The Mission Report

The MissionIR Report - March 2012

In-depth analysis, timely updates, latest market news


Market News

Company Updates


Indices Hit Milestones on Confidence

The Dow closed above 13,000 for the first time since May 2008 this week, and the S&P 500 also hit a milestone of its own, as buoyant U.S. consumer confidence data and a sharp drop in oil prices pushed the nearly five-month rally forward.

The S&P 500 closed above 1,370, its May 2011 intraday high, a move that could invite momentum buying as money managers chase performance, though low volumes lately have raised concerns about the rally's longevity.

"I don't see anything technically favoring a downturn right now," stated Chris Burba, short-term market technician at Standard & Poor's in New York.

"No doubt (the market) has been overbought since the beginning of February, but in a powerful uptrend, price will continue higher for some time amid overbought conditions."

Technology shares ranked among the best performers, and the Nasdaq was trading at its highest since 2000. Micron Technology Inc. (NSQ:MU) shot up 3.7 percent to $8.88 after Intel Corp said it will sell its stake in two wafer factories to Micron and buy chips from the company.

Intel advanced 1.3 percent to $27.24. The PHLX semiconductor index <.SOX> rose 1.6 percent.

The Dow Jones industrial average (DJI:DJI) gained 23.61 points, or 0.18 percent, to close at 13,005.12. The Standard & Poor's 500 Index (MXP:SPX) rose 4.59 points, or 0.34 percent, to end at 1,372.18. The Nasdaq Composite Index climbed 20.60 points, or 0.69 percent, to finish at 2,986.76.

The S&P 500 is up about 9 percent since the start of the year, largely because of data showing stronger momentum in the economy and signs of progress in managing the euro zone's debt crisis, including a debt deal for Greece.

Consumer confidence in the world's largest economy jumped to a one-year high in February, according to a report from The Conference Board, a private business research group. This indicator is noted because consumer spending accounts for more than two-thirds of U.S. economic activity.

The drop in oil prices from recent highs also relieved worries about the outlook for consumer spending. Brent crude oil futures fell more than $2 to settle at $121.55 a barrel.

Fourth-quarter earnings have been less impressive than in recent quarters, however, with 63 percent of companies beating analysts' expectations, below the average 70 percent beat rate in the last four quarters. Results are in so far for 472 of the S&P 500 components.

Advancing stocks outpaced decliners on the NYSE by about 15 to 14, while on the Nasdaq, decliners beat advancers by about 13 to 12.

Economy Grew Faster at End of 2011

Economic growth was stronger than originally thought at the end of 2011 as consumers increased their spending and businesses stocked up their inventories.

Gross domestic product, the broadest measure of the nation's economy, grew at a 3% annual rate in the fourth quarter of 2011, the Commerce Department said Wednesday.

The government had initially said the economy grew at a 2.8% rate. The Commerce Department estimates the GDP figures three times, and Wednesday's report was its second estimate.

That's a major improvement from a 1.8% growth rate in the prior quarter, and the fastest growth since the second quarter of 2010.

"We are seeing what historically would be considered a healthy growth rate for the country," said Brian Hamilton, CEO of Sageworks, a financial information company. "Last quarter compares very favorably to the GDP growth rate over the past few years and indicates the country continues to recover from the recession."

Consumer spending picked up at an annual rate of 2.1% in the fourth quarter, slightly higher than originally reported. Spending on long-lasting goods, especially motor vehicles, helped drive GDP higher, as did increased spending at restaurants and hotels.

Meanwhile, businesses increased their inventories by $54.3 billion, after cutting back on their stock the prior two quarters.

A boost on that front can be seen as a double-edged sword. On one hand, it can be a sign of confidence in the economy. When firms predict greater purchases in the future, they build up their inventories. On the other hand, if consumers don't end up buying as much as firms had hoped, that could drag on GDP going forward.

Most economists are predicting U.S. economic growth slowed slightly in the first quarter, for this very reason.

Many Investors Still Flock to Bonds

Despite a bull-market surge over the past four months, many retail investors continue to shun stocks, missing out on one of the biggest rallies in years.

Bond funds over the past four weeks have taken in a staggering seven times as much money as equity funds, continuing a pattern that has held steady since the cycle run began, according to TrimTabs data.

Yet stocks have produced four times the return as their fixed-income counterparts in 2012, even as mom-and-pop investors have stayed on the sidelines and continued to look for safe-haven bets while shunning risk.

