Shares of Plasmatech Biopharmaceuticals (PTBI), an unassuming small-cap biotech with a market capitalization just north of $100 million and revenue of less than $1 million last year, more than doubled in intraday trading on Tuesday.
Trading volume was more than 16 times average levels in the early afternoon. The catalyst for PTBI stock? A man by the name of George Soros.
George Soros, of course, is an investing legend. Known as the “Man Who Broke the Bank of England,” Soros is believed to have made more than $1 billion in a single day in 1992 when he bet against the British pound sterling just before the government was forced to stop propping up its value.
PTBI stock won’t net George Soros quite that much dough, but with more than 1.4 million shares to his name, he’s been up as much as $4 million today.
Why is PTBI Jumping?
The funny thing is, PTBI stock is only rallying because Soros is a shareholder. A recently released SEC document shows that his hedge fund took a 5.2% stake in PTBI on April 22. PTBI has two FDA-approved treatments for side effects of cancer treatments, and a total of six drugs in its pipeline.
The stock market watches investment tycoons carefully, and when they reveal new positions in tiny companies, the results are often short, unimaginable rallies.
Right now, markets are far more interested in observing financial gurus than normal; the 20th annual Ira Sohn conference, where some of the heaviest-hitting hedge fund managers dish on their stock picks, was yesterday. All it took was a few negative words from hedge fund golden boy David Einhorn to send the Texas fracker Pioneer Natural Resources (PXD) on a two-day, 4% losing streak.
But the George Soros PTBI stock situation is far more similar to something we saw just a month ago: famed corporate raider Carl Icahn disclosed a controlling stake in Voltari Corporation (VLTC), a mobile advertising company, on April 1. Eight days later, the stock was still running, up nearly 500% as investors clamored to get on board with Icahn.
Voltari didn’t stop there, either. The VLTC stock price sits around $9.50 today, or about 840% higher than its $1.01 share price before the Icahn announcement. There were some obscure reasons Icahn took a stake in Voltari stock (operating loss carry-forwards worth $187 million). But Soros’ investment in Plasmatech stock looks like he actually believes in the company.
After all, PTBI has two products on the market, and four more to be commercialized by 2017. By the company’s own estimations, the size of the total addressable markets its products address will be $17 billion in 2017. Capture just a sliver of that and this $100 million biotech could turn into a $1 billion biotech pretty quickly.
As of this writing, John Divine held no positions in any of the stocks mentioned. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
