Recounting XTENT

In the May Special Situations Real Money Portfolio update, I mentioned that I purchased 5,000 shares of XTENT (XTNT). Let me recount how this investment came about and how it turned out.

XTENT is a development stage medical device company focused on developing and commercializing customizable drug eluting stent systems for the treatment of coronary artery diseases. Based on the March 31, 2009 balance sheet, XTENT’s net current asset value is $0.46 per share and its book value is $0.53 per share. Net cash per share is about $0.40 per share. Insiders own over 60% of shares.

Management indicated on March 15, 2009 in a preliminary proxy that they estimate the amount ultimately distributed during the proposed business liquidation will be between approximately $0.11 and $0.40 per share, assuming the company is unable to sell its intellectual property. At the time, I thought there was a decent probability that the company would be able to sell some of its intellectual property, and thus boost the ultimate payout. I also thought there was the potential that someone would want to buy this company as a corporate shell.

I picked up the 5,000 shares of XTENT (XTNT) on May 27th at just under $0.30 per share for the Special Situations Real Money Portfolio. I shared news of my purchase with members of my premium Fat Pitch Financials Contributors Corner service. My total cost for these shares came to $1,503.86. I decided to buy these shares because XTENT was trading at less than 2/3 NCAV and the company also recently announced that it would be liquidating.

The 5,000 shares of XTENT (XTNT) were short lived in the Special Situations Real Money Portfolio. I made the mistake of keeping a limit order open to sell the shares at $0.38. I placed that limit order on June 3rd, since it appeared the shares might hit that price on no news the day before. I was also getting nervous about off balance sheet liabilities that I hadn’t originally accounted for and was more than happy to sell my shares if the stock approached $0.40 without news. Well, I guess there was news that was forthcoming.

News happened and I wasn’t quick enough to react. On June 4th, my shares were sold at the open for $0.60 per share. News broke that morning that the company received conditional approval from the FDA for an Investigational Device Exemption authorizing it to begin its pivotal clinical program for its Custom NX® drug eluting stent system. The market liked this news and sent shares of XTENT soaring.

When I sold the shares on June 4, 2009, I received $2,992.97 net of costs. My total profit came in at $1,489.11 for this investment. That comes out to a total return of 99.0%. The average annualized return was 4,016% for this 9 day investment.

I should have been thrilled by this performance. However, I suffered some sellers remorse. Shares of XTENT continued to climb until they hit a high of $2.69 on June 5, 2009. The momentum traders really hit this stock hard. However, since there has been no new news, shares have traded down significantly and closed today at $1.31, which around what I safely estimate the shares to be worth if the company is liquidated and the intellectual property is sold off. I think the lesson I learned here is not to underestimate the potential for momentum investors to drive up the price of a penny stock net-net.

I’ve recently been producing a weekly table of stocks trading below two-thirds of net current asset value and sharing it on Fat Pitch Financials Contributor’s Corner. Consider subscribing to this very affordable service to participate in our discussions of these great opportunities, and also gain access to going private transactions, odd lot tender offers, mergers, other special situations, and the current trades of the Special Situations Real Money Portfolio in the premium portion of my site.

11 thoughts on “Recounting XTENT

  • June 21, 2009 at 6:10 pm

    “The average annualized return was 4,016% for this 9 day investment.”…Please never use such comments, being that it is beyond unrealistic to have $$ fully invested over the coarse of the year at such return rates.

    “I think the lesson I learned here is not to underestimate the potential for momentum investors to drive up the price of a penny stock net-net.”

    -The lesson you should have learned is that real financial analysis of penny stocks is worthless and that the only reason you got that move was a random news announcement (nothing to do with the potential liquidation that could have taken months). The real opportunities you should look for are RIGHT UNDER YOUR NOSE (news events on penny stocks)…and trade them with the momentum traders…you could have bought around $.60 at the open after hearing about the news and shares went up over 300% from there!

  • June 22, 2009 at 9:29 am

    I don’t agree that financial analysis of penny stocks is worthless. The financial analysis in this case provided me with a margin of safety. If the FDA news had not occurred, I would have still had a reasonable return from the liquidation of the company.

    I do agree with you that I should have bought back in around $0.60, since I thought the company was worth about $1.30 after factoring in a reasonable estimate for the value of their intellectual property.

  • June 30, 2009 at 5:39 pm

    Joe, I feel sorry for your investing career after your second comment.

  • July 1, 2009 at 12:40 pm


    I’m a realist. I don’t read textbooks on valuation and expect it to transpire in the market. Anything to do with DCFs, PE multiples, or multiples of sales, book, etc….is nothing but a sales pitch in the real world. Think about it: if thousands of kids every year graduate with a Finance degree who learn the same material…do you really think anyone can make money that way? You make money when someone else is wrong…and how can that be if everyone is (give or take) using the same information and calculations? I know such things are hard for people like you to understand…but it is the truth. Why do the majority of individual investors lose money? Value investing is complete bull. It all comes down to recognizing trends (of other people reacting) and capitalizing off of the sheep. When analysts do their research and say something is undervalued or upgrade stocks…those stocks don’t magically go up….they go up simply and only because those analysts passed their info onto the firm’s sales team who then pitch ideas to their clients (the stocks then only go up if they successfully pitched the idea and the clients buy). You could say XYZ is trading at $5 and worth 100….it isn’t going anywhere if no one buys it (and even then not a guarantee because traders and market makers can sit on the offer and collect stock).

