Following A Winner: Tracking The Investment Profile Of Isaac Blech Print E-mail
By Scott Matusow, Contributor   
Thursday, 20 September 2012 03:08
icon_stockresearchIn June, I wrote an article featuring a company called Medgenics (MDGN). Preparing for my article on the firm, I attended a conference call with management there and spoke with Isaac Blech-- a well known biotech investor in the 80's and 90's who took years off to focus on his family and things in life that mattered most to him.

As a biotech industry pioneer, he helped find seven companies, all of which were subsequently brought public. These companies are responsible for major advances in a number of diseases including the diagnosis and/or treatment of cancer, chlamydia, sexual dysfunction, cystic fibrosis and AIDS. Their combined value is in excess of $30 billion.

Genetic Systems Corporation, which he helped found with his father and his brother David Blech, was built around promising scientists, including the high profile microbiologist Robert Nowinski. It developed the first inexpensive and accurate test to diagnosis sexually-transmitted diseases using monoclonal antibodies, allowing tens of thousands of babies to be born to women who otherwise would have become sterile from pelvic inflammatory disease.

In 1985, Bristol-Myers Squibb (BMY) bought Genetic Systems for $294 million in stock two weeks after Eli Lilly (LLY), its rival, had bought Hybritech, another monoclonal-antibody company, for $350 million.
Mr. Blech's other achievements include:

•    Celgene Corporation (CELG) - Blech was a founding shareholder of Celgene, which has introduced two major cancer drugs and has a stock market valuation of approximately $27+ billion.
•    ICOS Corporation - ICOS discovered the drug Cialis and was later acquired by Eli Lilly for over $2 billion. Blech was a founding shareholder.
•    Nova Pharmaceutical Corporation - Nova developed a treatment for brain cancer and subsequently merged with Scios Corporation which was later purchased for $2 billion by Johnson and Johnson (JNJ). Blech was a founding shareholder and a member of the Board of Directors.
•    Pathogeneses Corporation - Pathogeneses created TOBI for the treatment of cystic fibrosis and was later acquired by Chiron Corp for $660 million. Blech was a founding shareholder.

Blech is a proven winner, and I like to follow winners. Blech has also paired up a couple of times with Dr. Sol Barer, who was the driver behind convincing scientists at Celgene to put faith in thalidomide, banned long ago for causing severe birth defects, in a bet that certain aspects of the drug could be used to fight disease.

Blech has recently returned to capital investment, and has made a couple of key investments I feel investors should take a look at (click to enlarge):


 
Above, Blech is listed as a director in Medgenics. I first featured Medgenics in June of this year when the company was selling for $7 a share. After my article and substantial company news, the stock hit a high of around $16 in less than 3 weeks, before retracing back down to where it trades today, around $11 a share, of which Isaac owns a substantial block.

Companies Blech has been buying:

BillMyParents' (OTCBB: BMPI) where Blech is the leading shareholder with beneficial ownership of more than 38 million shares, and has invested millions into the company in the form of equity injections and/or convertible notes.

The Company has a new CEO, Michael McCoy, who joined the firm after leaving his position as President of Wells Fargo & Company's (WFC) credit card division. At the time of his departure from Wells Fargo, McCoy was responsible for $17 billion in receivables and approximately 4,000 employees.

BMPI's management team is backed by a highly experienced early-stage investment team lead by Board of Directors member Isaac Blech, who put his single largest upfront investment into BillMyParents, Inc.

BillMyParents, Inc. provides payments solutions to teens, young adults, and their parents. It offers Spend Smart card, which provides a way for teens and their parents to learn how to spend smart. The company was formerly known as Socialwise, Inc. and changed its name to BillMyParents, Inc. in June 2011 to reflect its business and lead product.

BMPI allows parent to set up recurring allowances on their teen's SpendSmart Card. This allows parents to instantly cancel money on the quasi debit card in case "Junior" does not do his chores -- as one example how the card works. This type of idea is something America needs at this time -- teaching teens to spend responsibly, while allowing parents to fully monitor their children's spending. Many parents these days are so busy working 2 jobs or more just to get ahead -- leaving them less time to monitor what their children are involved with. BMPI can help with time effectiveness and much easier for parents to better watch what their children are doing -- at least money wise.

