Another Volatility Spike Has Occurred

With yesterday’s panic sell-off, the CBOE OEX Volatility Index once again surpassed its 200 day moving average by over 50%. This indicates another volatility spike condition similar to the one that I pointed out last month in this blog. Thus, it is time once again to look forward to a rise in the S&P 500 (SPX/SPY) over the next 20 trading days. While I was already long SPY from the last spike, I added to my positions with SPY call options.

At the time of this Blog entry Scott Rothbort, his family and or clients of LakeView Asset Management, LLC were long shares and calls of SPY--- although positions can change at any time.

Amylin Disapoints Analysts But Not Investors

When it appeared that yesterday’s results for Amylin Pharmaceuticals (AMLN) would be met with disappointment I expected to hunker down for another round of selling. Instead AMLN was higher from the opening bell and was one of the few strong stocks in a dismal tape. While sales of its blockbuster Byetta treatment missed analysts’ expectations by a small margin, AMLN other diabetes treatment Symlin appears to be growing faster than anticipated. AMLN has a long acting formulation, Byetta LAR and an obesity treatment, pramlintide in the pipeline which should provide some excellent future revenue streams if approved. I anticipate LAR to be available in 2009.

The market for diabetic pharmaceuticals and medical testing equipment is growing because of the unfortunate increase in diabetes diagnoses throughout the world and the increasing demand for at home medical testing (for diabetes and other conditions). AMLN is my favorite pharmaceutical play. Inverness Medical Innovations (IMA) is my favorite diagnostic name. A more pure diabetic diagnostic play would be PloyMedica (PLMD). The best source for diabetic research is my friend David Kliff of the Diabetic Investor.

For more information on diabetes, go to the American Diabetes Association website.

At the time of this Blog entry Scott Rothbort, his family and or clients of LakeView Asset Management, LLC were long shares of AMLN and IMA --- although positions can change at any time.

Digested Gains in Yum Brands

I reversed my strategy on Yum! Brands (YUM) after devoting more thought to the company’s quarter which it announced last Wednesday. The quarter was not as good as the headline numbers because of the significantly lower effective tax rate. Furthermore, YUM’s restaurant margins declined due to higher food costs stemming from commodity prices. Thus, with YUM rising about 2% from my last buy point, I decided to take some profits on the stock. While I still think that YUM can get to $40 by the end of 2008 and love the growth in China, I think that the back half of 2007 could be more difficult than the company has forecasted. Furthermore the weakness in the restaurant stocks and better opportunities in other sectors – such as technology, metals, mining and machinery - lead me to use YUM as a trading vehicle but not as an investment.

No position in stocks mentioned

Does Red Lobster Have to Resort to New Tactics to Attract Diners?

I love to take pictures of scenes like the one above. When Darden International (DRI) reported quarterly results in June, the company highlighted difficult comps and rising seafood prices for its Red Lobster concept. Does this mean that they have to change their marketing plan? Are they trying to lure in diners with cheap haircuts? Is this a joint venture with Staples (SPLS) or is SPLS just providing the scissors? It is none of the above but nevertheless, its worth a chuckle when you see that sign above.

At the time of this Blog entry Scott Rothbort, his family and or clients of LakeView Asset Management, LLC did not have any positions in the companies named above--- although positions can change at any time.