April 2, 2001
MAINE STOCK TRENDS
Maine stocks beat the average, once again
Copyright © 2001 Blethen Maine Newspapers Inc.
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American Skiing stock rises on news of merger failure (March 26, 2001)
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It was another quarter in which the major stock market averages were all down. The Dow Jones Industrial Average was down 8.43 percent for the quarter. The Standard & Poor's 500 Index fell 12.11 percent. The Russell 2000 fell 6.82 percent. And, just when investors were convinced that the NASDAQ Composite couldn't move any lower from last December's rock bottom prices, guess what happened? The tech-heavy index lost an additional 25.51 percent. The quarter saw two major benchmarks penetrated. The Dow Industrials fell below 10,000 and the NASDAQ fell below 2,000.
Here in Maine, the story was much different. Local stocks once again outpaced the major indices in the first quarter, just as they did in 2000. The average Maine stock gained 7.43 percent during the first quarter. The median return was a positive 2.11 percent.
Topping the list of top performers locally during the quarter ending March 30 were ImmuCell (ICCC-$2.50), which was up 60 percent, and Intelligent Controls (ITC-$1.25) up 25 percent. The worst performer was Bangor's Nyer Medical Group (NYER- $3.44), which fell 14.06 percent.
The big story locally last week was the change of command at American Skiing (SKI-$1.52). Founder, chairman, and CEO Les Otten stepped down. Chief Operating officer BJ Fair, who joined the company one year ago, took over as CEO.
While Otten is no longer chairman of the board, he will remain on the board. The company has not selected a new chairman to replace Otten.
The shares of American Skiing barely budged on the news. The stock was up $0.02 for the week and 5.74 percent during the quarter.
Another statistic to ponder is American Skiing's short interest. This is the amount of stock that is borrowed and sold short in anticipation of replacing it in the future at a lower cost. For American Skiing, the figure as of March 15 was 1,268,412 shares up from zero in the month prior to the December merger announcement.
The increase in short interest is due to the previously pending (and now cancelled) merger with MeriStar Resorts (MMH-$1.74). Had the deal gone through, MeriStar shareholders were in line to receive 1.75 shares of SKI for each share they owned. That led arbitragers to purchase MeriStar, borrow and then, sell short 1.75 shares of American Skiing for every share of MeriStar they purchased (1.88 shares before the terms were revised in February.) That arbitrage move would have provided an annualized return of about 60 percent at one point.
Now there will probably be a scramble to cover those short sales, so buckle up, it could be a wild ride.
Speaking of March's short interest figures, IDEXX Labs' (IDXX-$21.94) open interest fell slightly from 2.5 million to 2.4 million shares shorted. The company's average daily trading volume, though, fell even more. The result was that the "days to cover" increased from 9.7 to 11.87 days, the highest among local companies, excluding of course, American Skiing.
Fairchild Semiconductor (FCS-$13.32) had a big percentage jump in its open interest. Short sales not yet covered moved from approximately 168,000 to 728,000, but that still represented just a little more than a single day's worth of trading.
Fairchild fell 11.96 for the week and 7.74 percent for the quarter.
UnumProvident (UNM-$29.22) was upped to 'buy' at Deutsche Banc AB on Friday. That helped move the stock up 1.3 points for the day and 10.06 percent for the week. The company will be holding its annual shareholder meeting on May 10 in Chattanooga, TN this year. That will mark the first time in either UNUM's or UNUMProvident's history that the annual shareholder meeting has not been held in Maine.
ImmuCell's significant news for the quarter was simply reporting another year of increased revenues and earnings. Last week, the company announced it won a $400,000 grant from the Maine Technology Institute. The grant will be used to augment the company's development of its Nisin-based mastitis treatment, MAST OUT(TM). The grant award must be paid back up to $800,000, which could be paid as a 2% royalty on product sales.
While a $400,000 grant may seem small, for a company with revenues barely north of $5 million, the number is meaningful for the local biotech company.
In its press release, ImmuCell said that estimates losses to the U.S. dairy industry associated with mastitis range from $1 to 2 billion per year. If successfully developed and commercialized, the Portland biotech company believes that MAST OUT could be the first non-antibiotic product approved for the treatment of mastitis (inflammation of the mammary gland). The U.S. market is estimated to be worth approximately $20,000,000 per year for lactating cows. The Company believes the dry cow application may represent a similar sized market opportunity.
Brad McCurtain is president of Maine Securities Corporation. Maine Securities Corporation is an investment firm specializing in Maine's securities. From time to time, the corporation, its employees, and its clients may buy, hold, and/or sell positions in companies mentioned herein. As a regulated securities broker/dealer, the company and its employees are required to abide by all securities regulations at all times when communicating with the public. Brad McCurtain may be reached at info@MaineSec.com. Web site: http://www.MaineSec.com