The card also good for birthdays, special occasions, or for parents with teens living in different households. The card is not a pre-paid debit card, but a totally monitored and parent controlled spending solution for their children -- parents can instantly add and remove money on the card via a web interface.

On August 6 of this year, Acceleron Equity initiated coverage on shares of the company and issued a buy rating on the stock and set a $3.30 price target.

On August 30th, 2012, the company announced the appointment of entrepreneur Jesse Itzler to the company's Board of Directors.

Mr. Itzler is the co-founder and former Vice Chairman of Marquis Jet Partners, the world's largest private jet card company which sold to Net Jets/Berkshire Hathaway in 2010. He recently created the brand incubator and marketing firm The 100 Mile Group, which he serves as the managing member. The 100 Mile Group's notable ventures include, among other projects, ZICO Coconut Water, Voli Light Vodkas and Sheets Energy Strips, which was co-founded with LeBron James.

Mr. Itzler certainly has years of successful experience helping to grow company brand names, so his appointment to BMPI'S board is definitely a very good step in the right direction as the company moves forward.

The company announced on September 6, 2012, that Sol Barer, Ph.D., founder and former Chairman of the Board of S&P 500 Company Celgene, has joined the Strategic Advisory Board of BillMyParents, Inc -- this marks yet another pairing between Blech and Barer.

Companies such as Mastercard Inc. (NYSE: MA), Visa Inc. (NYSE: V), American Express Company (NYSE: AXP), and Discover Financial Services (NYSE: DFS) do not have interest at this time to attempt to enter into this market space, so BMPI should have a nice heard start here in the segment. If the company can successfully execute its business plan in a timely fashion, it can become a huge winner.

Please take note that this is a risky investment, but in my opinion, a winning one -- in time. The fact that Blech owns a ton of BMPI is really the most bullish long term factor in this one.

Blech has also been buying Premier Alliance Group (PIMO).

Premier Alliance provides business and technology consulting services to businesses in the United States. The company focuses in the areas of project management, business analysis, business consulting, and strategic consulting, as well as compliance and regulatory, merger and acquisition, and business process reengineering. It operates in two divisions, Professional Services and Consulting.

On July 30 of this year, the company announced that its Energy and Sustainability Division has been awarded a $460,000 contract to design, install, and test the equipment necessary to utilize a new 12kV electrical service at the Southern California facility of a leading global provider of industrial equipment. The contract will begin generating revenue immediately and is to be completed during the first quarter of 2013.

On August 16, the company announced its Q2 2012 earnings. Net revenue for the three months ended June 30, 2012 totaled $5.5 million, an increase of 30%, compared to $4.2 million for the same period in 2011. Net revenue for the three months ended June 30, 2012 contributed by the merger with GreenHouse Holdings, Inc. was $1,261,000 or 23% of total revenue. Excluding the second quarter contribution of Greenhouse, net revenue would have been $4.2 million compared to $4.2 million for the same period in the prior year.

Cost of revenues was $4.1 million or 74.7% of revenue for the three months ended June 30, 2012, as compared to $3.1 million or 72.8% of revenue for the same period in 2011. Cost of revenue for GHH was $871,000 or 69.1% of total revenue. Cost of revenue for the core Premier business was 76.3% in second quarter 2012, which did not offset fixed consultant personnel expense, lower margins and utilization rates.
Not bad results for a company with a meager $10.89M market cap. Isaac owns roughly 1.2 million shares of Premier.

A key competitor in the space CIBER (CBR) also provides information technology (IT), business consulting, and outsourcing service. Pimo, with a few more contracts, might be able to match or surpass CIBER'S pps of $3.51, and a market cap of $256.68M.

As Warren Buffet over many years has proven himself to be an investor that others follow, so is Mr. Blech, and I especially like his investment in BMPI.


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional Disclosure: Family member is long BMPI.OBDisclaimer: This article is intended for informational and entertainment use only, and should not be construed as professional investment advice. They are my opinions only. Trading stocks is risky -- always be sure to know and understand your risk tolerance. You can incur substantial financial losses in any trade or investment. Always do your own due diligence before buying and selling any stock, and/or consult with a licensed financial adviser.




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