Aug 27, 2010 10:04 AM PDT
With buyers coming back into the market today, SmallCaps YRC Worldwide (YRCW), Brigham Exploration (BEXP) and Helicos BioSciences (HLCS) posted early gains. The bulls this morning were looking to get back some of yesterday's concessions to the bears and news from two sources did the trick.
The Institute for Supply Management said this morning its index of manufacturing activity rose to 52.9 in August, up from 48.9 in July; the first time in 18 months the industry has grown and other news this morning that pending U.S. home sales are forecast to rise for the sixth straight month gave buyers broad market confidence.
... a little wiggle room please ...
Gaining as much as 11.21% ($0.25) this morning in early trading is YRC Worldwide Inc., (YRCW) http://www.yrcw.com/ which is currently trading on the Nasdaq in the $2.50 range. YRCW has a new market cap of $147 million. YRCW has a 3-Month average daily trading volume of 6,482,630 shares and it had easily traded that volume by mid-session.
The reason for the YRCW jump in share price and volume this morning was news that the Company had re-arranged some of its fundamental loan financing with extensions. YRCW is a global giant in worldwide shipping and transportation of consumer goods and it has suffered in step with whole sector and all its industries as the recession crippled the goods produced; goods shipped; and goods sold supply chain.
YRCW is a $2.50 stock with $7.14 billion in trailing twelve month revenues.
YRCW management said today the Company has amended a $950 million credit agreement with lenders. This is another critical step in the YRCW struggle to avoid a possible bankruptcy filing. The credit agreement amendment suspends the requirement that the company maintain liquidity of $100 million at all times. The covenant is suspended until Oct. 13.
YRCW noted in a filing with the Securities and Exchange Commission that JPMorgan Chase Bank (JPM), among other lenders, will continue to provide YRCW with a $950 million senior revolving credit facility, including portions available for borrowing and for letters of credit, and a senior term loan of about $111.5 million. YRCW has also sold real estate, cut thousands of jobs and trimmed wages among existing workers to stay afloat.
... short term, long term ...
Stifel Nicolaus & Company analyst David Ross yesterday reiterated his 'Sell' rating on shares of YRC Worldwide. In a note to clients, he said the amendment was no surprise and the company should still be challenged to maintain adequate liquidity after Oct. 13 if there are no further amendments.
Today, Beacon Equity said, "Demand for freight will continue to decline in 2009, but may begin to increase along with the economy some time in 2010, according to FTR Associates' North American Commercial Truck and Trailer Outlook Report."
YRCW operating units include: YRC National Transportation, YRC Regional Transportation, YRC Logistics, and YRC Truckload. As of December 31, 2008, the YRC National Transportation unit had 14,327 owned tractors, 2,348 leased tractors, 59,682 owned trailers, and 2,802 leased trailers.
At $2.50, YRCW is below its 52-week high of $19.61 set on 09-03-08 and above its 52-week low of $0.89 set on 07-08-09. At $2.50, YRCW is ahead of its 50-day moving average and behind its 200-day moving average. YRCW is widely held by institutions. It shares out versus float ratio is near-parity.
Gaining 19.69% ($1.29) today in early trading is Brigham Exploration Company (BEXP) http://www.bexp3d.com/ currently trading in the $7.63 range on the Nasdaq. BEXP has a new market cap of $626 million. BEXP has a 3-Month average daily trading volume of 2,109,050 shares and it topped 2,513,037 by mid-session.
Late yesterday, BEXP management said its Figaro well was producing new results, the Company's cash flow was very fluid and in a guidance note; BEXP sees higher oil volumes in Q3. BEXP management also said the Company has entered an agreement with U.S. Energy (USEG) to accelerate drilling in some properties in North Dakota where BEXP owns 100,300 acres.
BEXP has a 95% working interest and 74% net revenue interest in its Figaro well, which is located in McKenzie county, N.D. BEXP management said the well had produced about 1,895 barrels of oil equivalent per day.
