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Fishy Stocks (Part 2)

13 December 2007 - Features - Editor

Fishy Stocks (Part 1)

Regulatory Management for Stock Value

Martek Biosciences must do more to join the league of top stock picks, its technical finesse in getting saleable products from algae notwithstanding. The company must acquire the skills of dealing with Washington regulators, or get acquired by a larger corporation with an established infrastructure in the nation’s capital. The Food and Drug Administration has not been particularly enthused as yet by the technical achievements of Martek Biosciences. This can come as a double whammy on top of opposition from doctors disgruntled at being side-lined by Martek Biosciences.

Regulatory failures destroy stock value everyday. Every Washington DC decision to allow or to withhold drugs and nutrition products from markets has worldwide stock reverberations. Doctors are inevitably involved because members of this community are the only ones who can approve of and conduct clinical trials. Martek Biosciences does not see this as a priority because it is busy notching up new industrial customers, but this approach will fail if owners of entrenched brands lose their most valuable label claims. There are admittedly large expenses involved in presenting trial findings to Washington regulators, and persuading Senators to take up related issues, but it is precisely in these investments that Martek stocks have rich but hidden values.

Lessons in Watching Stocks

Who knows if Martek’s present management will take cognizance of the opinions stated in this article, and either agree or contend against our views? Nevertheless, our readers and we can salvage some minimal but significant value by drawing lessons on how to make stock picks. The acquisition of new industrial clients is a key driver of stock value for all those who do not sell direct to consumers. Financial institutions give this factor great weight when disbursing corporate loans. You and I can copy accountants in this respect, and direct our portfolios towards stocks with backing from the best brand owners. Companies in the EU should be treated as especially valuable clients because label restrictions and regulations on the continent are tough and transparent.

Productive R&D is another marker for stocks worth buying. Martek’s scientists have done exceptionally well in producing DHA from a non-fish source on a commercial scale. The method of rearing algae in controlled conditions has the key benefit of assuring customers of uniform quality and freedom from unknown contaminants. Who in the world does not want a way of keeping arteries and nerves in good working order?

 


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