Parlux Fragrances (PARL-NASDAQ) $6.65-BUY

Parlux is in the frangrance business as the name says. It has brand rights to names like Perry Ellis and Paris Hilton among others. I owned this stock twice before several years ago very profitably. The current situation is involved and interesting. Please read all the recent press releases.

Our valuation is $13.77 a share. So the stock is trading at less than 50% of our valuation which makes it a buy in its own right. On top of that they recently had an offer to buy their Perry Ellis brands for $120 million (equal to today’s market cap alone). Perry Ellis nixxed the deal though. So now Glenn Nussdorf who owns 37% of E-Com Ventures (which is one of Parlux’s major customers) has recently bought 12.2% of PARL and is making nioses about buying PARL entirely. Lots if inter-relationships here which mkes it complicated and a bit risky. There are rumors of an offer any day, any minute–which means nothing will probably happen for a while, or at all. The stock was up as high as $19 in the last 52 weeks. We owned is previously at the $1.50 level and we hate to buy stocks back at higher levels but PARL’s business has exploded since we owned it beofre and it has a number of catalysts that could drive this much higher. The “take-over” rumors talk about $13.50 a share, which are amazing close to our valuation. BUY.

ARI Network Services Inc.

ARI reported Q1 (10/31/2006) results this morning. They were OK. Sales about flat and made $225,000 or $.03 per share compared to $498,000 or $.07 per share in 2005 (all earnings are un-taxed).
Earning were down because they appear to be trying to grow the business which is good.

Valuation stayed at $5.28 per share and they had $.24 of net cash.
BUY

Datawatch (DWCH), INYX (IYXI.ob)

DWCH announced earnings this morning. Blah. Sales were down a bit from last year and they incurred a loss of $530,000 or $.10 a share. The new valuation on DWCH is $7.50 down a bit from the previous valuation, but still way above where we are trading now.

HOLD for now. Looks like they cut some expenses after the quarter and seem to want to be profitable. If they can get any kind of positive results next quarter this should take off. If this goes any lower, we will be buyers.

IYXI.ob–seems like no one else knows what to make of the “take-over” talk either. Stock traded over 500,000 shares yesterday and closed down at $2.12 per share. Interesting one. HOLD for now.

INYX Inc. (IYXI.ob)–Another take-over?

Late on Friday IYXI announced that management and some outside investors have approached the Board of Directors about a “going private” transaction.

Hmmmm. Not sure if this is good news or not. No price was mentioned so who knows at this point. The group says it “intends to make an offer that it believes will be in the best interests of all Inyx shareholders”. We will see.

Hold. Hopefully we will see some action on Monday.

Happy Thanksgiving

2006 is shaping up to be our worst year since 2002 when we were down 23%. We have averaged a 35% annual gain for 2003,2004,2005. But there is still over a month left in 2006 and we hope that the market will start paying attention to some off our “unloved”, but undervalued stocks before then.

We went 6 up, 7 down and 1 even last week. Our model portfolio year-to-date gain, dropped back 1.2% to 10.0%. DWCH continued as our biggest dog followed by, LINN.ob, MIVA, INFT and CTIG.ob. Since the start of the year we are 13 up and 5 down. Mini-caps continue to lag way behind the market.

Earnings on QADI last week.

The model portfolio assumes $10,000 invested in each stock, less $10 commission each way (TD Ameritrade rate).

SPNC-(Buy price $10.65, Valuation $18-$20). Dropped another $.29 to $10.95 last week. No news, just the shorts and market makers playing games with 100 share trades again. Up 3% so far. HOLD

QADI-(Buy price $6.93, Valuation $13.69 (was $13.73 and $11.86). Closed at $8.08, down $.12. Trading at only 59% of valuation. Has $1.03 in cash also. Up 17% so far. HOLD.

PDLI-(Buy price $19.31, Valuation > $30)–Closed at $23.23, up $.48. Apparently the “bad news” about the canceled Roche deal ended up being good news. Now up 20%. HOLD.

MIVA-(Buy price $3.80, Valuation $7.52 (was $7.38 and $9.10)). MIVA closed at $3.40, up $.01. No news. Down 11% so far. HOLD.

DWCH-(Buy price $3.66, Valuation $7.63 (was $9.31)). Closed at $1.95, unchanged, still a loser–now down a whopping 47%. HOLD to see how this quarter turns out on November 28. Valuation gap is still huge, but declining. VSNT, DTLK, NTCT did nothing for a long time–until they announced some good earnings and then all took off. Lets hope this is DWCH’s quarter and they do not crater the earnings.

INFT-(Buy price $4.11, Valuation $6.95 (was $6.86)). Up $.16 last week to $3.69. Still has $2.52 per share in cash. Price objective $5.50. Now down 10%. Frustrating stock. BUY.

MOBI-(Buy price $7.08, Valuation $12.69). Down $.03 last week to $7.17. No news. Still OK to BUY at this level.

RITT-(Buy price $1.00, Valuation $2.69). Closed up $.02 at $1.02 last week. No news. BUY.

OB-abies

ARIS.ob-(Buy price $2.06, Valuation $5.28 (was $5.21)). Closed at $2.12, down $.03 last week. This stock is still pretty illiquid so price moves are fairly meaningless at this point. Now up 3% so far. BUY if you can find some shares. Huge valuation gap.

Linn.ob-(Buy price $.36, Valuation $.62 (was $.66 and before that-$.79)). Closed at $.26, down $.06 last week. Still trading at only 42% of our current valuation. Down 28% YTD. HOLD until we get some revenue growth and stop losing money (same story as last quarter).

OPTO.ob-(Buy price $1.25, Valuation $2.54 (was 2.88)). Closed at $1.48, up $.07. Seems to be wanting to break out to the upside, but just can’t seem to hold that $1.50+ level. Maybe next week. So now we have a 18% gain. HOLD.

AVSO.ob-(Buy price $1.19, NEW Valuation $2.69 (was $3.36, $3.81)). Stock closed at $1.53, up $.06. If they do the $55-$60 million in revenue that they are projecting for current fiscal year (did $12 million in Q1)–this stock should double from here as our valuation will range from $3.71 to $4.03 (assuming margins remain in the 40-50% range. Now up 29%. HOLD.

CTIG.ob-(Buy price $.27 ask, NEW Valuation $1.13 (Was $1.05, $.82)). Ask price dropped $.02 to $.26. Closed at $.25. Cash is $.24 per share. Now down 4% so far (based on asked price). BUY if you can find some shares.

IYXI.ob-(Buy price $1.91, Valuation–over $3.00). Closed down $.08 at $2.19, up 15% to date. This is still very risky, but could be a real barnburner is they do what they say they are going to do. HOLD.

QADI and PDLI

Qadi announced earnings this afternoon. Looks like they were right around analysts (the few that follow them)estimates for sales and may have missed earinngs by $.01. Non-event in our opinion. Sales were up year-over-year by 11% and margins held at 60%. Cash per share fell to $1.03 and our valuation dropped $.04 to $13.69. As we said a non-event in our book. Still way undervalued.

PDLI announced that Roche ended another drug development deal on daclizumab for organ transplants. Stock dropped to $21.75 down $.92 afterhours. Presumably not good news, but really doesn’t affect our opinion on the stock.

DWCH earnings are now scheduled for 11/28–postponed due to their CFO leaving in January. Have to wait till then to see whether this will remain our biggest dog of the year.

Still muddling along

We went 7 up, 6 down and 1 even last week. Our model portfolio year-to-date gain, popped back up 1.1% to 11.2%. DWCH continued as our biggest dog followed by, INFT, Linn.ob and MIVA. Since the start of the year we are 13 up and 4 down and 1 even. Mini-caps continue to lag way behind the market. Tax selling seemed to keep INFT and DWCH going down.

