Ceres Inc (CERE), Syngenta AG (ADR) (SYT): Stay Away From This Overnight Multibagger

Page 1 of 2

Shares of energy crop developer Ceres Inc (NASDAQ:CERE) surged more than 100% from the opening bell Monday to early trading on Thursday. In fact, over one-third of the total outstanding shares traded hands on Thursday. Even with the move the company is trading for “only” $100 million. With some of the biggest names in industrial biotech on its side — such as Syngenta AG (ADR) (NYSE:SYT), Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR), Amyris Inc (NASDAQ:AMRS), Valero Energy Corporation (NYSE:VLO), Novozymes, Gruppo M&G, and Mascoma, to name a few — this must be a good buy right? Not so fast.

Syngenta AG (ADR) (NYSE:SYT)

What does Ceres do?
Ceres Inc (NASDAQ:CERE) mines and manipulates the genomes of energy crops such as sweet sorghum and switchgrass to increase drought tolerance, biomass yield, and salt tolerability. Essentially, it has a similar business model as Syngenta AG (ADR) (NYSE:SYT) and Monsanto Company (NYSE:MON), just for energy crops. Syngenta AG (ADR) (NYSE:SYT) has actually licensed Ceres Inc (NASDAQ:CERE)’ bioinformatics software since 2008 to develop its own crops. In return, Syngenta AG (ADR) (NYSE:SYT) has upgraded the capability of the computer program. Meanwhile, Monsanto Company (NYSE:MON) and Ceres Inc (NASDAQ:CERE) tangled up in 2002 to identify and develop engineered row crops such as corn and soybeans. Those payments now are a distant memory.

I was once an intern shoved into a similar chemical closet. This one houses thousands of experimental plants for Ceres. Source: Ceres

The similarities to Syngenta AG (ADR) (NYSE:SYT) and Monsanto Company (NYSE:MON) do not mean Ceres Inc (NASDAQ:CERE) is worthy of investment, though. In fact, I think it could be a dangerous trap for just that reason. This latest pop is particularly worrisome to me. So what actually happened?

Why you shouldn’t be a buyer
Did the company announce a major development? Nope, its last press release occurred on Jan. 8, 2013. Perhaps a big insider made a big purchase? Nope — its last update to the SEC occurred on April 11, 2013. So what would cause this developmental stage to climb so rapidly? I can only come up with three possible scenarios:

    1. A potential buyout: Nothing is worse than speculating about a buyout, but I suppose a bigger player could go after the 100 issued and 210 pending patents held by Ceres Inc (NASDAQ:CERE)– more than many industrial biotech companies. This is just a guess to explain the massive share movement, and every day that passes without an announcement makes this less and less likely.
    2. Momentum trades: We at The Motley Fool think technical trading is hogwash, but if that’s your game all power to you. I couldn’t tell you what shape the stock chart took leading into the run-up (a dancing dragon trail, perhaps?) — and I don’t really care. If momentum traders are piling in to try to make a quick profit, then they will be out just as quickly. Don’t be caught holding the bag.
Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Top Reasons For Getting Fired

The 3 Best States to Start an LLC

10 Jobs That Allow You to Travel

7 High-Paying Jobs You Can Do From Home

12 Best Cities to Shop in USA

10 Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!