SFM Delivers 1680%! … Before Earthquake Destroys San Fran’s Akero Therapeutics (AKRO, SFM)

Akero Therapeutics, Inc. (NASDAQ:AKRO) develops medicines that futz with your most intimate physical processes to “cure” you of all those disease-laden toxic pathogens that their scientific brothers create in laboratories just down the hall.

They claim what they’re doing “restores metabolic balance,” but who you gonna believe…?

Today’s trade offers a knockout profit potential and a known downside.

But before you go blue with excitement, we’re closing another trade for big gains.

It’s our SFM initiative from December 26^th.  The dispatch was called Grocer Sprouts a Leek! Stock Goes to Seed, and it urged you to short one lot SFM @ $33.71, buy the March 17^th SFM 36 CALL for $1.50, and buy ten (10) SFM March 17^th 32/30 PUT spreads for $0.70 each.  Total credit on the affair was $25.21.

And now, with better than two months still remaining before expiry, we’re shutting her down.

Sell your long CALL for $0.40, sell all ten PUT spreads for $0.80 each (2.40/1.60), then buy back the stock for $30.94.

And…

You step out of the trade with a robust $2.67 on nothing laid out!

Adjusted for minimal commissions gives you a wild 1680%—

IN JUST TEN BLEEDING DAYS!

And now back to the druggist…

Our first stop is the accountant’s office, where we find AKRO to be fundamentally corrupt.

To wit—

• P/E is non-existent (because the company hasn’t yet earned anything).
• Forward P/E is also non-existent (because analysts agree there will be no money earned next year, either).
• The company has posted zero sales,
• Offers no Dividend, yet…
• Sells for 5.57x its breakup value (P/B).  Hunh…?
• Consensus is that AKRO will LOSE 9.40% per share over the next twelve months, and…
• LOSE an additional 14.60% per share on average for the NEXT FIVE YEARS!
• Insiders are equally enchanted with the stock, apparently—they sold 71.03% of their stake over the last six months, for a whopping total of $94 million.

Kinda gives you hope, yeah…?

Anywho, with the stock up 629% over the last six months (and not a penny deposited bankwise), we say the jig is up.

The company went to market in September, hat in hand, to collect $230 million in equity financing (while insiders were selling for nearly half that amount—nice job, heh, heh, heh…).

They claim to have enough money to continue operations through 2025, but again, on who’s say-so?

Bottom line is: the stock gapped higher over 100% in one day when the new financing was complete, and thereafter continued to run.

Why?

Because $230 million was now available to burn.

Nothing else.

Here’s the chart—

Say goodnight, Irene…

May the G-d of Israel continue to bless us and our families and protect us from the Evil Ones and their dark machinations.

Many happy returns!

Matt McAbby

Follow @HughLOHaynew