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“A Medley” Vista Partners Daily Market Recap 7/9/19

By John F. Heerdink, Jr.

The markets seem to be a bit of a medley today as we spent a great deal of it in the red and it was not tasting well.  However, three of the four indices made it back to positive territory at the close. The S&P 500 managed to move up 3.68 points while closing at 2,979.63 down .48% after swimming in the red for most of the day. The Dow lost 22.65 points closing down .08% ending at 26,793.49.14. The tech-heavy Nasdaq closed at 8,141.73 up 54.% up 43.35 points. The Russell 2000, the small-cap stock market index representing the bottom 2,000 stocks in the Russell 3000 Index added a weak 1.2 point gain closing at 1,562.59 up .08%. 

We seem to be currently caught swimming in the dreaded summer doldrums as we wait for further clarity from the FOMC this week and then again at the end of the month when they are due to make another interest rate decision.  The markets today also continued digesting the fresh and unwelcomed understanding that we will not be receiving a significant interest rate cut of a half-point at the end of the month as expected after Friday’s job report confirmed that the US economy added 224K new jobs in June which was well above the 161k monthly average in 2019.

Today we received Fed Chair Jerome Powell’s recorded welcoming remarks which did little to help or hurt the markets. Here’s a part of it: “The Federal Reserve is strongly committed to stress testing as a cornerstone of our bank supervisory and financial stability missions. Stress testing is perhaps the most successful supervisory innovation of the post-crisis era. But if stress tests are to continue to serve their critical function, they will need to evolve in the years ahead to keep pace with the ever-changing financial system, as they have since the first round of tests in 2009.” We will receive his semi-annual Monetary Policy Report to Congress both tomorrow and Thursday this week.

The volatility trading range was relatively steady again today while volatility bets continued their rise. The CBOE Volatility Index (VIX) closed higher at $14.09 up by .93% or $.13/share. It traded between $13.99 – $14.71. The 2x leveraged ETF TVIX also closed higher at $16.34 up .12% or $..02/share and traded between $16.26 and $17.16 today. The US Dollar Index gained again today ending the day at 97.51 up .1% for the day.
The 2-yr treasury yield ended up slightly at 1.9%  & the 10-year Treasury note closed up at 2.05%.  Oil prices moved lower higher by .7% to close at $57.79./bbl.  Dow 30 energy participants Chevron (CVX) moved lower by .2% closing at $123.35 & Exxon (XOM) closed lower by .07% closing at $76.43. Gold moved lower again today by .24 % and closed at $1397.30/oz. M&A news brought forth an acquisition from Dow 30 component and tech giant Cisco (CSCO) which announced that they are acquiring Acacia Communications Inc. (ACIA) for approximately $2.6 billion or $70 a share which is about a 46% premium to Acacia’s closing price on Monday. Acacia’s products are used to speed up the flow of information throughout data centers and telecommunications networks. ACIA went public May 2016 at $26/share.

Big tech stocks were up for the most part as the FANGS were out to play.  Apple (AAPL) was up .61% closing at $201.24 &  Amazon (AMZN) which gained strongly by 1.84% closing at 1,988.30. Alphabet (GOOG) gained .76% closing at $1,124.83 & Facebook (FB) finished strongly too at $199.21 up 1.76%. Shares of Microsoft (MSFT) lost .37% closing at $136.46. Chipmaker Intel (INTC) ended down .15% closing at $47.75/share but Micron (MU) added a solid 2.33% closing at $41.35/share after its recent earnings beat. Netflix (NFLX) added 1% ending at $379.93.

Institutional alternative asset manager Och-Ziff Capital Management Group (OZM) closed at $25.14 down .63% or $.16/share closing off today’s newly minted 52-wk high of $25.49. The 52-wk range is $8.60 – $25.49. OZM sports a 4.18% cash dividend. Los Angeles-based Colony Capital (CLNY) a leading global investment management firm with assets under management of $43 billion closed at $5.18 up .97% after hitting an intraday high of $5.20. CLNY pays an 8.71% cash dividend.

Nike (NKE) closed at $88.04 losing .50%. Nike recently missed analyst earnings estimates but maintained full-year guidance.

