May 27, 2011 at 20:20 PM EDT
K-V Pharmaceutical (NYSE: KV-A) – Catches a Spark to a 42% Gain
K-V Pharmaceutical KV-A
The very volatile K-V Pharmaceutical Company (NYSE: KV-A) caught a spark Friday and jumped 42% higher through the day. There was no news of relevance listed on the company’s wire all day long nor on its website, so investors speculated as to the cause, filling message boards with their fervor. We found the driver for you though, so now you can make an informed investment decision for the short and maybe even the long-term.

biotech analystOur founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

K-V Pharmaceutical (NYSE: KV-A) – Catches a Spark to a 42% Gain

Relative tickers: Nasdaq: AATI, Nasdaq: FTWR, Nasdaq: BCON, Nasdaq: VLYWW, Nasdaq: LPHI, Nasdaq: RUE, Nasdaq: SZYM, Nasdaq: INHX, Nasdaq: TKMR, Nasdaq: HMPR, Nasdaq: ACRX, Nasdaq: SEAC, Nasdaq: KGJI, Nasdaq: CDTI, Nasdaq: PFED, Nasdaq: MRVL, Nasdaq: RXII, Nasdaq: QUIK, Nasdaq: CZFC, Nasdaq: CRMT, Nasdaq: SPPRP, Nasdaq: FEED, Nasdaq: ALXA, Nasdaq: VNET, Nasdaq: LAVA, NYSE: KV-A, NYSE: KV-B, NYSE: ARL, Nasdaq: ACTV, NYSE: ZLC, NYSE: DEXO, Nasdaq: SQNS, Nasdaq: FXCM, NYSE: MSO, NYSE: DAC, NYSE: FRC, NYSE: BZH, NYSE: DRL, NYSE: CIS, NYSE: RUSL, NYSE: MDS, NYSE: END, NYSE: MTR, NYSE: LAS, NYSE: AVD, NYSE: UAN, NYSE: MNI, NYSE: RL, AMEX: URG, AMEX: EGX, AMEX: GHM, AMEX: UQM, AMEX: GBG, AMEX: DNN, AMEX: DMC, AMEX: INV, AMEX: PAL, AMEX: URZ, AMEX: GPL, AMEX: BRD, AMEX: COVR, AMEX: BONE, AMEX: QRM, AMEX: RBY, AMEX: PIP, AMEX: CNR, AMEX: WGA, AMEX: HDY, AMEX: SSY, Nasdaq: AMGN, Nasdaq: BIIB, Nasdaq: GILD, Nasdaq: LIFE, Nasdaq: TEVA, NYSE: WPI, Nasdaq: MYL, NYSE: PFE, NYSE: JNJ, NYSE: GSK, NYSE: SNY, NYSE: NVS, OTC: RHHBY.PK and NYSE: AZN.

It looks as though the fuel behind the big move in KV-A shares Friday was news that OrbiMed, the world’s largest healthcare focused investment firm, with some $5 billion in assets under management, upped its stake in K-V Pharmaceutical to 10.53% since March. It looks as though the news, which was not understood until after the close, was not as hot as the rumor though, as the stock was down after hours. It seems speculators thought there was some operation-relevant news leaked, and the real news just didn’t live up to traders’ dreams.

It’s still very relevant that OrbiMed increased its interest, which was 7.23% in March. This quickly heated stock has a 52-week range of $0.61 to $13.55, and took most of that ground starting in February, when one of its drugs gained FDA approval. Makena reduces the risk of premature birth in pregnant women. When approved in early February, it sent the stock up 131% in a day, and to its peak in March. Makena was the first drug approved by the FDA that is specifically indicated to reduce premature birth risk.

It appears Makena is still competing with unapproved compounds of approved drugs that match Makena’s make-up. It also appears that K-V has had to lower its price to ensure the drug was the chosen option of women at risk of premature birth. It looks to me as though this is what took the steam out of the KV-A locomotive in March.

The stock started Friday at $2.39 and closed at $3.38. It was down about 3.25% after hours though, as nimble money trying to catch a lift on its momentum looked to get out after the non-operational news broke. Given a three-day weekend, that made sense for a lot of traders. My feeling is that the stock might give more ground on Tuesday when it reopens under less cloudy skies, given the story will be well known by then. That said, this stock has long-term appeal, based on the little I currently know about it. If the “right price” and the market opportunity are attractive enough, OrbiMed, the specialist investor, may know exactly what it’s doing.

