Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

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

Biotech Insider Alert - $5 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...
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 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!