There has been a keen level of bullish option trading interest in Origin Agritech, the China-based producer of hybrid crop seeds. It was reported that an Origin executive, speaking at an industry conference in Asia, reported that corn price are up 40% year-on-year in China, and characterizing the present macro outlook as âfavorable.â We surmise that itâs this level of buzz that pushed Origin shares up some 1.7% over the noon hour past the $10.00 mark, as options traded at nearly 20 times the normal level and implied volatility skyrocketed 17.0% to 135.12%. A look at volume distribution shows more than 5 times as many calls moving as puts, but much of this appears tied up in call shorting at the January 12.50 strike in a contrarian play against the companyâs current share price momentum. Ok so smart money sees this going to $12.50 and maybe stopping there, that's how I read that. Actually my chart work shows $15... and from $10.00 that aint half bad. Let's get the bad news about this company out first. While Chinese stocks were shooting up 100% last year, Origin Agritech's (SEED) shares fell 14.5% to $10.94, to a $250 million value. Possible reasons? 1) General fallout from the Amaranth hedge fund collapse. Amaranth owned Special Purpose Acquisition Companies (SPAC's) similar to Origin, putting all SPAC's in disfavor. 2) Company blunders like filing its December 2005 annual report four months late, changing revenue recognition rules, shifting to a September fiscal year, firing its auditor and holding the annual shareholder's meeting in Beijing, when the stock only trades in the U.S. 3) A look at the checkered ethical and legal past of Richard Propper, who headed Chardan China Acquisition when it acquired the seed company and changed its name to Origin: Charges of insider information while at Montgomery Medical Ventures, an SEC settlement over failure to disclose holdings and transactions in public companies and a recent suit against Propper and his partners for defrauding the Small Business Administration of $32 million. Origin enthusiasts include its CFO Jeff Wang, who says revenue by June 30 was $65 million, sharply higher than five years ago, sales are growing and acquisitions are a focus. The Maxim Group, backer's of Origin's IPO, says shares are worth $21, and Propper says earnings will be up significantly in '07 as well. Bottom Line: Its fans say Origin could be worth $21, but legal woes could drag the stock down further. Now the good news like Syngenta or Monsanto or Agco these guys are into hybrid corn seeds and with the corn situation as it is now this should be a prosperous year for them... I hate buyinmg before earnings but the gambler in me always does this, I'll post some comments from Agco's conference call which was specific to them but casts a good light on the Chinese hybrid. ~ stoney
I'm with you stoney. I got in at 8 and was thinking high 12 low 13 range. Totally holding my breath for the earnings call. LOL
2008-02-25 By Ian Cooper Wealth Daily - http://www.wealthdaily.com Why it's time to get load up on Corn. Running on heavy volume, Agria just announced that Q4 revenues could reach the high end of prior guidance of $31.8 million to $33.8 million, thanks in part to strong corn seed sales. It also sees Q1 revenues up 15% year over year. And, according to Briefing.com, the company has said: "We are pleased with the success in our business and continue to expect we will achieve annual revenue growth above 25% in 2008 compared to 2007 based on current order forecasts and market expectations. We expect to achieve this growth despite the impact of snow storms in China in the first quarter of 2008. The storms did not materially affect our operation in Shanxi, did not cause any material increase in breeding sheep deaths and should not impact our seedling business. The impact was confined to transportation and shipment problems across China. Overall, the weather is a short-term, macro issue. The opportunities in front of us for revenue and profit growth remain vast." Origin Agritech (SEED:NASDAQ) has earnings on Wednesday, February 27. We expect both to run further as corn futures spike to a 12-year high on expectations that global supply will fall drastically. That follows a US Department of Agriculture projection for a steep drop in U.S. corn ending stocks. The USDA lowered its forecast for 2007-2008 to 1.438 million bushels from 1.797 million. Plus, genetically modified corn could hit Korea by May. According to JoongAng Daily, "the nation's starch manufacturers signed a deal to purchase nearly 50,000 tons of GM corn earlier this month..." That's because natural corn costs $100 more per ton. Some of our favorite plays are Agria (GRO:NYSE) and Origin Agritech (SEED:NASDAQ), which has earnings on Wednesday. ~ si
Oh SNAP! That has to hurt! Price is 6.40 and falling as of this post. I think stoney just blew out his account with this one. It will be in the 4s by open i bet.
thank you trading gods.....i got in at 8.88 and got out at 9.88..before the fall off the cliff. Hope you didn't bite there stoney..or at least got out before the sky fell
Still falling...Actually might be a good time to BUY tommorrow. Could be another NSTR, might be good for a quick 20% gain.
Oh I'll be buying and selling this all day tomorrow until I make at least half of this loss back... man the company lays out the industry just as I seed it (that was Freudian) and then goes on to miss on every metric citing a bunch of excuses. >China, demands for higher food production have increased dramatically, most noticeably a major shortage of pork meat. These demands include significant domestic price inflation of food products, the rising consumer desire for higher quality food products, the increased need for fuel including the usage of bio-fuels, and the growing constraints on land. Due to the high demand for corn feed products, China is becoming a net corn importer. The shortage of produced commodity corn and oversupply of corn seed clearly shows the low productivity of the corn acreage in China. Coupled with the already shrinking arable land in China, under the pressure of industrial encroachment and environmental changes, the advantages of GM transgenic varieties of high yield, high quality are obvious. Farmers plant transgenic varieties to both save time and cost, while reducing fieldwork. The Chinese authorities are beginning to promote genetically modified (GM) crop seed research and commercialization to meet the increasing demand of agricultural products. Ah yea that was the whole f*ing idea and you have the cheap corn seed! Korea too... damn rice why is it always the rice that gets you! >Our rice product sales in fiscal year 2007 suffered the greatest losses this year. Our revenues for the rice unit, exclusive of scrap sales, for the year ended September 30, 2007 decreased approximately 50.52% to RMB 71.90 million from RMB 145.32 million in the twelve months ended September 30, 2006. Just an awful report- We recorded a net loss applicable to ordinary shareholders of RMB 163.20 million (US$21.78 million) for the year ended September 30, 2007, as compared to the net income of RMB57.82 million (US$7.32 million) for the twelve months ended September 30, 2006. Yet as usual with some advantage and promise.... Turning to the competitive landscape, large biotech multinational companies will face obstacles as currently foreign-funded companies are prohibited from the development or production of genetically modified plant seeds, breeding livestock and poultry, and aquatic seeds. We possess exclusive rights in China to five genetic traits in various stages of testing and development. As a domestic company, we can proceed through all five phases of GMO approval, while international entities are restricted to phase one currently. We already have several products in phase 2 to phase 4, and one product in phase 5. I have no one to blame but myself I knew of the suspect past of the ceo the blank check situation and never hold through earnings, several mistakes... Not happy. Pump you are something; talk about pot calling the kettle black. 200 is a severe underestimate, quite a few I remember you giggling all the way to the bank while I stayed in to long. I put this dog in my wife's ira too, that's going to make for an uncomfortable breakfast tomorrow for sure... I should of just taken my COIN winnings and moved on, househunting in the same sector always seems to bring on headaches. It's sellers remorse or something. ~stoney
I escaped the seed nightmare but got caught out badly by fannie mae. I was short when the crazy news hit about them being able to do more business. Went from 28 to31 in an instant. Then my screen freezes and I PANIC ( bad form dude) if I'd just waited 5min it started coming back my way. Instead, I'm down 6 grand and thouroughly disgusted with my decision making ability here today. After that I couldn't take a chance on losing more on seeds earnings so I jumped ship early.