"Retail investors still think about 2008. People are not convinced we're in a stock market rally," Nadav Baum, executive vice president at BPU Investment Management in Pittsburgh, Pa., says in reference to the darkest days of the financial crisis.

Like many in his profession, Baum worries that most investors won't get back into the market until the indexes climb to an even higher peak - perhaps the Dow industrials at a record 14,500, he suggests.

"2008 is still very fresh," Baum says. "There's still a lot of geopolitical issues. They're still not convinced that the Greece and Italy things are done yet. None of these things have changed from last year. That's why you're still getting all these flows into the fixed-income side. That's the safe haven, not the equity side."

Bond mutual funds have attracted $30.4 billion over the past month even as they have returned just 2.8 percent this year.

While both investment grade and high-yield bonds both have posted record issuance in recent weeks, low-yielding Treasurys remain the preference, drawing in about double the assets of corporates over the past three months, according to TrimTabs. Corporates, however, have drawn about even with Treasurys over the past month.

For Kevin Ferry, president of Cronus Futures Management, a bond-trading firm in Chicago, the fund flows are sending an even more ominous message: That the rush to government securities is leading to "the secular end of a 30-year bull market in bonds."

"It scares the hell out of me," he says. "The baby boomers are the biggest lemmings around. They're buying into the concept of financial repression."

As a trader, Ferry says he's been buying futures contracts on the 10-year Treasurys solely for short-term trading positions. Anyone who's looking at the government bonds as a long-term money store, he says, instead should be focusing on what bigger buyers are doing.

"What is the smart money doing? What are the long-term holders of Treasury securities over the last 20 years - Japan, China, Russia - doing? They're diversifying away from them," Ferry says. "They're valueless pieces of paper. They're capital appreciation notes. Everyone who buys them predicates it on a predetermined scenario: That I'll get out before it goes wrong."

The worry with Treasurys is two-fold: The Federal Reserve is keeping rates artificially low and likely will for at least the next two years, while the specter of inflation ahead will outweigh the value of fixed-income investments.

Yet stock market investors also face the same worry over what happens once the Fed starts pulling its bond-buying stimulus programs, which simultaneously have kept rates low while pushing investors towards stocks and commodities.

TrimTabs CEO Charles Biderman says fear of what happens after quantitative easing and other interventions run their course is what could be keeping retail investors from hopping aboard the stock market train.

Curiously, investor surveys, such as the one run by the American Association of Individual Investors, have reflected strongly bullish sentiment for going on nine straight weeks. But investors haven't been backing that up with their dollars.

In addition to parking their money in bonds, individuals have plowed $2.3 trillion into savings accounts over the past five years, which is 2.4 times the amount allocated to bonds.

"The bulls dancing to the central bank's music had better stay close to the door so they can exit quickly when their medicine becomes poison and the music stops," Biderman said in his weekly analysis. "While central bankers can print all the money they want, they cannot control where the money goes."

Mortgage Applications Jump

Applications for home mortgage purchases jumped last week as interest rates dipped, though demand for refinancing waned.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, dipped 0.3 percent in the week ended Feb 24.

The MBA's seasonally adjusted index of refinancing applications was off 2.2 percent, but the gauge of loan requests for home purchases shot up 8.2 percent.

"Purchase application volume increased over the week, but remains within the narrow and anemic range of activity we have seen since the expiration of the homebuyer tax credit in May 2010," Michael Fratantoni, vice president of research and economics at the MBA, said in a statement.

The refinance share of total mortgage activity slipped to 77.9 percent of applications from 80.1 percent.

Fixed 30-year mortgage rates averaged 4.07 percent, down 2 basis points from 4.09 percent the week before.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

Mortgage Applications Jump

Applications for home mortgage purchases jumped last week as interest rates dipped, though demand for refinancing waned.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, dipped 0.3 percent in the week ended Feb 24.

The MBA's seasonally adjusted index of refinancing applications was off 2.2 percent, but the gauge of loan requests for home purchases shot up 8.2 percent.

"Purchase application volume increased over the week, but remains within the narrow and anemic range of activity we have seen since the expiration of the homebuyer tax credit in May 2010," Michael Fratantoni, vice president of research and economics at the MBA, said in a statement.

The refinance share of total mortgage activity slipped to 77.9 percent of applications from 80.1 percent.

Fixed 30-year mortgage rates averaged 4.07 percent, down 2 basis points from 4.09 percent the week before.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

AdCare Health Systems, Inc.

