The stock market closed Friday at the highest level for the year. According to CNN, the S&P 500 now has gained 52% since hitting 12 year low on March 9th. The recent highs warranted a revision of our holdings and after carefully examining our overall portfolio, we have decided to make some changes.

We decided to sell Caterpillar Inc (CAT) and Texas Instruments (TXN). We thought CAT was getting ahead of the economy at $47.50 and we did not see much upside of keeping TXN when it hit $24. With the proceeds from selling those two, we added two other small companies which we thought were undervalued. We bought LMI Aerospace Inc (LMIA) at $8.55  and Friedman Industries Inc (FRD) at $5.90.

Since I am in biotech field myself, I constantly read about the current research and clinical trails. Last week, I came across Cell Therapeutics Inc (CTIC) since it was on the news due to its heavy trading volume. It turns out CTIC has submitted New Drug Application (NDA) to FDA for Pixantrone, which would treat relapsed aggresive non-Hodgkin’s lymphoma. If approved, Pixantrone would be the Chemotherapy agent for non-Hodgkin’s lymphoma because Pixantrone supposedly has less toxic side effects than the current one. CTIC has asked FDA for a “priority review”, which if granted would expedite the review process and a decision would be made by the end of the year. The decision for whether or not FDA would do a “priority review” is expected on Monday (Aug. 24th).

After carefully reading about Pixantrone, we decided to buy CTIC at $1.67. Even if the FDA does not expedite the review process, we thought we would be comfortable holding CTIC and wait for the decision. CTIC also has another drug on Phase II trial and more on the pipeline according to their website. At $1.67, the upside potential far out weighs the risk. Well, that is just my opinion.