The health care sector regained slight positive momentum today as the S&P 500 healthcare sector closed at 1078.19 up .11%. Community Health Systems, Inc. (CYH) one of the largest publicly traded hospital companies in the US closed at $2.62 after hitting an intraday high of $2.80/share/ CH also traded at low of $2.51 today on 2 million shares of trading and gained into the close of trading. On June 27th CYH announced that its subsidiaries signed a definitive agreement to sell 92-bed Bluefield Regional Medical Center in Bluefield, West Virginia, and its associated ancillary healthcare operations to subsidiaries of Princeton Community Hospital. The hospital included in this transaction is among the additional planned divestitures discussed on the Company’s Q1 2019 earnings call. Also, note there has been more insider buying occurred recently as Michael Dinkins bought shares at $3.168/share on 5/28/19 according to the latest Form 4 filed at Michael Dinkins has served on our Board of Directors since December 2017. Mr. Dinkins has served as president and chief executive officer of Dinkins Financial, a consulting firm that helps small businesses gain access to capital, since October 2017. See our story more details: INSIDER BUYING ALERT: Community Health Systems, Inc. (CYH) Director Michael Dinkins. The Ishares Nasdaq Biotechnology ETF (IBB) gained 1.02% closing at $108.84. This sector has been on a more than healthy run over the last 30 days. The 52-wk range is $89.01 – 122.97.
Atossa Genetics (ATOS),  a Seattle-based biotech firm developing novel therapeutics and delivery methods to treat breast cancer and other breast conditions closed today at $2.13. The average daily trading volume is 818,424 shares per day.  Atossa announced last week that a preliminary analysis from its recently completed Phase 2 study of the company’s proprietary 20mg daily topical Z Endoxifen (“Endoxifen”) showed a significant and rapid reduction in mammographic breast density (MBD). Studies by others using tamoxifen have demonstrated that density reduction induced by tamoxifen is associated with a significant reduction in breast cancer incidence. See complete story.
INVO Bioscience, Inc. (IVOB) ended the day at $.3534/share as daily trading volume continues to rise in concert with their announcing progress after their exclusive U.S. partnership with Ferring Pharmaceuticals, a leader in the reproductive health industry was announced in Q1-2019. Ferring has committed to providing the necessary sales and marketing resources to more fully develop the market in the United States. There are countless couples not able to receive reproductive treatments today, and Ferring can be instrumental in addressing the unmet needs of this cohort. Ferring has the industry experience, relationships and the marketing capabilities to successfully embed the INVOcell in clinics throughout the country.  IVOB is a medical device company, headquartered in Sarasota, FL focused on creating simplified, lower-cost treatment options for patients diagnosed with infertility. The company’s lead product, the INVOcell, is a novel medical device used in infertility treatment that is FDA cleared and that enables egg fertilization and early embryo development in the woman’s vaginal cavity. IVOB also announced last week news of their recent appointment of Pressly Ahammed as the new Director of International Business Development and he will be responsible for the Company’s international distribution channels in Europe, Middle East, Africa & parts of Asia. Ahammed joined IVOB from Cooper Surgical where he held a similar position. See complete story. Leap Therapeutics (LPTX) closed up .74% at $2.04 on 233,661 shares of trading.  LPTX is a biotechnology firm developing targeted and immuno-oncology therapeutics. Pfizer (PFE) closed lower at $43.37up .16% after the recent announcement regarding their acquisition of Array BioPharma (ARRY) for ~$11.4 billion or $48/share in cash.  See complete story. The pharmaceutical giant and Dow component Merck & Co, Inc. (MRK) that recently announced the acquisition of Tilos Therapeutics for a consideration of up to $773 million closed at $84.86 up by .98%.
San Diego-based biotech Fate Therapeutics (NASDAQ: FATE), dedicated to the development of programmed cellular immunotherapies for cancer and immune disorders,  closed at $20.50/share down .58% on 656,837 shares of trading after establishing a new all-time intraday high of $22.35 last week. The 52-week range is $8.64 – $22.35. Guggenheim Securities initiated coverage on FATE last week with a “Buy Rating” and a $25/share price target. Scott Wolcho, President and CEO of Fate Therapeutics presented at the Jefferies 2019 Healthcare Conference in New York recently. Roth Capital initiated coverage on FATE with a Neutral rating and a $20 price target last Friday, June 7th. Mizuho initiated coverage with a price target of $27/share about a week ago.