Bud Brigham, the Chairman, President and CEO, said, "Assuming three Bakken (type) wells per 1280 acre spacing unit, we could drill as many as 222 wells in Rough Rider (area) based on our 94,800 net acres after the drilling participation agreement announced last week (with USEG).
"If the Three Forks is also productive, we could potentially drill double that number of wells. We are ramping up our development drilling activity in Rough Rider and should be adding our second operated rig in the next several weeks.
"We are seeing our transition to an oil resource play company continue to play out exceptionally well for our shareholders. The prompt month oil contract closed at a 24 to 1 ratio on Friday, or roughly 4 times the historic 6 to 1 conversion ratio. With the anticipated increase in our oil volumes in the third quarter, our cash flows are expected to remain strong as the overall economics of our Williston Basin wells continue to be more attractive relative to natural gas plays."
BEXP has interests in the production of oil and natural gas reserves in the Rocky Mountains, Onshore Gulf Coast, Anadarko Basin, and west Texas. The company holds property interests in the Powder River Basin located in Wyoming. It also holds property interests in the Onshore Gulf Coast consisting of the Vicksburg trend in Brooks County, Texas; Miocene and Upper Oligocene trends in Southern Louisiana; and the Frio trend in and around Matagorda County, Texas.
At $7.63, BEXP is below its 52-week high of $14.50 set on 09-22-8 and above its 52-week low of $1.04 set on 03-02-09. At $7.63, BEXP is ahead of both its 50-day and 200-day moving averages. BEXP has trailing twelve month revenues of $82 million. BEXP is widely held by institutions. Its shares out versus float ratio is near-parity.
Taking advantage of today's broad market enthusiasm and a steady, upward trend in share value, Helicos BioSciences Corp., (HLCS) http://www.helicosbio.com/ gained 7.86% ($0.22) this morning in early trading. HLCS is currently trading in the $3 range on the Nasdaq. HLCS has a new market cap of 196 million. HLCS has a 3-Month average daily trading volume of 1,342,320 shares and it surpassed 2,804,040 by mid-session.
HLCS seems to be a great play for the future...
Or so it seems because if you look at the exposure of HLCS based on today's trading volume, its recent ascent in share value and you consider the fact that management is very comfortable in saying in its recent quarterly filing that "We expect (such) losses to continue for at least two years as we continue to develop and commercialize our products," the attraction here has to be in future sales (or a future buy-out).
On Aug 20, HLCS announced the placement of a Helicos Genetic Analysis System at the Ontario Institute for Cancer Research. On Aug 13, HLCS announced the placement of a Helicos Genetic Analysis System at the Massachusetts General Hospital. I believe HLCS systems are being strategically placed now for future proof of success.
And HLCS numbers are improving: for the rear-over-year comparable quarter ending, June 30, the Company only posted a $0.10 EPS loss in 09 compared to a $0.57 EPS loss in 08. Also, HLCS is bringing in money with; product revenue for the six months ended June 30, 2009 primarily consisting of $829,000 of revenue recognized from the sale of an instrument that was shipped in 2008, as well as $280,000 of revenue recognized from the sale of proprietary reagents to customers.
HLCS has also taken bottom line measures, reducing its workforce by 30% in Dec 08. And this from the filing: "We believe that our existing cash and cash equivalents and receipts from customers on sales of products, coupled with the implementation of significant additional expense reduction initiatives, will be sufficient to fund our operations into the first quarter of 2010."
HLCS focuses on genetic analysis technologies for the research, drug discovery, and clinical diagnostics markets. The company's products are based on its proprietary True Single Molecule Sequencing technology, which enables the analysis of genetic material by directly sequencing single molecules of DNA or single DNA copies of RNA. Its Helicos genetic analysis platform is its primary product.
At $3, HLCS is below its 52-week high of $4.23 set on 09-02-08 and above its 52-week low of $0.21 set on 12-17-08. At $3, HLCS is ahead of both its 50-day and 200-day moving averages. HLCS is widely held by insiders. Its shares out versus float ratio is lopsided and I would like to see more shares in the public float for stability.
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