Earnings on CTIG.ob and AVSO.ob last week.

The model portfolio assumes $10,000 invested in each stock, less $10 commission each way (TD Ameritrade rate).

SPNC-(Buy price $10.65, Valuation $18-$20). Dropped another $.24 to $11.24 last week. No news, just the shorts and market makers playing games with 100 share trades again. Volume has dropped off significantly. Up 6% so far. HOLD

QADI-(Buy price $6.93, Valuation $13.73 (was $11.86). Closed at $8.20, up $.10. Trading at only 60% of valuation. Has $1.30 in cash also. Up 18% so far. HOLD.

PDLI-(Buy price $19.31, Valuation > $30)–Closed at $22.75, up $1.78. Biotech buy-out binge continues, maybe ours will be next. Now up 18%. HOLD.

MIVA-(Buy price $3.80, Valuation $7.52 (was $7.38 and $9.10)). MIVA closed at $3.39, up $.12. No news. Down 11% so far. HOLD.

DWCH-(Buy price $3.66, Valuation $7.63 (was $9.31)). Closed at $1.95, down $.39, still a loser–now down a whopping 47%. HOLD to see how this quarter turns out on November 21. Valuation gap is still huge, but declining. VSNT, DTLK, NTCT did nothing for a long time–until they announced some good earnings and then all took off. Lets hope this is DWCH’s quarter and they do not crater the earnings.

INFT-(Buy price $4.11, Valuation $6.95 (was $6.86)). Down $.20 last week to $3.53. Still has $2.52 per share in cash. Price objective $5.50. Now down 14%. I think that there is some tax loss selling going on here, and just impatience. Frustrating stock. BUY.

MOBI-(Buy price $7.08, Valuation $12.69). Up $.12 last week to $7.20. Had gotten up to over $7.50, but swooned on Friday. Still OK to BUY at this level.

RITT-(Buy price $1.00, Valuation $2.69). Closed even at $1.00 last week. Tax loss sellers need to finish up and then maybe we will start to see this one rise. BUY.

OB-abies

ARIS.ob-(Buy price $2.06, Valuation $5.28 (was $5.21)). Closed at $2.15, up $.15 last week. This stock is still pretty illiquid so price moves are fairly meaningless at this point. Now up 4% so far. BUY if you can find some shares. Huge valuation gap.

Linn.ob-(Buy price $.36, Valuation $.62 (was $.66 and before that-$.79)). Closed at $.32, up $.04 last week. Still trading at only 52% of our current valuation. Down 11% YTD. HOLD until we get some revenue growth and stop losing money (same story as last quarter).

OPTO.ob-(Buy price $1.25, Valuation $2.54 (was 2.88)). Closed at $1.41, up $.09. We were starting to get excited on Friday when the stock hit $1.53, but then the buyers went home for the weekend and we closed at $1.41. So now we have a 13% gain. HOLD.

AVSO.ob-(Buy price $1.19, NEW Valuation $2.69 (was $3.36, $3.81)). Stock closed at $1.47, down $.03. Q1 earnings last week were so-so. Sales were up 30.6% year-over-year, but they only made a tiny $36,000 profit down from $166,000 in the prior year. Valuation has been consistently dropping which we do not like. But, if they do the $55-$60 million in revenue that they are projecting for current fiscal year (did $12 million in Q1)–this stock should double from here as our valuation will range from $3.71 to $4.03 (assuming margins remain in the 40-50% range. Now up 24%. HOLD.

CTIG.ob-(Buy price $.27 ask, NEW Valuation $1.13 (Was $1.05, $.82)). Ask price dropped $.01 to $.28. Closed at $.252. Cash is $.24 per share. CTI announced earnings last week. Sales were down due mostly to lumpy patent revenue, but they made $113,000 in profit! From the sounds of the press release, things seem to be progressing well. Up 4% so far (based on asked price). BUY if you can find some shares.

