Readers Respond: Feuerstein's Comments regarding CVM, BIEL

An anonymous comment regarding Feuerstein's latest comments on CVM

Have you seen the newest article from AF?

http://www.thestreet.com/_yahoo/story/10629106/1/biotech-stock-mailbag-fda-playbook.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

Someone asked a question about DSCO and CERS and he went out of his way to say CVM is full of bull. Notice he didn't say a word abou their work with Johns Hopkins or their new facility. Its like he goes out of his way to drive the stock down. I really question this guy's motive.

VFC's Take: I agree, and as I've stated before, I believe that Feuerstein operates with motives other than simply reporting the news and commenting on it.

His blog posts have appeared with suspicious timing, in my opinion, and the fact that when he did go positive on a stock (BDSI), it was when a hedge fund was looking to exit the stock and surely benefited from the higher price that resulted from 'TheStreet.com' buy recommendation.

Coming from another angle, however, there's no doubt that Feuerstein's day job of blogging for the 'TheStreet.com' benefits anytime he mentions a popular stock because it draws viewers to his page. At the end of the day, he needs to attract readers to keep his job as top biotech blogger, so I think that stocks like DNDN, CVM and BIEL (among many others) will be mentioned as much as he can fit them into a blog post in an effort to draw as many viewers as he can.

After all, the man's gotta eat.

I noticed that I get a lot more viewership to my own blog when I post about a hot stock, that's what keyed me on to Feuerstein's game.

Another neat trick that he does to pump his 'clicks' statistics is making a one or two page blog post into an eight page ordeal. You read about a paragraph and a half of his article before having to click to the next page. All those clicks count as a click even when it's just one viewer clicking eight times to read one article, I'd presume.

Regarding the article (BIEL was also included in the most recent), I don't read his stuff anymore unless someone posts it on a message board. I've rarely felt that I got an un-biased view of a company or a stock from his blog postings and since I feel that 'TheStreet.com' has an agenda different than my own, I don't give them the clicks - especially not eight of them.

Manipulation can control the day to day price action of a stock, but overall, a good company and a good product combined with an investor's own DD will win out.

And as the reader who posted this comment mentioned - you can't have a conversation about CVM without including the ongoing Johns Hopkins study; any study being conducted in conjunction with JH gives instant credibility to that study.

More than likely, Feuerstein was trying to put a subtle CVM bash in that article, but he was also undoubtedly looking for a few clicks to his blog.

Disclosure: VFC is long CVM.

Readers Respond: CSUH Financing Fears (Again)

To be fair, I'll address the recent Celsius financing again this week, but this is a dead horse at this point.

Either you believe in the company and the product or you don't. VFC's Stock House is not the CSUH Yahoo!

Message Board where the same one or two people use multiple IDs to beat the same issue into submission over and over again. I like to entertain both sides of the story here, so I'll give fair time to any oppossing views - but the same old rumbo-jumbo isn't going to cut it.

It's time to come up with something new. Here's another one from Scott:

VFC,

I'm beginning to believe that you don't understand finance. I don't want to believe that, but your use of allegories in substitution for mathematical facts is leading me to that conclusion.

This is not "fear of dilution" as you say, it is real, hardcore dilution. Not a threat, real honest to goodness, in the flesh dilution. Now, how does the investor protect himself from losing the value of his/her original investment, if he believes so strongly in the future of Celsius?

You must match each round of dilution. In this case, you would have to buy 25% more stock when the stock drops due to a 25% dilution, so that your original investment remains whole. So, if you want to keep pace with the last month's "financing deals", double down to match Carl and then add another 25% to that to match the registration offering. Now you are even, in shares anyway.

Just saying that you don't get scared when financing deals come along does not let your readers know what is happening to their investment. I hope I cleared this up for some people. That is the only reason I've been posting on CSUH.

Good luck to all invested, like most people, I love an underdog story.

Scott M

VFC's Take:

Scott, is it March already?

When dilution occurs, then potential profits are also diluted - we got that. That's obvious.

The point is, if the company can grow a lot more and a lot faster with the influx of cash now, then today's dilutive effect could turn out to be a wash in the long run; because let's face it, without money to advertise and raise awareness, then Celsius goes nowhere; especially if one of the big boys in the beverage industry comes up with their own version of Celsius (not talking Enviga) and immediately has that product at 'full distribution'. I think that is highly possible and I think that is why Haley is pushing to make a big splash now.

In that scenario, if Haley decides to go the status quo and not dilute, the shareholder would be happy to know that the value of their shares was not diluted - but they'd be pretty disappointed if Celsius trickled along and allowed one of the big boys to make their big splash first. Then the value of an investment would drop with the stock.

However, if as a result of the dilution the company is able to grow on a massive scale - a scale a lot higher than would have been allowed without the funds raised by dilution - then the dilutive effect turns into a wash because growth will have reached levels not possible without the money raised.

Of course, we're speaking hypotheticals.

It's like the Obama Adminstration claiming that they 'saved and created' jobs.

I happen to believe that an investor's original investment will actually end up being worth more down the road as a result of the dilution than it would have had the dilution not occurred. Why?

Because I think that it's imperative that Celsius become a household name as soon as possible, before one of the big boys comes up with their own version of Celsius - and not Enviga, one that actually catches on.

So, yes, Scott's mathematical equations for the dilutive effect are spot on - but here's one thing that a math equation cannot account for: The fact that the dilution allows for more growth than would have been there without it.

I'm not a tree kinda guy, I look past the tree and see the forest.

Now, if Steve Haley and the board were to start using the funds raised through this dilution to buy house boats and head to Scores instead of growing the company, then I'd be worried; OR if dilutive deals were to continue AFTER the product has become a success and the company no longer needed to dilute, then I'd be gone.

So far, that hasn't been the case.

In my opinion, Haley has plans for this money - plans that will allow Celsius to grow to a higher level more quickly than would have been possible without the dilution. So, I emphasize again - if the dilution allows the company to bank more profits at a quicker rate, then an investor's investment that looks diluted today - could be worth more down the road than what it would have with less and slower growth.

Is the ante upped right now? Yes.

But if you don't take risk, you don't get results.

Right now, I repeat, it all depends on how Steve Haley spends this money and how well Celsius is received in the market place.

I also emphasize that if you're an investor that has no stomach for risk and dilution, then you've got to stay away from speculative stocks.

Disclosure: VFC is long CSUH.