TipRanks
Billionaire Ken Griffin pulls the trigger for these 2-cent shares
Risk and reward are the yin and yang of stock trading, the two opposite ingredients, but essential to the success of every market. And there are no actions that better incorporate both sides – risk factors and reward potentials – than low-cost actions. These shares, priced below $ 5 per share, typically offer high appreciation potential. Even a small gain in stock prices – just a few cents – quickly translates into a high-yield return. Of course, the risk is also real; not all penny stocks will show this kind of gain, some of them are cheap for a reason, and not every reason is good. So, how should investors distinguish between long-term winners and those who will be lost? Following the activity of investing titans is a strategy. Hedge fund manager Ken Griffin, head of investment firm Citadel, is one of those titans, having turned his college trading – from a PC in his dorm – into a billion dollar market giant. A look at Griffin’s performance during the coronavirus crisis shows just how successful he can be. In March last year, when the corona hit rock bottom, Griffin’s Citadel still had a positive net return of 1.7%. And for the year as a whole, Citadel’s revenues totaled $ 6.7 billion, almost double the previous high in 2018. Drawing on Griffin for inspiration, we take a closer look at the two actions that the Citadel of Griffin recently changed. Using the TipRanks database to find out what the analyst community has to say, we learned that each ticker has Buy ratings and huge potential for appreciation. Abeona Therapeutics (ABEO) We will start with Abeona Therapeutics, a clinical stage biopharmaceutical company focused on gene and cell therapy. This is an avant-garde field, which uses the latest genome technology to treat genetic diseases, inserting corrected copies of DNA directly into the affected cells. Abeona has seven drug candidates in preparation, with EB-101 and ABO-102 being the most advanced and of most interest to investors. EB-101 is set to begin a Phase III study as a treatment for Recessive Dystrophic Bullous Epidermolysis (RDEB). This is a connective tissue disorder, leaving patients subject to serious skin injuries and wounds. The cause is a genetic defect that leaves patients unable to produce the collagen needed to protect skin layers. If approved, EB-101 would become the first – and only available – treatment for RDEB. Treatment involves using the drug to transplant the affected gene into the patient’s skin cells, which are then transplanted into the affected areas of the skin. In early-stage studies, the drug was well tolerated by patients, who showed distinct improvement up to 2 years after treatment. The Phase III study is now enrolling patients. ABO-102, the next most advanced drug candidate, is in a Phase I / II study as a treatment for Sanfilippo Syndrome, a fatal early childhood disease. The syndrome is currently untreated, except for supportive care, and affected children usually survive to 15 years of age. ABO-102 is a gene therapy drug administered through a single intravenous infusion. It delivers active copies of the affected gene to the child’s central nervous system, allowing the body to naturally correct the enzyme deficiency behind the disease. Both drug candidates have been designated an orphan drug in the United States and Europe, providing government assistance for their development. In addition, they also received the FDA’s rare pediatric disease designation. Abeona’s drug pipeline and $ 2.22 stock price have yielded substantial praise from Wall Street professionals. This is Griffin’s stance. Increasing its stake in the company by an impressive 181%, Citadel grabbed 1.846 million shares in the fourth quarter, which are now worth $ 4.06 million. 5-star analyst Ram Selvaraju, from HC Wainwright, also considers himself a fan. Selvaraju recently published two notes on ABEO, focusing on the potential of EB-101 and ABO-102. Regarding the first, the analyst notes that “After the successful completion of the FDA meeting, Abeona is continuing with all the necessary steps to enroll the next patient in the VIITAL study and hopes to complete the enrollment in 2021 … In our opinion , the FDA meeting and the resulting feedback bodes well for Abeona, as the agency appears to be in line with the company’s study design and statistical analysis plan for VIITAL [Phase III] trial… ”Turning to ABO-102, Selvaraju said:“ In our opinion, these data are highly intriguing and deserve attention to see if they can be confirmed in a larger cohort of patients. In our view, preserving neurocognitive development in young children with MPS IIIA is likely to be the main measure of effectiveness that resonates with regulators. ” In line with his optimistic outlook, Selvaraju evaluates ABEO as a buy together with a target price of $ 8. If his thesis materializes, a potential 12-month jump of ~ 264% may be in the cards. (To see Selvaraju’s history, click here) In general, 2 purchases and no reservations or sales have been assigned in the last three months. Therefore, the analyst’s consensus is a moderate purchase. At $ 6.50, the average target price places the upside potential at ~ 188%. (See the analysis of ABEO’s actions in TipRanks) Mereo Biopharma (MREO) The second action we are analyzing, Mereo, is another biopharmaceutical company focused on rare diseases. Mereo has a broad and diversified pipeline, with six drug candidates at various stages of development. The company’s research programs are looking for treatments for solid tumor cancers, ovarian cancer and chronic obstructive pulmonary disease, among other serious conditions. Griffin is among those who have high hopes for this health name. Griffin’s Citadel acquired 4.097 million shares in the fourth quarter, which are now worth $ 16.3 million. The biggest news for Mereo was the announcement on December 17 of a collaboration and license agreement with Californian company Ultragenyx for the development of Setrusumab, a candidate being tested as a treatment for osteogenesis imperfecta, or brittle bone disease. This incurable condition is usually treated with lifestyle changes and exercise. Setrusumab, however, has been shown in Phase 2b studies to cause a dose-dependent increase in bone formation in affected adults. Leerink analyst Joseph Schwartz writes of the Mereo / Ultragenyx partnership: “Although the RARE / MREO business was unexpected, we are not surprised by the news, considering that MREO is looking for a partner and RARE has extensive experience in developing and launching of successful bone agents … We visualize [the] announcement as a victory for both RARE and MREO, since the two could complement each other’s strengths to bring setrusumab to the market. ”In light of these comments, Schwartz evaluates MREO’s shares as a purchase and its target price of $ 8 suggests that it is up 103% in one year. (To see Schwartz’s history, click here) Some actions fly below the radar, and MREO is one of them. MREO is the only recent review by analysts at this company and is decidedly positive. (See MREO stock analysis on TipRanks) To find good ideas for trading low-cost stocks with attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that brings together all of TipRanks stock insights. Disclaimer: The opinions expressed in this article are exclusively those of the analysts presented. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investments.