IYXI.ob-(Buy price $1.91, Valuation–over $3.00). Closed down $.06 at $2.27, up 19% to date. This is still very risky, but could be a real barnburner is they do what they say they are going to do. HOLD.

Mobius Management (NASDAQ-MOBI)

We are a little hesitant to recommend MOBI after it has moved up from around $6.60 to Friday’s close of $7.08, but here we go.

Our current valuation of MOBI is $12.69 per share (up from $11.59 a year ago). MOBI also had about $2.30 per share in cash (32% of market cap). We think that MOBI is a prime take-over candidate due to it’s lackluster financial performance and stock price performance over the last couple of years. Also, if they can hit their Q4 sales projections the stock ought to move up just on the fact that they actually hit them and are moving in the right direction. The stock price has not cracked $8 in 2 years, and was as high as $15 back in early 2004 (take-over rumours), but is trading at only 56% of our valuation. MOBI needs to be sold to a bigger software company that can leverage MOBI’s top notch customer list with other products and cut the sales and G+A overhead and make some real profits with MOBI’s products. We expect that this will be another boring, wait-for-a-while stock. But these are the ones that usually get sold.

Be patient in buying this one. We have an small open order in at $6.70, which actually partially filled last week after it closed the previous day at over $7.00. We were about to cancel the order. So maybe some cheaper stock can be had due to tax season!

From their last press release, here’s what they do:

Mobius Management Systems, Inc. (www.mobius.com) is a leading provider of integrated solutions for enterprise archiving and records management. The company’s comprehensive software suite integrates content across disparate repositories, supports regulatory compliance, and includes content-enabled applications that automate business processes. Mobius solutions have achieved industry-wide recognition for breadth of functionality, breadth of supported formats, and high-volume, high-demand performance. The Mobius customer base is made up of leading companies across all industries, including more than sixty percent of the Fortune 100.

RiT Technologies (NASDAQ-RITT)

RITT is an Isaeli company that sells software solutions to both the enterprise and Telco “carrier” market. Our current valuation of RITT is $2.69 per share (after last weeks Q3 earnings announcement) up from our previous valuation of $2.56. RITT announced sales of $6.062 million down 15% from the previous year and a net loss of $182,000 ($.01 per share). Stock dropped from about $1.25 to $1.00. While the results don’t scream BUY, we think this is a good entry point. RITT has about $.38 per share in cash, and has cut its quarterly losses almost to the point of break-even. At the same time its Enterprise sales are up 31% year-over-year, and carrier sales are off 80%. In their press release they seems optimistic that carrier sales are coming back (looks like they had none in Q3 and for the 9 months carrier sales are off $6.7 million). If they can keep the momentum on the enterpise side and book a couple of carrier sales in the next quarter or 2, this could easily double. Also Special Situations Fund owms about 17% of RITT. These are pretty smart guys (although they bought at $1.66 early in 2006). BUY.

From the latest RITT press release, here’s what they do:

“RiT is a leading provider of physical network infrastructure control and management solutions. Deployed in the networks of many of the world’s largest carriers and enterprises, its pioneering, fast-ROI products have proven their ability to simplify service deployment and provisioning, enhance troubleshooting accuracy, reduce infrastructure maintenance costs, enhance physical layer security and enable cost-effective service qualification and verification”.

More of the same

We went 4 up, 8 down last week. Our model portfolio year-to-date gain, dropped 1.1% to 10.1%. DWCH continued as our biggest dog followed by, Linn.ob, MIVA, INFT and ARIS.ob. Since the start of the year we are 11 up and 5 down. Mini-caps continue to lag way behind the market We did start to see some impact from tax loss selling last week as LINN.ob and INFT dropped for no reason.

This wacky year-end trading can provide some good buying opportunities as people are dumping some stocks almost with no regard to price. For example, IYXI.ob dropped to $1.89 on Wednesday and closed at $2.35 (24% recovery), and MOBI (Mobius Mgmt.) was trading over $7.00 and dropped to $6.58 on the open on Thursday and closed at $7.03 (7% swing). MOBI is one of the stocks we have followed for a number of years and have traded in and out of. More later on this one.