Boston-based Pieris Pharmaceuticals (PIRS) closed at $4.42 down 2.64% on 266,843 shares of trading but gained into the close. The stock traded between $4.28 & $4.58 today and the 52-wk range is $2.39 – $6.55. Xeris Pharmacueticals, Inc. (XERS) closed higher at $12.57 up 4.58%. Xeris is a specialty pharmaceutical company leveraging its novel formulation technology platforms to develop and commercialize ready-to-use injectable and infusible drug formulations. Biohaven Pharmaceutical Holding Company Ltd., (BHVN), a clinical-stage biopharmaceutical company with a portfolio of innovative, late-stage product candidates targeting migraine and neurological diseases, including rare disorders, announced recently the pricing of an underwritten public offering of 6,976,745 of its common shares at a price of $43.00/share. The gross proceeds of the offering are expected to be $300 million.  Shares of BHVN closed at $43.24 today up 2.13% after hitting an intraday high of $43.44/share on 429,468 shares of trading. The 52-wk range $29.17 to $67.86. Last week they announced that a first patient has been enrolled in a Phase 2 clinical trial assessing the efficacy and safety of rimegepant in treatment-refractory trigeminal neuralgia. See our recent story MARK THESE DATES ALERT: Biohaven Pharmaceutical Holding Company (BHVN) July 11-14, 2019″ to learn more Bedford, Massachusetts-based Stoke Therapeutics is a biotechnology company pioneering a new way to treat the underlying cause of severe genetic diseases by precisely upregulating protein expression. Recently Stoke Therapeutics announced the pricing of its initial public offering (IPO) of 7,891,110 shares of its common stock at a price to the public of $18.00 per share. The shares are now trading on The Nasdaq Global Select Market as of June 19, 20,19 under the symbol “STOK.” Stoke’s stock traded as high as $31.76 recently a new all-time high prior to closing trading at $26.65/share down 2.35% today. See complete story.   Change Healthcare Inc., a leading independent healthcare technology platform, announced Wednesday after the close that they had priced their initial public offering of 42,857,142 shares of its common stock at a price to the public of $13.00 per share and its concurrent offering of 5,000,000 of its 6.00% tangible equity units (“Units”), with a stated amount of $50. The offerings are expected to close on July 1, 2019, subject to customary closing conditions. The completion of the Units offering is conditioned upon the completion of the common stock offering, but the completion of the common stock offering is not conditioned upon the completion of the Units offering. Change has granted the underwriters in the common stock offering a 30-day option to purchase up to an additional 6,428,571 shares of common stock. Change has granted the underwriters in the Units offering an option to purchase, within a 13-day period beginning on, and including, the date of the initial issuance of the Units, up to an additional 750,000 Units. The shares and the Units began trading on the Nasdaq Global Select Market today, under the symbols “CHNG” and “CHNGU,” respectively. CHNG shares rose to a high of $15.19 and closed at $15/share up 15.38% in its first day of trading on Thursday but closed today at $14.81 up .27%.

Elsewhere on the recent IPO front, Zoom Video Communications (ZM) moved up by .19% closing at $90.93 & Uber Technologies (UBER), the ride-sharing company closed higher at $44.20/share up nicely by 2.91% & still below its recent IPO price of $45. Plant-based burger maker Beyond Meat (BYND) closed at $157.82 adding .73%. Their meat is made of four main ingredients: water, pea protein isolate, canola oil & refined coconut oil and is meant to taste like “meat.  Slack Technologies (WORK) which jumped into the public markets with their IPO last week flying up 48.5% from their offering price of $26/share & closed today at $35.64 up 1.83% on the day. Slack is a provider of a cloud-based workplace messaging app and went public via a direct listing avoiding paying fees to the relevant banks.

The US markets are back to normal this week. We will be receiving the FOMC meeting minutes on Wednesday/Thursday & also the inflation report on Thursday.

Vista Partners LLC (”Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: with daily stories, weekly market updates, monthly macroeconomic newsletters, podcasts, & Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives. Stay Informed! Stay Competitive! Sign Up to receive FREE email updates here!
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