During a conference call on May 9^th, regarding MNKD’s first quarter earnings, Mr. Mann said that he believes Afrezza could end up being the most influential pharmaceutical product in history. The optimism surrounding Afrezza and its expected influence on the health industry, combined with Mr. Mann’s age (he’s currently 87) and history of building up successful companies and then selling them off is why many people believe the MNKD will be bought up by a pharmaceutical giant like Pfizer or Bristol-Meyers. Pfizer is currently in the need for a blockbuster drug since their moneymaker, Lipitor (the highest grossing drug of all time), has seen its sales decline by 59% in the past year since its patent expired. Afrezza could be the answer to Pfizer’s needs if it lives up to expectations.

Glenn Russell Dubin’s Highbridge Capital Management is currently the leading hedge fund in MNKD stock owning 15 million shares, comprising .14% of their total portfolio. Second to Highbridge is Chou Associates Management who despite contracting their holdings by 10% during the last quarter of 2012, still own 8.9 million shares, making up 1.64% of their portfolio. Brian Taylor’s Pine River Capital Management is the third leading holder of MNKD shares with 5.8 million but Aqr Capital Management, after increasing their holdings by 30% last quarter, is hot on their heels at 5.7 million shares.

The Trade: Buying the MNKD Jan 2014 5-9 Call Spread for $1.16
Risk: $116 per 1 lot
Reward: $284 per 1 lot
Breakeven: $6.16

Greeks of this Trade:
Delta: Long
Gamma: Long
Theta: Short
Vega: Long

—
Andrew Keene
President/Founder
Andrew@KeeneOnTheMarket.com

Paper bought 828 MHK Aug 110 Calls for $10.80 (4.2 times usual volume) with stock at $116.69
Paper bought 29,864 MNKD Jan 5 Calls for $1.98 (7.2 times usual volume) with stock at $5.92
Paper bough 9,888 P Jun 21 Calls for $0.40 (2.4 times usual volume) with stock at $16.53
Paper bought 7,500 RIO Jun 47.5 Calls for $1.075 (2.8 times usual volume) with stock at $45.91
Paper bought 800 Jun 1.5 Calls for $0.05 (3 times usual volume) with stock at $1.03

Paper bought 1,000 HD Jan 82.5 Puts for $6.60 (2 times usual volume) with stock at $81.33
Paper bought 1,723 FXC Jul 94 Puts for $0.60 (5.7 times usual volume) with stock at $96.20
Paper bought 5,000 STJ Jan 25 Puts for $0.15 (4 times usual volume) with stock at $47.07
Paper bought 248 EWA Oct 26 Puts for $1.60 (3 times usual volume) with stock at $26.23

While the market can stay irrational more than one can stay solvent, the Japanese situation seems to be unraveling as irrational markets fade away and fundamentals prevail. In recent news and market action, Japanese government borrowing rates have surged before and after market limit-ups. Additionally the USD/JPY currency pair broke out of a consolidating pattern to the upside. And finally other Asian countries have started to pursue an easing policy.

The chart below displays USD/JPY. Some may theorize that when there is a halt in JGB trading, investors turn to the currency market as a proxy to do their JGB selling. The idea behind this trade is that should the Japanese government pursue any more unconventional policy, investors will want US dollar as opposed to Yen (especially if they devalue).

The USD/JPY saw resistance at 100 for just about a month, now this level should provide solid support, but calling for a massive tide change can be dangerous.

salerno.mark.a@gmail.com 

Paper bought 1,200 CPB Jun 45 Calls for $1.15 (3.8 times usual volume) with stock at $45.39
Paper bought 8,516 WFT Jan 16 Calls for $1.07 (3.7 times usual volume) with stock at $14.24
Paper bought 1,000 HLF Jan 45 Calls for $9.70 (3 times usual volume) with stock at $51.49
Paper bought 25,600 AMTD Jan 26.5 Calls for (13.8 times usual volume) with stock at $22.53
Paper bought 932 PX Jul 120 Calls for $0.95 (4.4 times usual volume) with stock at $115.85