The model portfolio assumes $10,000 invested in each stock, less $10 commission each way (TD Ameritrade rate).

SPNC-(Buy price $10.65, Valuation $18-$20). Price got whacked another $.39 to $11.48 last week. No news, just the shorts and market makers playing games with 100 share trades again. Up 8% so far. HOLD

QADI-(Buy price $6.93, Valuation $13.73 (was $11.86). Closed at $8.10, down $.16. Announced a small acquisition last week–about $4 million in cash purchase price. Yield about 1.2%. Trading at only 60% of valuation. Has $1.30 in cash also. Up 17% so far. HOLD.

PDLI-(Buy price $19.31, Valuation > $30)–Closed at $20.97, up $.89. PDLI has almost recouped it’s losses over the past 2 weeks. Huge acquisition premiums on KOS Pharma and Tanox last week had to help. Now up 9%. BUY.

MIVA-(Buy price $3.80, NEW Valuation $7.52 (was $7.38 and $9.10)). MIVA closed at $3.27, up $.03. New valuation crept up $.14 to $7.52, not great but al least in the right direction. They still have a lot of work to do to get this company profitable. Now down 14% to date. HOLD.

DWCH-(Buy price $3.66, Valuation $7.63 (was $9.31)). Closed at $2.34, down $.06, still a loser–down 36%. HOLD to see how this quarter turns out on November 21. Valuation gap is still huge, but declining. VSNT, DTLK, NTCT did nothing for a long time–until they announced some good earnings and then all took off. Lets hope this is DWCH’s quarter.

INFT-(Buy price $4.11, New Valuation $6.95 (was $6.86)). Down $.27 last week to $3.73. Still has $2.52 per share in cash. Price objective $5.50. Now down 9%. I think that there is some tax loss selling going on here, and just impatience. Frustrating stock. BUY.

OB-abies

ARIS.ob-(Buy price $2.06, Valuation $5.28 (was $5.21)). Closed at $2.00, down $.10 last week. This stock is still pretty illiquid so price moves are fairly meaningless at this point. They announced that they retained the Stihl business last week and the CEO was speaking at some college forum. At least they are alive! Now down 3% so far. BUY if you can find some shares. Huge valuation gap.

Linn.ob-(Buy price $.36, NEW Valuation $.62 (was $.66 and before that-$.79)). Closed at $.28, down $.01 last week. Still trading at only 45% of our current valuation. Down 22% YTD. HOLD until we get some revenue growth and stop losing money (same story as last quarter).

OPTO.ob-(Buy price $1.25, Valuation $2.54 (was 2.88)). Closed at $1.32, up $.12. OPTIO announced that they collected a $2.8 million note that they had partially written-off. So in addition to the $.12 per share in cash that this will add, they will also have a $900,000 (about $.04) gain to report. Now in the plus column with a 6% gain. HOLD.

AVSO.ob-(Buy price $1.19, Valuation $3.36 (was $3.81)). Stock closed at $1.50, down $.04. Now up 26%. No news, just lack of interest in this and other mini-caps right now. Maybe some tax loss selling for those that bought at $2.50. Still only trading at only 45% of our valuation. Earning to be announced on Wednesday this week. BUY.

CTIG.ob-(Buy price $.27 ask, Valuation $1.05 (Was $.82)). Ask price dropped $.01 to $.29. Closed at $.26. Cash is $.28 per share. Up 7% so far (based on asked price). If you own this HOLD. If you don’t-BUY.

IYXI.ob-(Buy price $1.91, Valuation–over $3.00). Closed up $.01 at $2.33, up 22% to date. IYXI traded over 700,000 shares on Wednesday. It dropped as low as $1.89 and bounced back strongly by the end of the day/week. Someone wanted to take their tax loss early–and did. This is still very risky, but could be a real barnburner is they do what they say they are going to do. HOLD.