I See Questionable Drivers Behind 2 Big Chinese Stock Advances – Nasdaq: VALV and Nasdaq: KGJI

The most active stocks list Wednesday was volatile, with winners rising from 10% to 39% and decliners dropping from 9% to 42%. Chinese stocks led the list, you would think as the likely beneficiaries of favorably interpreted Chinese economic data, which was released Wednesday. However, my view of the real reasons behind two of the risers exposes what I believe are questionable drivers. So I say buyer beware.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relative tickers included: Nasdaq: VALV, NYSE: KKD, NYSE: ETE, NYSE: FF, Nasdaq: KIOR, Nasdaq: KGJI, Nasdaq: PBTH, Nasdaq: NEWN, Nasdaq: TAOM, AMEX: PAL, AMEX: BMJ, Nasdaq: SORL, Nasdaq: ALRN, Nasdaq: PPHM, Nasdaq: DYNT, Nasdaq: AFFM, AMEX: ALN, Nasdaq: CLNE, Nasdaq: BWOW, Nasdaq: SCMF, NYSE: GU, Nasdaq: SNFCA, Nasdaq: MDGN, Nasdaq: LBIX, NYSEArca: AGQ, Nasdaq: SPEX, Nasdaq: CHCI, Nasdaq: RGDX, Nasdaq: TSPT, Nasdaq: FPFC, Nasdaq: BKOR, Nasdaq: CRVP, NYSE: ITG, Nasdaq: TBSI, Nasdaq: LIME, Nasdaq: VTUS, Nasdaq: TOPSD, Nasdaq: BCAR, NYSEArca: ZSL, Nasdaq: BOVA, Nasdaq: OLCB, NYSE: OWW, Nasdaq: ADTN, AMEX: WGA, Nasdaq: PWAV, Nasdaq: AMTC, Nasdaq: CPSS, Nasdaq: CDTI, NYSE: TRU, NYSE: VR, Nasdaq: EONC, Nasdaq: BMTI, Nasdaq: ALTI, NYSE: YUM, NYSE: MAR, Nasdaq: ARTW, Nasdaq: OZRK, Nasdaq: ESBK, Nasdaq: EMMS, Nasdaq: FEIM, Nasdaq: FTLK, NYSE: GKK, Nasdaq: GFED, Nasdaq: IGTE, Nasdaq: LLEN, Nasdaq: MSW, Nasdaq: MFRI, Nasdaq: FIZZ, AMEX: UWN, Nasdaq: NFEC, Nasdaq: NTIC, Nasdaq: SLP, Nasdaq: UFPI, Nasdaq: WBNK, Nasdaq: WINA.

I See Questionable Drivers Behind 2 Big Chinese Stock Advances – Nasdaq: VALV and Nasdaq: KGJI

Shengkai Innovations

Wednesday’s most active risers was led by penny stock Shengkai Innovations Inc. (Nasdaq: VALV), which increased 39.5% on the day. Shengkai was mentioned in a China Analyst article as a leader among Chinese stocks in terms of ROE, with a reported 134.64% return over 12 months. The company was also noted to have a net profit margin of 69.42% over the same span. The wire was otherwise absent of reasoning for the rise in the stock. VALV makes ceramic valves, which it exports to the Asia-Pacific region, North America and Europe. Yahoo Finance has the float for this $58 million market capitalization stock at 8.0 million shares, so moving it was not so difficult. The listed P/E ratio on the stock is extremely low based on Yahoo data. However, we’re dealing with a small Chinese company here, so there are many unknowns about the industry, company and the opportunity. I would have been more interested in the stock and its move if the reason behind it were other than a PRish article.

Kingold Jewelry

Kingold Jewelry (Nasdaq: KGJI), another penny stock from China, benefited from a Street.com article listing it as 1 of 5 stocks insiders were snapping up. The article included Krispy Kreme Doughnuts (NYSE: KKD), Energy Transfer Equity (NYSE: ETE), FutureFuel (NYSE: FF), KiOR (Nasdaq: KIOR) and Kingold Jewelry (Nasdaq: KGJI). This stock is down significantly since last summer, and there must be a good reason for that wouldn’t you think? KGJI is off its high by 83% even after Wednesday’s 25% spurt higher. The founder of the company and its chairman may be a good guy who believes wholly in his company, and the stock does trade at a trailing P/E ratio of 4.7, which under normal conditions would seem cheap for a stock that sells into the expanding Chinese middle class.

