The Heavy Trading In Strategic Diagnostics

A Recent Runup--On Big Trades
Strategic Diagnostics (SDIX ), which makes immunoassay tests to detect toxicity in foodstuffs, has risen since September from 3.90 to 4.87 -- on heavy volume. Herbert Lotman, who owns Keystone Foods and sits on Strategic's board, has been buying shares, and it is rumored that he may make a run for Strategic. He has 1 million shares -- and is buying more. Lotman bought the shares on the open market when Richard Birkmeyer, who resigned as Strategic's CEO in July, was unloading about 1 million shares. Keystone supplies hamburger patties and processed poultry to McDonald's (MCD ). Lotman also owns Molecular Circuitry, which, with Strategic, developed a test for mad-cow disease. All this makes Keystone a logical buyer of Strategic, says Sven Monberg, editor of SuperStock Investor. He figures Strategic is worth 10 in a buyout, but Lotman denies that he is after Strategic. He says it's obvious to him that the stock is undervalued. Strategic's RapidChek, validated for testing raw meat and poultry, recently got certified to test for salmonella in milk, orange juice, eggs, and cabbage. Ken Trbovich of C.E. Unterberg, Towbin figures it will earn 8 cents a share in 2003, and 12 cents in 2004, vs. a loss in 2002.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

Gene G. Marcial

    Before it's here, it's on the Bloomberg Terminal.