Readers Respond: MSBT

MSBT.ob: A comment from Lenny regarding MedaSorb:

Hi Vinny,

Hope all is well!

I have a small position in MSBT and was thinking up increasing it, however the # of shares including warrants and preferreds (since they would be 'in the money') has me a little concerned.

If you have a chance and can review this link and their 10Q, what do you think?

The SEC file is: http://www.sec.gov/Archives/edgar/data/1175151/000114420408068974/v134279_s1.htm

It seems to indicate a much higher share count when you take it into consideration, am I missing something?

Let us know when you get a chance,

Tks!

Lenny



VFC's Take: I've been watching the MSBT action also, and the warrants and preferred are definitely something to consider, but it depends on when the holders start converting that will determine how much of an effect it has on the stock price, in my opinion. However, that is a large amount of potential outstanding shares. Because of that consideration I'm planning on selling a large portion of my remaining shares into the run up that I think will occur later this year or early 2010.

I have to believe, however, that all of those preferred and warrants would not be converted at the same time, so I'm not too worried about them - especially if CytoSorb proves successful because I think that the stock price is going to trade significantly higher than a dollar if the CytoSorb trial goes well - with full conversion or not.

What does have me sceptical about this stock right now is that the MSBT stock reminds me of the airplane that overshot its destination last week - I think the clowns are in charge. I don't mean management, I mean the big players that have been playing the stock over the past few weeks.

If the recent spike to over forty cents was simply the result of speculation on a positive outcome of the CytoSorb trial, then I don't think that a full retracement to twenty cents would have occured. More likely, in my opinion, it was a combination of speculation and some swing/momentum/day traders bringing additional hype to the stock; most of whom started bailing at forty cents to go look for the next quick trade.

While the pull back has created a nice entry point for those that may not have a position, I'm holding any buys unless we reach the low teens. I'm still set with my remaining sub ten cent shares and it'll take a huge bargain to get me to buy more. I'm not convinced that we will see the low teens again (barring any bad news), but I wouldn't be surprised to see a dip into the high teens.

Thanks for posting the information and your insight.

Disclosure: VFC is long MSBT.