QCOR was recommended by BI Research at $28.89 in Investment Digest 704, dated October 5, 2011.
“Questcor Pharmaceuticals, Inc. (QCOR, $33) is a specialty biopharmaceutical company whose primary product, H.P. Acthar, is FDA approved for 19 indications, mostly for autoimmune diseases. The stock price that had been comatose lately — stuck in the $25 to $29 range for months — awoke from a slumber around $27 recently and, after two days of ramping up, vaulted 8% on Tuesday (February 19) through technical resistance and on to $31. In so doing, QCOR broke through a long-standing technical barrier in the $29 to $30 range that dates back to September when the share price hurdled through there heading in the opposite direction — chased by the shorts shooting flaming arrows.
“In as much as the company says there is no news, no research reports, no articles, no positive developments at insurance companies, just business as usual, this may just be a technical rally fueled further by short covering. Then again, I suppose these industrious shorts may have gotten an ‘inkling’ that Q4 is going to be as strong as ever with little hint of insurance curtailing coverage. So while this is great to be back over $30, I don’t know how long it will last. I can imagine the shorts are probably reaching for pen and paper as the pain intensifies.
“It is interesting to note that about when this rally started, say around February 12, short interest for January 31 was posted, and showed a drop from 27.6 million shares short to 25.9 million, the biggest decline since June, albeit from a frightening all-time high level. Still, that’s a lot of shares still short, basically the average level that has persisted since October before a spike in the first half of January. So I have little doubt they will be back to once again expose every little wart as if it were a mountain.
“Meanwhile, days to cover has rocketed higher, to 27 days, despite the short interest drop, simply because average daily volume has dropped from roughly two million shares to roughly one million, the lowest level in the past year. Earnings are due out on Tuesday (February 26) after the close, but frankly: I’ve had enough excitement.
“I’ve grown weary of this war, and this endless controversy isn’t the kind of situation I like to be in. There are some concerns here with this one-product company (even if for 19 indications), and the extremely high price of the drug, and insurance, and the Department of Justice investigation. And also given we only have a small position remaining, it’s not worth it. So sell the last 20% of this position here while we have a respectable 23% gain on the remaining shares, and overall a 43% weighted average gain (sold 50% on 1/13/12 at $36.25, and sold 30% on 3/25/12 at $39.21).”
- Tom Bishop, BI Research, February 26, 2013