    So if no one else out there is looking at these penny stocks and saying its worth at least $xx….then no one will buy them for said reasons and it won’t go up….get real.

    Coming from a person with 20 years market experience, who is self-made, and has had returns in excess of 50% every year since around 1992 (including the 2000-2002 and recent periods)…this year I am up 124% so far. My drawdowns are never more than 10% and I only trade about 6 months out of the year and spend the rest of the time donating my time and traveling. I’ve technically been retired since 30 years old because of my success. And I’m only commenting to drive some sense every now and then into people. So feel privileged.

    Another thing…just think…how can a stock like X be properly valued at 175 7/08 and also at 25 during 11/09….in 4 months, its value changed by 85%? Really? And you are talking about a cyclical company in existence for over 100 years. Even if overshot on the upside and downside…even with a margin of error, that is too ridiculous. Analysis doesn’t matter….it only matters about how much is being bought and sold and where.

  • July 1, 2009 at 12:43 pm

    Also, I don’t mean 50% on a $5k account like you probably have. Because catching a “high-flyer” and making 50-100% isn’t hard. It’s doing that with size…which not many do nor can do. I’ve been trading in the $millions since 1994 and $10s of millions since about 1998-9. This guy made a bet with $1500! If he was soo very confident and sure of himself (and worst-case in his mind was still a profit)…why on earth only put in $1500….common freaking sense here, money talks.

  • July 2, 2009 at 6:19 am


    Seriously WTF. George does provide an up to date entry exit for his personal portfolio in the special situations, and he has done very well. If you consider subscribing to his service you would see that his value investing principle is no bull.

    It’s very easy to claim triple digit returns, but I am 100% certain that you can’t prove that you even own a bank account!

    Prove me wrong. And no, calling me an idiot doesn’t count. ;-)

    Best Regards,

    Dividend Growth Investor

  • July 3, 2009 at 7:04 pm


    Wow, what a troll. Seriously, I don’t understand what’s your purpose of posting if you have no good information to share.


    This sounds like an idea straight out of Jonathan Heller’s Cheap Stocks blog… nicely done!

  • July 5, 2009 at 2:09 pm


    My apologies if my comments aren’t you cup of tea. But the information provided is of the advice nature and a dose of reality in this market. So many people recommend stock because they think it’s work “this or that”….but such statements are ridiculous given that a stock is only worth what someone is willing to buy it for (reasons could be anything from belief in value or because it was their favorite company…and you should realize that there is no difference between those two examples). I’m not trying to attack anyone…just wanting other people to see the market for what it is…a sales pitch.

  • July 20, 2009 at 12:41 pm

    Dear Joe,

    Still waiting for those audited trading records…

    If it’s more convenient why don’t you post them here in the comments?

    Thanks in advance!

  • July 27, 2009 at 1:34 am


    Did some basic number crunching. Assuming you started with $1,000,000 (you implied more than $1M, but being conservative here) in 1994 and grew that at 50% until 2009 (once again, you implied more but we value investors are usually conservative) and are up 100% in 2009, you would have around $600,000,000. Obviously, even if your 50% return over 16 1/2 years was true, you are giving us before tax numbers on your annual returns. Taxes being just another problem of the short term outlook.

    Not to mention, the daytrader Timothy Sykes who has shown audited results, has admitted to the fact that although he can have obtain great gains it is only with smaller sums of money (at 5-10 million, his strategies aren’t very successful). This is obviously why you don’t see any short term oriented equities traders being billionaires.

    But hey, according to you, it looks like at 50% a year you should be a billionaire in the next few years. I’ll be looking forward to reading about your success as the first to do it!

  • April 13, 2011 at 3:03 am

    I have two comments:

    First – I bought this stock early in the morning (approx. 5k) for roughly .70/share only because I was new to day trading and was my first time buying stock that was “going up” (it was up 100% for the day). I should of sold when it was at $2+ but I got greedy and held too long… I did sell at 1.40 and doubled my money! Afterwords, took all my “winnings” out and put a new paint job on my 1979 vette… Haven’t traded since!

    Secondly – I think Joe is very smart! He and I think alike! When I was trading stocks I made money on ALL my trades except one – and that one I purposely sold fast knowingly taking a loss so I could quickly buy another stock that made me good $$$!!

    Sorry folks – unlike Joe – I want everybody to remain as stupid as possible so I can make more money! No secrets from me! And yes – I can walk the walk and provide proof of my trades!

Leave a Reply

Your email address will not be published. Required fields are marked *