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Before getting into why Dow Jones could plummet to its pre-Murdoch offer price, I just wanted to congratulate those of you that followed the advice of Death Cross Trader to short Dendreon. While a panel did recommend approval for Dendreon’s Provenge drug, we were still skeptical, and bet heavily on strong possibility of an approvable letter.
Yes, the company scored big points when a panel of FDA advisers recommended approval, but that didn’t mean the FDA would follow its advice. Yes, there’s a need for this drug. I’m not denying that. But the sample size for Provenge was a tiny 127. How can you come to a conclusion based on 127 tests out of a population size of hundreds of thousands? Plus, the study reportedly missed main goals.
Missed the Dendreon trade in Death Cross Trader? Don’t worry about it. Marvel, a play issued just yesterday, is pulling back as expected (down $1.14 as of 11:30 a.m. EST). There’s still plenty of time to jump in on this. Plus, we’ve got two new unlock plays. One is adding 30% to its float. The other is adding more than 100% to its float. In both cases, we’re looking for impressive Dendreon-type gap downs.
As for Dow Jones… First, according to reports, Murdoch is losing confidence that the deal will happen. And two, according to UBS (as mentioned by Bloomberg.com), “News Corp.'s $5 billion bid for Dow Jones & Co. has a 40 percent chance of success and its failure would send the shares tumbling to below their pre-offer price…”
If you’re betting on a Bancroft family change of heart, don’t hold your breath. And don’t risk money on upside that isn’t coming. Fifty two percent of the voting power said they would not accept the offer. And should they remain firm, the stock could easily slip back under $35 -- $16 downside.