KV-A forum message board chat

Other top gainers on the day included Advanced Analogic Technologies (Nasdaq: AATI), FiberTower (Nasdaq: FTWR), Beacon Power (Nasdaq: BCON), Valley National Bancorp (Nasdaq: VLYWW), Life Partners (Nasdaq: LPHI), rue21 (Nasdaq: RUE), Solarzyme (Nasdaq: SZYM), Inhibitex (Nasdaq: INHX), Tekmira Pharmaceuticals (Nasdaq: TKMR), Hampton Roads Bankshares (Nasdaq: HMPR), AcelRx Pharmaceuticals (Nasdaq: ACRX), SeaChange International (Nasdaq: SEAC), Kingold Jewelry (Nasdaq: KGJI), Clean Diesel Technologies (Nasdaq: CDTI), Park Bancorp (Nasdaq: PFED), Marvell Technology (Nasdaq: MRVL), RXi Pharmaceuticals (Nasdaq: RXII), QuickLogic (Nasdaq: QUIK), Citizens First (Nasdaq: CZFC), America’s Car-Mart (Nasdaq: CRMT), Supertel Hospitality (Nasdaq: SPPRP), AgFeed Industries (Nasdaq: FEED), Alexza Pharmaceuticals (Nasdaq: ALXA), 21Vianet (Nasdaq: VNET), Magma Design Automation (Nasdaq: LAVA), K-V Pharmaceuticals (NYSE: KV-A, NYSE: KV-B), American Realty Investors (NYSE: ARL), The Active Network (Nasdaq: ACTV), Zale (NYSE: ZLC), Dex One (NYSE: DEXO), Sequans Communications (Nasdaq: SQNS), FXCM, Inc. (Nasdaq: FXCM), Martha Stewart Living (NYSE: MSO), Danaos (NYSE: DAC), First Republic Bank (NYSE: FRC), Beazer Homes (NYSE: BZH), Doral Financial (NYSE: DRL), Camelot Information (NYSE: CIS), Direxion Daily Russia Bull (NYSE: RUSL), Midas (NYSE: MDS), Endeavor Int’l (NYSE: END), Mesa Royalty Trust (NYSE: MTR), Lentuo International (NYSE: LAS), American Vanguard (NYSE: AVD), CVR Partners (NYSE: UAN), McClatchy (NYSE: MNI), Polo Ralph Lauren (NYSE: RL), Ur Energy (AMEX: URG), Engex (AMEX: EGX), Graham (AMEX: GHM), UQM Technologies (AMEX: UQM), Great Basin Gold (AMEX: GBG), Denison Mines (AMEX: DNN), Document Security Systems (AMEX: DMC), Innovaro (AMEX: INV), North American Palladium (AMEX: PAL), Uranerz Energy (AMEX: URZ), Great Panther Silver (AMEX: GPL), Brigus Gold (AMEX: BRD), Cover-All Technologies (AMEX: COVR), Bacterin International (AMEX: BONE), Quest Rare Minerals (AMEX: QRM), Rubicon Minerals (AMEX: RBY), PharmAthene (AMEX: PIP), China Metro-Rural (AMEX: CNR), Wells-Gardner Electronics (AMEX: WGA), HyperDynamics (AMEX: HDY) and SunLink Healthy (AMEX: SSY). Industry relatives include Amgen (Nasdaq: AMGN), Biogen Idec (Nasdaq: BIIB), Gilead Sciences (Nasdaq: GILD), Life Technologies (Nasdaq: LIFE), Teva Pharmaceutical (Nasdaq: TEVA), Watson Pharmaceuticals (NYSE: WPI), Mylan (Nasdaq: MYL), Pfizer (NYSE: PFE), Johnson & Johnson (NYSE: JNJ), GlaxoSmithKline (NYSE: GSK), Sanofi-Aventis (NYSE: SNY), Novartis (NYSE: NVS), Roche Holding (OTC: RHHBY.PK), AstraZeneca (NYSE: AZN).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

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