But here’s the problem... Kingold sells gold jewelry, and as gold prices rise, its margins get squeezed and sales opportunities get limited. That’s why the stock is down over the last year in my view, and I think it’s a good reason. I would, however, look at this stock should gold prices indicate a longer term turn in trend lower. However, while I see gold backtracking off whatever high it sets Thursday, I don’t see it backing down far enough for jewelry retailers to become attractive long-term.

The remainder of the day’s upside list included: PROLOR Biotech (Nasdaq: PBTH), New Energy Systems (Nasdaq: NEWN), Taomee Holdings (Nasdaq: TAOM), North American Palladium (AMEX: PAL), Birks & Mayors (AMEX: BMJ), SORL Auto Parts (Nasdaq: SORL), American Learning (Nasdaq: ALRN), Peregrine Pharmaceuticals (Nasdaq: PPHM), Dynatronics (Nasdaq: DYNT), Affirmative Insurance (Nasdaq: AFFM), American Lorain (AMEX: ALN), Clean Energy Fuels (Nasdaq: CLNE), Wowjoint Holdings (Nasdaq: BWOW), Southern Community Financial (Nasdaq: SCMF), Gushan Environmental Energy (NYSE: GU), Security National Financial (Nasdaq: SNFCA), Medgenics (Nasdaq: MDGN), Leading Brands (Nasdaq: LBIX), ProShares Ultra Silver (NYSEArca: AGQ), Spherix (Nasdaq: SPEX), Comstock Homebuilding (Nasdaq: CHCI) and Response Genetics (Nasdaq: RGDX).

The leading losers list included: Transcept Pharmaceuticals (Nasdaq: TSPT), First Place Financial (Nasdaq: FPFC), Oak Ridge Financial (Nasdaq: BKOR), Crystal Rock (Nasdaq: CRVP), Investment Technology (NYSE: ITG), TBS International (Nasdaq: TBSI), Lime Energy (Nasdaq: LIME), Ventrus Biosciences (Nasdaq: VTUS), TOP Ships (Nasdaq: TOPSD), Bank of the Carolinas (Nasdaq: BCAR), ProShares Ultra Short Silver (NYSEArca: ZSL), Bank of Virginia (Nasdaq: BOVA), Ohio Legacy (Nasdaq: OLCB), Orbitz Worldwide (NYSE: OWW), ADTRAN (Nasdaq: ADTN), Wells-Gardner Electronics (AMEX: WGA), Powerwave Technologies (Nasdaq: PWAV), Ameritrans Capital (Nasdaq: AMTC), Consumer Portfolio Services (Nasdaq: CPSS), Clean Diesel Technologies (Nasdaq: CDTI), Torch Energy Royalty (NYSE: TRU), Validus Holdings (NYSE: VR), eOn Communications (Nasdaq: EONC), BioMimetic Therapeutics (Nasdaq: BMTI) and Altair Nanotechnologies (Nasdaq: ALTI).

The day’s earnings list included: Yum! Brands (NYSE: YUM), Marriott International (NYSE: MAR), ADTRAN (Nasdaq: ADTN), Art’s Way Manufacturing (Nasdaq: ARTW), Bank of the Ozarks (Nasdaq: OZRK), Elmira Savings Bank (Nasdaq: ESBK), Emmis Communications (Nasdaq: EMMS), Frequency Electronics (Nasdaq: FEIM), Funtalk China (Nasdaq: FTLK), Gramercy Capital (NYSE: GKK), Guaranty Federal Bancshares (Nasdaq: GFED), iGate (Nasdaq: IGTE), L&L Energy (Nasdaq: LLEN), Mission West Properties (Nasdaq: MSW), MFRI (Nasdaq: MFRI), National Beverage (Nasdaq: FIZZ), Nevada Gold & Casinos (AMEX: UWN), NF Energy (Nasdaq: NFEC), Northern Technologies International (Nasdaq: NTIC), Simulations Plus (Nasdaq: SLP), Universal Forest Products (Nasdaq: UFPI), Waccamaw Bankshares (Nasdaq: WBNK) and Winmark (Nasdaq: WINA).



Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

K-V Pharmaceutical (NYSE: KV-A) – Catches a Spark to a 42% Gain

The very volatile K-V Pharmaceutical Company (NYSE: KV-A) caught a spark Friday and jumped 42% higher through the day. There was no news of relevance listed on the company’s wire all day long nor on its website, so investors speculated as to the cause, filling message boards with their fervor. We found the driver for you though, so now you can make an informed investment decision for the short and maybe even the long-term.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

K-V Pharmaceutical (NYSE: KV-A) – Catches a Spark to a 42% Gain

Relative tickers: Nasdaq: AATI, Nasdaq: FTWR, Nasdaq: BCON, Nasdaq: VLYWW, Nasdaq: LPHI, Nasdaq: RUE, Nasdaq: SZYM, Nasdaq: INHX, Nasdaq: TKMR, Nasdaq: HMPR, Nasdaq: ACRX, Nasdaq: SEAC, Nasdaq: KGJI, Nasdaq: CDTI, Nasdaq: PFED, Nasdaq: MRVL, Nasdaq: RXII, Nasdaq: QUIK, Nasdaq: CZFC, Nasdaq: CRMT, Nasdaq: SPPRP, Nasdaq: FEED, Nasdaq: ALXA, Nasdaq: VNET, Nasdaq: LAVA, NYSE: KV-A, NYSE: KV-B, NYSE: ARL, Nasdaq: ACTV, NYSE: ZLC, NYSE: DEXO, Nasdaq: SQNS, Nasdaq: FXCM, NYSE: MSO, NYSE: DAC, NYSE: FRC, NYSE: BZH, NYSE: DRL, NYSE: CIS, NYSE: RUSL, NYSE: MDS, NYSE: END, NYSE: MTR, NYSE: LAS, NYSE: AVD, NYSE: UAN, NYSE: MNI, NYSE: RL, AMEX: URG, AMEX: EGX, AMEX: GHM, AMEX: UQM, AMEX: GBG, AMEX: DNN, AMEX: DMC, AMEX: INV, AMEX: PAL, AMEX: URZ, AMEX: GPL, AMEX: BRD, AMEX: COVR, AMEX: BONE, AMEX: QRM, AMEX: RBY, AMEX: PIP, AMEX: CNR, AMEX: WGA, AMEX: HDY, AMEX: SSY, Nasdaq: AMGN, Nasdaq: BIIB, Nasdaq: GILD, Nasdaq: LIFE, Nasdaq: TEVA, NYSE: WPI, Nasdaq: MYL, NYSE: PFE, NYSE: JNJ, NYSE: GSK, NYSE: SNY, NYSE: NVS, OTC: RHHBY.PK and NYSE: AZN.

It looks as though the fuel behind the big move in KV-A shares Friday was news that OrbiMed, the world’s largest healthcare focused investment firm, with some $5 billion in assets under management, upped its stake in K-V Pharmaceutical to 10.53% since March. It looks as though the news, which was not understood until after the close, was not as hot as the rumor though, as the stock was down after hours. It seems speculators thought there was some operation-relevant news leaked, and the real news just didn’t live up to traders’ dreams.

It’s still very relevant that OrbiMed increased its interest, which was 7.23% in March. This quickly heated stock has a 52-week range of $0.61 to $13.55, and took most of that ground starting in February, when one of its drugs gained FDA approval. Makena reduces the risk of premature birth in pregnant women. When approved in early February, it sent the stock up 131% in a day, and to its peak in March. Makena was the first drug approved by the FDA that is specifically indicated to reduce premature birth risk.

It appears Makena is still competing with unapproved compounds of approved drugs that match Makena’s make-up. It also appears that K-V has had to lower its price to ensure the drug was the chosen option of women at risk of premature birth. It looks to me as though this is what took the steam out of the KV-A locomotive in March.

