Fertile Stock?

Ken Luskin is a breed of money manager one used to see more of before blue chips ant tech stocks the oxygen out of the room for all other kinds of stocks: That is, a manager who assembles a stake n a small- or mid-car company with a good story, and who then patiently waits for Wall Street to discover the gem-in-the-rough.

Now, finally, the mid-caps and even small caps are outperforming the blue chips. A change may be in the winds.

Moreover, Luskin recently earned some bragging rights when he advised (in this column) buying Alhambra-based Ortel Corp. in the $6-a-share range. The stock ended up trading at more than $180 a share, before being bought at about $160 by Lucent Technologies Inc.

OK, that's nice, but what's the encore? Now Luskin likes a little stock named Conceptus Inc., so much so that his money management shop, Malibu-based Intrinsic Value Asset Management, has filed papers with the Securities and Exchange Commission and taken a 17 percent stake in the company, but has no plans to take control or board seats.

The smallish, not-yet-profitable Conceptus (market capitalization of $60 million) has a new, lower-cost, minimally invasive method of permanent birth control, already being sold commercially in Europe and Asia. In the United States, the company has successfully completed the first- and second-phase FDA-mandated testing of the procedure, which involves placing a small coil in the fallopian tubes, in an outpatient procedure. Third (and final) phase testing is slated to begin soon.

"The Conceptus method costs about one-third as much" as a tubal ligation, said Luskin. "And we know from watching FDA testing announcements, no one else has a product going to market like this."

All over the world, women need and want an inexpensive method of permanent birth control, which has no side-effects, said Luskin.

But small biotech companies are a dime a dozen, and usually they need the marketing and distribution heft of a big outfit to penetrate world markets. Is a merger on horizon for Conceptus? "Well, you might see that here," said Luskin. "But I wouldn't vote, to sell this stock for anything less than $50." As of last week, it was selling for about $5.25 a share.

With a growing portion of the San Carlos-based Conceptus stock in his hands, it may indeed be Luskin who becomes arbiter of when to sell Conceptus.

Contributing Columnist Benjamin Mark Cole writes about the local investment community for the Los Angeles Business Journal.