APT

Alpha Protech N-95 masks for swine flu protection were covered by CNBC today. We got in a couple months ago in the $2's. Shares surged almost $1 above $5 this morning after the segment. Take away message: better early than late.

http://www.cnbc.com/id/15840232?video=1280599599&play=1

Here's a history of my blogs on APT:

http://gregnguyen.blogspot.com/2009/08/apt-announces-record-earnings.html

http://gregnguyen.blogspot.com/2009/08/apt-and-sva.html

I've made a killing by being early, but based on revisiting these previous blogs, I could have actually made even more had I trusted my initial instincts. Another take away message: if your investment thesis is solid, your timing doesn't have to be perfect.

Disclosure: I am long shares of APT.

Swine flu portfolio rally

Shares of BCRX, NVAX, SVA, HEB, and APT all increased double-digit percentages today. I keep expecting the overall market to roll over and have protective puts in place--hence, the hedges keep eroding in value. But I am not complaining, given triple digit gains on the aforementioned stocks.

Exit strategies for longs need to be in place. But after polling several experts in the field, the swine flu will be worse than general public expectations. Also, very few understand the five vaccines and the anti-virals available, either approved or under Emergency Use Authorization review. Unless, of course, they've been reading these blogs for a few months (pardon the temporary lapse in modesty).

The most recent update is that egg-based vaccines won't be available until October, due to lower than expected yields. With a 21-day duration between doses, and one more week thereafter before immunogenicity kicks in, most students and young adults won't be immunized until November at the earliest. As noted before, with schools already in session, the swine flu will peak in October, rendering many vaccines useless among the targeted population.

Anti-virals will have to step in, even though Tamiflu has tolerability as well as efficacy issues due to resistance. Inhaled Relenza has limitations, so intravenously administered Peramivir has BCRX longs excited about an imminent EUA stockpiling order.

Good luck to all longs, and good luck to those who will become infected with the novel H1N1 virus.

Disclosure: Long shares in BCRX, NVAX, SVA, HEB, and APT.

APT announces record earnings

Alpha Pro Tech announced record earnings for the 2nd quarter, driven by sales for their infection control and building supply products.

http://finance.yahoo.com/news/Alpha-Pro-Tech-Ltd-Announces-bw-3964651527.html?x=0&.v=1

Shares soared 16% in after hours trading after the announcement. We're up big since opening up our positions 3 weeks ago, and could have been up more had I acted on my original due diligence 2 months ago. APT executives had been giving hints on a robust 2nd quarter and long lead times for deliveries since June. CEO's normally don't drop hints like that unless they know execution won't be an issue. In other words, this was telegraphed 2 months ago.

Lawsuits fly when CEO's dupe and mislead investors. Another lesson learned. Gotta trust my instincts more. That's okay, a 40% return in less than 3 weeks is a lesson I don't mind learning.

Disclosure: Long position in APT shares.

APT and SVA

I opened up a position in APT a week and a half ago, as they make a particularly effective N-95 protection mask against communicable diseases.

http://finance.yahoo.com/news/Swine-Flu-Masks-Prevention-or-indie-3995316474.html?x=0&.v=1

Based on the SARS scare, shares shot up for two quarters. This pandemic flu, while not having nearly the high death rates as SARS, is spreading much faster than other pandemics, hence triggering my buy order.

SVA is a Chinese vaccine and hepatitis drug manufacturer. It is already profitable, unlike its US counterparts still in the clinical stage. The Chinese domestic market is huge, and SVA should be able to secure a larger order than the projected one for 10 million doses (5 million people). Even at that conservative number, and estimate of $5 per dose, revenue projects to $50 million annually. This places a buy out offer price of $250 million, which yields a price per share of $6, based on 43 million outstanding shares. At a current price of $4.99, shareholders get the rest of the company (hepatitis drugs) for free. Add in the distribution deal for the Philippines, and other potential orders from other Asian countries, and SVA has some serious upside.

Disclosure: I have long positions in APT and SVA.