The stock started Friday at $2.39 and closed at $3.38. It was down about 3.25% after hours though, as nimble money trying to catch a lift on its momentum looked to get out after the non-operational news broke. Given a three-day weekend, that made sense for a lot of traders. My feeling is that the stock might give more ground on Tuesday when it reopens under less cloudy skies, given the story will be well known by then. That said, this stock has long-term appeal, based on the little I currently know about it. If the “right price” and the market opportunity are attractive enough, OrbiMed, the specialist investor, may know exactly what it’s doing.



Other top gainers on the day included Advanced Analogic Technologies (Nasdaq: AATI), FiberTower (Nasdaq: FTWR), Beacon Power (Nasdaq: BCON), Valley National Bancorp (Nasdaq: VLYWW), Life Partners (Nasdaq: LPHI), rue21 (Nasdaq: RUE), Solarzyme (Nasdaq: SZYM), Inhibitex (Nasdaq: INHX), Tekmira Pharmaceuticals (Nasdaq: TKMR), Hampton Roads Bankshares (Nasdaq: HMPR), AcelRx Pharmaceuticals (Nasdaq: ACRX), SeaChange International (Nasdaq: SEAC), Kingold Jewelry (Nasdaq: KGJI), Clean Diesel Technologies (Nasdaq: CDTI), Park Bancorp (Nasdaq: PFED), Marvell Technology (Nasdaq: MRVL), RXi Pharmaceuticals (Nasdaq: RXII), QuickLogic (Nasdaq: QUIK), Citizens First (Nasdaq: CZFC), America’s Car-Mart (Nasdaq: CRMT), Supertel Hospitality (Nasdaq: SPPRP), AgFeed Industries (Nasdaq: FEED), Alexza Pharmaceuticals (Nasdaq: ALXA), 21Vianet (Nasdaq: VNET), Magma Design Automation (Nasdaq: LAVA), K-V Pharmaceuticals (NYSE: KV-A, NYSE: KV-B), American Realty Investors (NYSE: ARL), The Active Network (Nasdaq: ACTV), Zale (NYSE: ZLC), Dex One (NYSE: DEXO), Sequans Communications (Nasdaq: SQNS), FXCM, Inc. (Nasdaq: FXCM), Martha Stewart Living (NYSE: MSO), Danaos (NYSE: DAC), First Republic Bank (NYSE: FRC), Beazer Homes (NYSE: BZH), Doral Financial (NYSE: DRL), Camelot Information (NYSE: CIS), Direxion Daily Russia Bull (NYSE: RUSL), Midas (NYSE: MDS), Endeavor Int’l (NYSE: END), Mesa Royalty Trust (NYSE: MTR), Lentuo International (NYSE: LAS), American Vanguard (NYSE: AVD), CVR Partners (NYSE: UAN), McClatchy (NYSE: MNI), Polo Ralph Lauren (NYSE: RL), Ur Energy (AMEX: URG), Engex (AMEX: EGX), Graham (AMEX: GHM), UQM Technologies (AMEX: UQM), Great Basin Gold (AMEX: GBG), Denison Mines (AMEX: DNN), Document Security Systems (AMEX: DMC), Innovaro (AMEX: INV), North American Palladium (AMEX: PAL), Uranerz Energy (AMEX: URZ), Great Panther Silver (AMEX: GPL), Brigus Gold (AMEX: BRD), Cover-All Technologies (AMEX: COVR), Bacterin International (AMEX: BONE), Quest Rare Minerals (AMEX: QRM), Rubicon Minerals (AMEX: RBY), PharmAthene (AMEX: PIP), China Metro-Rural (AMEX: CNR), Wells-Gardner Electronics (AMEX: WGA), HyperDynamics (AMEX: HDY) and SunLink Healthy (AMEX: SSY). Industry relatives include Amgen (Nasdaq: AMGN), Biogen Idec (Nasdaq: BIIB), Gilead Sciences (Nasdaq: GILD), Life Technologies (Nasdaq: LIFE), Teva Pharmaceutical (Nasdaq: TEVA), Watson Pharmaceuticals (NYSE: WPI), Mylan (Nasdaq: MYL), Pfizer (NYSE: PFE), Johnson & Johnson (NYSE: JNJ), GlaxoSmithKline (NYSE: GSK), Sanofi-Aventis (NYSE: SNY), Novartis (NYSE: NVS), Roche Holding (OTC: RHHBY.PK), AstraZeneca (NYSE: AZN).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.