We went 3 up, 8 down and 2 even last week. Our model portfolio year-to-date gain, dropped 3.5% to 11.2%. DWCH continued as our biggest dog followed by, Linn.ob, MIVA, OPTO.ob and INFT. Since the start of the year we are 11 up and 5 down. Mini-caps continue to lag way behind, although CAW got a take-over last week. The CAW “take-under” was not enough to offset drops in SPNC, PDLI and Linn.ob. We should also start to see some impact from tax loss selling soon. This may provide some opportunities in stocks like DWCH, MIVA and INFT to pick up some even cheaper shares.
The model portfolio assumes $10,000 invested in each stock, less $10 commission each way (TD Ameritrade rate).
Lots of news last week:
SPNC-(Buy price $10.65, Valuation $18-$20). Price got whacked $1.47 to $11.87 last week. Good Q3 results and the Forbes article knocked our gain in SPNC by more than 50% last week. Now up 11%. Sales were up 44%, laser system placements were a record, they were profitable when you exclude stock option BS. Q3 sales exceeded Q2 even though Europe goes on vacation in Q3. Q4 sales are projected at $16.2 to $18.2 million. Lets hope they continue their record of being conservative and hit or exceed the high end of this range. Oh yeah, they also have $51 million in cash and no debt. All good reasons for the stock to go down–NOT. Conference call went well too. HOLD
CAW-(Buy price $9.45, Valuation $19.35 TAKE-OVER). Closed up $1.19 at $11.39. Dubilier offered a measly $12 for our shares and $14.50 for the Class A (insider) stock. This is a ridiculously low offer in our opinion, but the insiders apparently like it and we are not going to wait around to see if it gets any better. In this market, we will take our 22% gain in 5 months adn go home. SELL at $11.50 or better.
QADI-(Buy price $6.93, Valuation $13.73 (was $11.86). Closed at $8.26, unchanged. Yield about 1.2%. Trading at only 60% of valuation. Has $1.30 in cash also. Up 19% so far. HOLD.
PDLI-(Buy price $19.31, Valuation > $30)–Closed at $20.08, down $.80. PDLI released earning last week. Sales were up 44% (maybe 44% is an unlucky number?), non-GAAP net income was $26.5 million or $.43 per share. Royalty revenue was up 64%!! Then Prudential downgrades them. Go figure. How many bio-tech companies are getting bought-out that have no revenues at all. PDLI will do over $400 million this year (almost 1/2 of which are 100% margin royalties), are profitable on a non-GAAP basis and have great prospects? Now up 4%. BUY.
MIVA-(Buy price $3.80, Valuation $7.38 (was $9.10)). MIVA closed at $3.24, up $.18. Now down 15% to date. HOLD until we see their full earnings results for the quarter and update our valuation.
DWCH-(Buy price $3.66, Valuation $7.63 (was $9.31)). Closed at $2.40, unchanged, still a loser–down 34%. HOLD to see how this quarter turns out on November 21. Valuation gap is still huge, but declining.
INFT-(Buy price $4.11, New Valuation $6.95 (was $6.86)). Down $.08 last week to $4.00. Still has $2.52 per share in cash. Price objective $5.50. Now down 3%. BUY.
ARIS.ob-(Buy price $2.06, Valuation $5.28 (was $5.21)). Closed at $2.10, down $.08 last week. This stock is still pretty illiquid so big moves are fairly meaningless at this point. Now up 2% 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 $.29, down $.055 last week. Still trading at only 47% of our current valuation. Down 19% YTD. Linn announced Q3 results last week. They were weak again. Sales down 6% from Q2 and down 17% form the prior year. Net loss was $215,000 or $.01 per share. Cash burn was minimal and they still had about $.11 per share. They did announce some new initiatives that sound interesting such as selling auto insurance, credit cards, auto financing off their web-site. This company really should be sold to a bigger company. 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 $1.20, up $.02. Still in the red with a 4% loss. BUY.
AVSO.ob-(Buy price $1.19, Valuation $3.36 (was $3.81)). Stock closed at $1.54, down $.16. Now up 29%. 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 46% of our valuation. BUY.
CTIG.ob-(Buy price $.27 ask, Valuation $1.05 (Was $.82)). Ask price dropped $.01 to $.30. Closed at $.30. Cash is $.28 per share. Up 11% 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 down $.10 at $2.32, up 21% to date. This is still very risky, but could be a real barnburner is they do what they say they are going to do. They did sign a new contract manufacturing agreement last week, but it couldn’t hold the stock price up. HOLD.