AdCare Health Systems, Inc. announced it will be presenting at the ROTH Capital Partners 24th Annual Conference. The conference will be held at The Ritz Carlton in Laguna Niguel, California, on March 12-14, 2012. AdCare CEO Boyd Gentry and Chief Acquisition Officer Chris Brogdon are scheduled to present on Monday, March 12, 2012 at 12:00 p.m. Pacific time, and will have one-on-one meetings throughout the day.

Mr. Gentry and Mr. Brogdon will also discuss the progress of AdCare's M&A program designed to build upon its strong reputation for operational efficiency and high-quality living environments. Investors unable to attend may view a live feed of the presentation via A replay will also be available following the conference in the investor relations section of AdCare's Web site at

About AdCare Health Systems, Inc. (ADK)

Ohio-based AdCare Health Systems is an expanding national leader in the development, ownership, and management of care facilities, including nursing homes, assisted living facilities, independent living facilities, dementia/alzheimer's units, sub-acute units and retirement communities. In addition, the company provides a variety of home health care services.

The company's mission is to provide the finest in care facilities, and has a history of success in their development as well as management. In particular, the senior living facilities market is considered to be one of the most dynamic and rapidly growing sectors within the healthcare arena. Changing demographics, coupled with the limited supply of senior living facilities, clearly supports this growth. AdCare is exploiting these trends by growing both internally and through strategic acquisitions.

The company has a seasoned senior management team, with substantial senior living, healthcare, and real estate industry experience. The senior management team is incentivized to continue to grow the business through their combined ownership of approximately 25.6% of the common stock. The resulting numbers underline AdCare's growth strategy, with revenues showing steady growth for the last 9 years, and now in line for another record breaking year in 2011.

Earlier this month it was reported that Ladenburg Thalmann analysts initiated coverage on shares of Adcare, setting a "buy" rating and $7.50 price target on the stock. The stock is currently trading at $4.05 with a market cap of approximately $49 million. Combining its current annualized run-rate with transactions currently in the process of closing, AdCare's estimated annualized revenue run-rate is anticipated to exceed $300 million.

FluoroPharma Medical, Inc.

FluoroPharma Medical, Inc. recently presented at Noble Financial Capital Markets' 8th Annual Equity Conference. Thijs Spoor, President & CEO of FluoroPharma Medical, delivered the company's presentation, summarizing the rising importance in medical diagnostics of PET technology and the associated radiopharmaceuticals such as those developed by FluoroPharma.

During his presentation, Mr. Spoor exposed the major gap between the promise of PET and the current availability of chemical agents needed to make the promise a reality. The entire presentation can be viewed at the following link: FluoroPharma Medical, Inc. Noble Financial Capital Markets Presentation

About FluoroPharma Medical, Inc. (FPMI)

FluoroPharma Medical, Inc. is a biopharmaceutical company focused on discovering and developing patented Positron Emission Tomography (PET) imaging products to improve patient management by evaluating cardiac disease at the cellular and molecular levels. The company is currently advancing two products in clinical trials to fulfill critical unmet medical needs. The agents will provide clinicians important tools for detecting and assessing pathology before critical manifestations of disease.

The company's proprietary molecules labeled with the radioactive isotope of fluorine combined with PET scanning provide non-invasive, highly specific and efficient assessment of heart metabolism and physiology. FluoroPharma's cardiovascular program addresses the largest segment of the nuclear medicine market.

Molecular imaging fulfills numerous unmet needs in diagnosis by enabling visualization, characterization and measurement of biological processes at the molecular and cellular level. Unlike traditional imaging modalities – MRI, CT, and Ultrasound – that reveal the anatomical abnormalities and cause for disease, PET provides insight into physiology and can detect disease before anatomical manifestation is identified. According to GAI, the market for molecular imaging agents currently exceeds $1.7 billion annually and promises rapid growth for the foreseeable future.

FluoroPharma's comprehensive technology platform was developed by scientists at the Massachusetts General Hospital. To date, the company has been issued four US patents and has seven applications pending in addition to strong international protection. With a solid and experienced management team in place and the necessary resources to advance clinical development, FluoroPharma is well positioned to capitalize on its superior imaging technology.

GlobalWise Investments, Inc.

GlobalWise Investments, Inc. and its wholly owned subsidiary Intellinetics, Inc. recently provided an overview of Intellinetics' history and current position in the ECM industry. The Intellinetics' flagship ECM platform, Intellivue™, represents a new industry benchmark in making the promise of ECM a simple to attain, affordable reality by combining the power of the Cloud with on-demand solution templates and user-focused design.

