or bear down on zero. Which side will win? The Business Press Maven has had a pretty foolproof track record on these contretemps.
( XNL), the last sordid public spat
I put myself in the middle of. All a stock-picker has to do, ultimately, is listen to the competing rhetoric. The side with the most specific case to make will most likely be the winner. The side that argues in generalities usually gets a big "L" on its forehead.
Numbers are important in investing, but words ultimately hold the answers.
With Xethanol, critics like The Business Press Maven were reciting from a long list of pinpointed grievances: the apparent resume inconsistencies of top company officials, its wacky pedigree as a public company -- I could go on and on.
The company -- and its supporters -- either said nothing or came back with vague rebuttals along the lines of "Liar, liar, pants on fire" or even more general assurances that ethanol, which the company purported to make out of everything but old shoes, was the future. That might (or might not) be so, but whether Xethanol was equipped to play a role was the real question.
Generality may be the enemy of art, but it is also the enemy of good stock picking. And, sure enough, Xethanol critics were right.
Now let's go from making ethanol out of garbage to curing cancer in mice.
Adam Feuerstein started this particular fight by criticizing Introgen, a biotech outfit, for essentially issuing the same press release about the same drug early and often. He
raised an eyebrow at whether the supposedly promising drug had even a lick of true potential.
Where do his comments fall on the continuum between alarmingly general and perfectly specific? They're probably right in the middle, maybe a touch closer to general. I let those fighting words pass unnoticed because they weren't detailed enough for me.
That brings me to Feuerstein's
Feb. 14 follow-up column, a blackened Valentine to Introgen if there ever was one.
Feuerstein delved into what has always been a concern of mine: the legitimacy placed in some quarters on studies whose results are drawn after the fact.
In other words, if a drug is tested for curing one thing and found in retrospect to possibly help in another, the resulting conclusions -- and public posture of the company involved -- have to be measured. The surprising results could be a good sign, but they merit further, completely dedicated testing of the apparently randomly discovered new function.
With a high degree of specificity, Feuerstein lanced the highly promoted test of Advexin, Introgen's all-important drug prospect.
How did the company respond? With a specific rebuttal? By telling the world why retrospective studies are direct signs of
approval and commercial success -- not just a reason to try another study? By explaining to the world why 16 patients in a pool of 217 were a meaningful sample? By claiming that, despite what Feuerstein reported, it has not been having difficultly getting cancer-research centers to enroll patients in Advexin studies?
Remember, the side that gets most specific is probably going to be right.
Tuesday Introgen spoke,
issuing a press release that was a study in generality. Between referencing Feuerstein's piece and summing up what the company does, there was a grand total of one line about Feuerstein's story: "Introgen denounces the publications as false and misleading."
In typical fashion,
The Austin Business Journal
(in Introgen's hometown)
released a story within hours with a headline about Introgen's denouncement.
The company's protest ("denouncement" is a bit strong, when it is not backed up by a single counterclaim) did fall all the way on the generality side of the continuum, but, to be fair, I didn't want to stop there. So I called Introgen's media relations head to get more specifics. She said that she couldn't be the one to talk to me, that I'd have to talk to the CEO. The verdict? Well, there is none yet. I said I needed a response yesterday and did not get one.
Interestingly enough, Introgen's spokeswoman apparently did not even return a call from
The Austin Business Journal
, which actually did the company the favor of basically just fleshing out its press release.
Me? I'm still waiting -- and am open to specific rebuttals, which I'll pass along.
It is still an open question as to which side will win the coveted "More Specific" award. But the one who does, I feel, will ultimately be proved right.
If I do hear back from Introgen today, tomorrow or on the 10th of Never, I'll let you know what, if anything, they have to say.
May the most specific man win.
Please note that due to factors including low market capitalization and/or insufficient public float, we consider Introgen and Xethanol to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.
At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.
A journalist with a background on Wall Street, Marek Fuchs has written the County Lines column for The New York Times for the past five years. He also contributes regular breaking news and feature stories to many of the paper's other sections, including Metro, National and Sports. Fuchs was the editor-in-chief of Fertilemind.net, a financial Web site twice named "Best of the Web" by Forbes Magazine. He was also a stockbroker with Shearson Lehman Brothers in Manhattan and a money manager. He is currently writing a chapter for a book coming out in early 2007 on a really embarrassing subject. He lives in a loud house with three children. Fuchs appreciates your feedback;
to send him an email.