Friday, March 26, 2010

Transaction Alert: Sold MDS, Inc. (MDZ)

I'm getting very aggressive (and hopefully opportunistic) with my MDS, Inc. trades as I just sold my remaining 1100 shares for $8.23. Here's my rationale:

It was reported today that the old reactor is going to take longer to repair than originally anticipated (thus leaving MDS without their primary supply of isotopes). While this is a problem in and of itself, the real concern is that the Canadian government may abandon their nuclear program altogether. Afterall, they build a new reactor but can't get it to work and their old reactor is literally falling apart. If you go to my original post,, this is the first outcome I listed and would be a worst case scenario.

However, and here's where it gets interesting, MDS is only down 3% today because IMO the Reverse Dutch Auction has essentially created an artificial price floor. The auction ends Monday, March 29th (thus removing the price floor), and after the results are publicized I think there could be significant selling pressure. I discussed this selling pressure in my previous post,, but now I think it has an increased liklihood of happening and my guess is it will be greater in magnitude.

If the price falls enough I may reinitiate a position in MDS. If you go back to my first post I outlined 4 possible outcomes. Based on the news today outcome #2 became less likely and outcomes #1, #3, and #4 all became more likely, so this could still be a highly profitable investment. If I'm wrong and the selling pressure doesn't materialize, then at least I've locked in my gains and I'll sleep well at night.