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The Best And Worst From August 25

Posted: Aug 26, 2008 11:00 AM by Eric Fox

Tickers in this Article: QELP, HWAY, FEED, STSI, QRCP

The biggest gainer on the U.S markets on August 25, 2008, was Star Scientific (Nasdaq:STSI) which ended the day up $ 1.09 to $2.76 The biggest loser was Quest Resources (Nasdaq:QRCP), which ended the day down $2.05 to $4.88.

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The Gainer
Star Scientific is a developer of technology used to reduce the amount of toxins in tobacco smoke. Its focus is on reducing the amount of tobacco specific nitrosamines (TSNAs) in tobacco using its technology during the curing process. The company has two main products marketed under the names Ariva and Stonewall. They are smokeless dissolvable products designed to provide adult tobacco users with an alternative to cigarettes.

Star Scientific was up strong yesterday due to a favorable court ruling involving litigation that the company has been engaged in with R.J. Reynolds over intellectual property related to its low-TSNA technology. The court overturned a lower court decision that said that Star Scientific had engaged in "inequitable conduct" and also reversed the lower court's grant of summary judgment in favor of R.J. Reynolds. The case now goes back to the lower court. (Don't let company lawsuits hit you unprepared. Learn how to uncover how they might affect you in Litigation: Are Your Investments At Risk?.)

Star Scientific filed the lawsuit against R.J. Reynolds in May 2001 alleging that the company infringed on its patent that prevented the formation of TSNAs in tobacco. A second infringement claim was added in 2002.

The Loser
Quest Resources is an exploration and production company with properties in an area of Kansas and Oklahoma called the Cherokee Basin. The Cherokee basin produces mostly Coal Bed Methane (CBM), which is natural gas that is trapped in coal reserves underground. The methane is released from the coal after water is removed during the drilling process, which causes a change in pressure, allowing the gas to more easily rise to the surface. The company also owns and operates a network of gas gathering and interstate pipelines.

The stock fell after the company announced that Jerry Cash, the chairman and CEO, had resigned from Quest Resources. He also resigned from the same positions he held at Quest Energy Partners (Nasdaq:QELP) and Quest Midstream Partners, L.P. The resignation came after the board at Quest Resources learned from the Oklahoma Department of Securities that there were "questionable transfers of company funds" to an entity controlled by Cash. The amount transferred was approximately $10 million. David Grose, the chief financial officer, was placed on paid administrative leave.

Additional Winners and Losers
Another large gainer on August 25, 2008 was Agfeed Industries (Nasdaq:FEED), which closed up $1.73 to $12.32. The company announced four accretive acquisitions, and backed its earnings guidance for the fiscal year.

The other large decliner was Healthways (Nasdaq:HWAY), which closed down $ 5.54 to $19.73, after the company provided guidance for the first quarter which was below analyst estimates.

By Eric Fox

Eric J. Fox, is the founder of Brittain Capital Management, LLC., which manages the Alesia Fund, LP., a Value oriented long/short investment partnership. You can read more of his views on investments at his blog - Stock Market Prognosticator.

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