The Intellivue™ ECM platform is now being distributed through a variety of direct sales and value-added resellers or channels throughout the private and public sectors. Leveraging its industry leading position, Intellinetics will capture emerging growth opportunities by driving the ECM economic benefits to the private and public sectors in the underserved small-to-mid sized business market.

About GlobalWise Investments, Inc. (GWIV)

GlobalWise Investments (GWIV), via wholly-owned subsidiary Intellinetics, Inc., is a leading-edge technology company focused on Enterprise Content Management (ECM) solutions for the digital age. The ECM industry continues to grow rapidly as a result of unrestricted proliferation of digital content within today's business environment. Leveraging its proprietary cloud-based computing software, GlobalWise is poised to capture a significant market share of this burgeoning industry.

GlobalWise's ECM service is delivered to customers via five unique delivery models which cover the spectrum of business needs: Cloud/Saas (Software as a Service), Hardware Vendor Integrated Service, Software Vendor Integrated Service, Premise (Client-Server), Hybrid (Premise & Cloud/Saas).This diversity gives advanced security & privacy features with an on-demand structure needed for large Tier 3 and Tier 4 businesses that are currently underserved by the market.

The Intellinetics platform defines a new industry benchmark and game-changing approach by combining advanced virtualization & automated content management with an open and service-oriented architecture using web services. The company provides strategies, tactics, and technologies used to manage paper and digital assets from capture to long-term archive, without the need for manual processes conducted by a full time employee.

GlobalWise's management boasts a combined total of over 150 years in ECM leadership and industry experience. The ECM industry is expected to exceed $5.1 billion by 2013 with Gartner predicting a compound annual growth rate of 9.5%. IBM Market Insights predicts adoption of cloud computing to grow by 26% CAGR between 2010 through 2013. Leveraging management and key department heads, Intellinetics has a strong foundation from which to capture significant market share within the lucrative $149 billion Business Software & Services industry.

VistaGen Therapeutics, Inc.

VistaGen Therapeutics, Inc. recently announced the identification of its initial Top 10 drug rescue candidates. The company plans to launch two formal drug rescue programs by the end of next quarter. VistaGen's goal for each of its stem cell technology-based drug rescue programs is to generate and license a new, safer variant of a once-promising large market drug candidate previously discontinued by a pharmaceutical company no earlier than late-preclinical development.

"We are now at an advanced stage in our business model," stated Shawn Singh, VistaGen's Chief Executive Officer. "After more than a decade of focused investment in pluripotent stem cell research and development, we are now at the threshold where game-changing science becomes therapeutically relevant to patients and commercially relevant to our shareholders. We have positioned our company and our stem cell technology platform to pursue multiple large market opportunities."

About VistaGen Therapeutics, Inc. (VSTA)

VistaGen Therapeutics, Inc. is a biotechnology company applying stem cell technology for drug rescue and cell therapy. Drug rescue combines human stem cell technology with modern medicinal chemistry to generate new chemical variants ("drug rescue variants") of once-promising drug candidates that have been discontinued during late-stage preclinical development due to heart or liver safety concerns. VistaGen also focuses on cell therapy, or regenerative medicine, which includes repairing, replacing or restoring damaged tissues or organs.

VistaGen's versatile stem cell technology platform, Human Clinical Trials in a Test Tube™, has been developed to provide clinically relevant predictions of potential heart and liver toxicity of promising new drug candidates long before they are ever tested on humans.

By more closely approximating human biology than conventional animal studies and other nonclinical techniques and technologies currently used in drug development, VistaGen's human stem cell-based bioassay systems can improve the predictability of the drug development cycle and lower the cost of new drug research and development by identifying product failures earlier in the cost curve. According to the Food and Drug Administration even only a ten percent improvement in predicting failure before clinical trials could save $100 million in development costs, which savings ultimately could be passed on to patients.

Using mature human heart cells produced from stem cells, VistaGen has developed and internally validated CardioSafe 3D™, a novel three-dimensional (3D) bioassay system for predicting the in vivo cardiac effects of new drug candidates before they are tested in humans. VistaGen is now focused on using CardioSafe 3D™ to generate up to two new, safer small molecule drug rescue variants every twelve to eighteen months. VistaGen anticipates that these drug rescue variants will be modified versions of once-promising new drug candidates that have been discontinued by pharmaceutical companies and academic research institutions because of heart toxicity concerns, despite substantial prior investment and positive efficacy data demonstrating their potential therapeutic and commercial benefits.


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