These Stocks Primed Their Own Pump

"Sell in May and go away" is strategy that tells you to invest between Nov. 1 and April 30 and then sell your holdings through the summer doldrums. It was a strategy that seemed to be working as intended, as the markets tumbled 7% in May. Yet they're making something of a comeback in June and are now up almost 4% -- including a nearly 1% gain yesterday alone -- with another eight trading days to go.

Some stocks though went on a joyride of their own, jumping by double-digit percentages in the process.

But resist the urge to high-five everyone in the cubicles next to you, since smart investors won't celebrate until they know why their stock surged. Without a fundamental basis for the bounce, these stocks can quickly make the return trip down.

Amid the ruins
The Dow's financial stocks once again paced the day's gains, with Bank of America jumping 4.5%. Not only was JPMorgan Chase's (NYSE: JPM  ) Jamie Dimon talking up bank stocks on Capitol Hill, but the languishing economic recovery has also pushed the Federal Reserve into extending Operation Twist.

While U.S. financials were doing well, international institutions also gained. Most noteworthy, perhaps, is National Bank of Greece (NYSE: NBG  ) , whose country survived a eurozone no-confidence vote over the weekend. Now that it will be staying in the European Union, it's time to get down to brass tacks about what kind of austerity it will accept in return for billions in new euro bailouts.

Just the fact Greece has yet to implode -- and really, does anyone really think it won't? -- is causing the bank to jump higher. While the stock rose 16.5% yesterday and is up 60% from its lows, it still needs to confront the outflow of cash from the country. Leading up to the election, Greeks were yanking cash out of their accounts by the fistful, with some analysts estimating that as much as $1.1 billion was pocketed in the days leading up to the election.

But don't buy into NBG's rebound. Greece's economy has ground to a halt. According to the Financial Times, virtually all commercial activity has ceased, as banks won't lend even to companies with solid order books. And the bailout monies received are simply exported to foreign debtholders. As bad as Greece's situation is, the EU also needs to attend to bailing out Spain and Italy, which might cost 750 billion euros.

I've had a long-running underperform rating on National Bank of Greece on Motley Fool CAPS, even as 93% of the 1,418 other investment-community members rating the stock think it will survive. Tell me in the comments section below or on the National Bank of Greece CAPS page whether you think it can once again scale the heights of Mount Olympus, and then add its stock to the Fool's personalized stock-tracking service to keep up to date on its crisis-management efforts.

Tilting at windmills
On the surface, Microsoft's (Nasdaq: MSFT  ) new tablet computer, the Surface, isn't likely to unseat Apple's (Nasdaq: AAPL  ) iPad anytime soon, even if it has some neat enhancements that separate it from the rest of the me-too tablet computers on the market. But it also indicates how low Mr. Softy has fallen that it feels the need to try to transform itself into something other than just a shadow of its former greatness.

Also looking wraith-like is BioSante Pharmaceuticals (Nasdaq: BPAX  ) , which has lost almost 90% of its value after its "female Viagra" LibiGel failed to impress in trials. The only thing that's been able to get its stock excited was initiating a reverse 1:6 stock split that allowed it to regain Nasdaq compliance. Its shares jumped 12% yesterday.

With nothing else going for it, though, BioSante is going to launch a Hail Mary pass downfield by initiating new phase 3 trials for LibiGel. It should be remembered that its failure last time was due to not outperforming a placebo. While it hopes to prove the drug works and its efficacy was merely masked by the placebo effect, as the Fool's Brian Orelli says, it's really little more than an exercise in spending millions of dollars.

Surprisingly, nearly three quarters of CAPS All-Star investors are rating BioSante to outperform the broad indexes, but the low, two-star rating they've assigned it suggests they think there are better places for your money.

Tell me on the BioSante Pharmaceuticals CAPS page or in the comments box below if you think it has any chance whatsoever of succeeding in its strategy, and then add its stock to your Watchlist to be alerted if by some miracle these results come in better than before.

Going into orbit
Financial news may move stocks big and small, and even Warren Buffett has a stake in some of the largest. If you'd like to know why he keeps his ear to the ground there, check out the Fool's free report, "The Stocks Only the Smartest Investors Are Buying," and discover the one banking stock Buffett would buy if he were a smaller investor. Download your free copy today -- but hurry! It's for a limited time only.

Fool contributor Rich Duprey owns shares of Apple, but he holds no other position in any company mentioned. Check out his holdings and a short bio . The Motley Fool owns shares of Apple, Bank of America, Microsoft, and JP Morgan Chase. Motley Fool newsletter services have recommended buying shares of Microsoft and Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (1) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 04, 2012, at 5:55 AM, JTFM1 wrote:

    Rich, with respect to Biosante it easy too easy dismiss it as nothing else going for it. But a deeper examination will reveal the growing belief that testosterone restoration has many benefits including the reduction of cardiovascular. As a result of data collected from the Libigel safety trial Biosante now has the evidence to support that claim and submitted two patent applications in relation to the reduction of cardiovascular events in post menopausal women by 70 %. You will also want to explore the connection between Abbott and Biosante in relation to exchange of employees. Pay particular attention to the timing of Biosante hirings of former Abbott employees in relation to changes in the clinical trials for Libigel.

    Now ask yourself does Abbott believe Biosante has no value or is Abbott interested in leading the world in what appears to be the next big thing in mitigation cardiovascular events. Abbott is already the world leader in the male use of testosterone and are presently researching the cardiovascular benefits of testosterone in males. If Abbott wants to control this market the road for post menopausal women goes through Biosante and Libigel.

    This year, Biosante was also nominated for two ViE awards at the World Vaccine Congress this year. GVAX was one of five vaccines nominated for the Best Therapeutic Vaccine category and the deal between Biosante and Aduro for a phase II Pancreas Cancer trial was runner up for Best Vaccine Licencing Deal.

    Now ask yourself, why would Biosante sit on all of the above information and allow their share price to dive to the point of needing a reverse split?

Add your comment.

DocumentId: 1919389, ~/Articles/ArticleHandler.aspx, 4/24/2014 2:12:15 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement