2/24/2007 Update

Last week we went 8 up and 6 down and 1 even. LINN.ob holds first place on our “biggest dog” list followed by INFT, DWCH, PARL and SPNC. For the week, 2007 year-to-date, and since we started this Blog in January 2006, our model portfolio is +.8%,+6.6% and +23.0% respectively. Since inception we are 14 stocks up and 5 down (2 of which are down less than 5%).

Spectranetics and PDL BioPharma released earnings last week.

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

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $10.65, Valuation $18-$20
Down $.39 to $10.62 last week. Shorts won the battle last week, despite a very good earnings report. We got the revenue “pop” we were hoping for –+44% over last year, but after an early spike up to $11.80, down we went. Things seem to be going great at the company, laser placements are up, disposable sales are up. They lost a bit of money, due the a litigation expense, but only a small amount. Guidance for next year was decent ($79-$83 million in revenue and about break-even on the bottom line–they are always conservative to a flaw) and did not include any revenue for the TurboBooster.
Now down a tiny .3% so far. BUY.

QAD Inc. (QADI-Recommended 6/14/2006)
Buy price $6.93, Valuation $13.69 (was $13.73 and $11.86)
Closed at $8.53, up $.46. Robinson Humphrey gave QAD an upgrade last week. So this one is starting to get noticed. Trading at 62% of valuation. Earnings due March 15th. No news. Has $1.07 in cash also.
Up 23% so far. HOLD.

PDL BioPharma Inc. (PDLI-Recommended 5/21/2006)
Buy price $19.31, Valuation > $30
Closed at $19.49, up $.33. Earnings last week. Q4 revenues were up 29% to $108 million, GAAP loss was huge due to a write-down ($.78 per share) but Non-GAAP income was $.05 per share. PDLI was cash flow positive for the year and had over $400 million of cash at the end of 2006. Guidance for 2007 was $450-$500 million in revenues and a Non-GAAP profit of $.38-$.54 per share. Their drug pipeline continues to expand and we still think that PDLI is a bargain at this price. This however, remains a very volatile stock.
Now up 1%. BUY.

MIVA Inc. (MIVA-Recommended 3/18/2006)
Buy price $3.80, Valuation $7.52 (was $7.38 and $9.10)
MIVA closed at $4.35, up $.01. Now up 15%. HOLD.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (averaged down from $3.66), Valuation $8.32 (was $7.50, $7.63, $9.31)
Closed at $3.01, up $.11 for the week. Seeing more volume on this one too.
Now down only 6%. BUY.

Inforte Corp. (INFT-Bought January 13, 2006)
Buy price $4.11, Valuation $6.13 (was $6.95, $6.86)
Down $.03 to $3.57 last week. Has $2.64 per share in cash. Price objective $5.50.
Now down 13%. Like watching “moss grow”. HOLD.

Mobius Management Systems (MOBI-Recommended 11/12/2006)
Buy price $6.68 (averaged down from $7.08), Valuation $12.82, was $12.69
Up $.07 to $7.12 last week. Volume (and price) seems to be picking up a bit for MOBI. Maybe we will see a good price move soon.
Up 7%. HOLD.

RiT Technologies (RITT-Recommended 11/12/2006)
Buy price $1.00, Valuation $3.36 (Was $2.69)
No news. Closed up $.08 at $1.48 last week.
Up 48%. HOLD.

Parlux Fragrances (PARL-Recommended 11/30/2006)
Buy price $6.65, Valuation $13.77)
PARL closed at $6.53, down $.26 last week. They received another delisting notice from the SEC due to their failure to file their September 2006 Form 10Q. We think the stock price will continue to vacilate for a while until we get some positive news.
Down 2%. HOLD.

OB-abies (Bulletin Board Listed Stocks)

ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $2.06, Valuation $5.28 (was $5.28, $5.21)
Closed at $2.10, up $.15 last week. This stock is still illiquid, so price moves are fairly meaningless at this point. However, ARI traded every day last week and actually did 68,000 shares on Thursday and got up to $2.28 (normal daily volume is 5,000). Earnings due March 8th after the market close. Hoping for some revenue growth here. No very concerned with the bottom line as long as any loss is not BIG.
Now up 2% so far. HOLD. Still a Huge valuation gap here.

Lion Inc. (LINN.ob-Recommended 4/15/2006)
Buy price $.36, Valuation $.62 (was $.66 and before that-$.79)
Closed at $.28, down $.02 last week. Still trading at only 45% of our current valuation. Earnings due March 8th, after the close. Unfortunately we are not expecting great things here.
Down 22%. HOLD until we get some revenue growth and stop losing money (same story as last quarter).

OPTIO Software Inc. (OPTO.ob-Recommended 3/22/2006)
Buy price $1.25, Valuation $2.89 (was $2.54 and 2.88)
Closed at $1.60, down $.10. Has $.44 in cash per share also. We are now stuck in the $1.60-$1.70 range. Maybe we will see north of $2.00 this year.
28% gain so far. HOLD.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $1.19, NEW Valuation $3.29 (was $2.69, $3.36, $3.81)
Stock closed at $1.70, up $.04. No news, but the price keeps creeping up, even in a crummy market like last week.
Now up 43%. HOLD.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.13 (Was $1.05, $.82)
Ask price fell $.01 to $.33. Closed at $.34. Cash is (was) $.24 per share. Nine weeks ago CTI announced the purchase of Ryder Systems LTD. an international provider of electronic and on-line billing solutions and developer of VoIP business applications. Eight weeks ago they filed an 8-K, with details of the financing they got to fund the $11 million purchase–but still no details of what they bought.
Now up 22% so far (based on ask price). HOLD until we see what we just bought.

INYX Inc. (IYXI.ob-Bought January 3, 2006)
Buy price $1.91, Valuation–over $3.00)
Closed unchanged at $2.30. Still waiting for the “attractive cash offer” that management says is coming in February–only 3 trading days left, although another delay would not surprize us. Hopefully it will be attractive by our standards and be at least $3 per share–so we can book at least a 50% gain on this one. Bank debt is now scheduled for repayment by March 31, 2007 and they have arranged financing for their latest acquisition.
Up 20% HOLD.

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Flat week

Last week we went 7 up and 8 down. LINN.ob holds first place on our “biggest dog” list followed by INFT, DWCH, ARIS.ob and PDLI. For the week, 2007 year-to-date, and since we started this Blog in January 2006 our model portfolio is +.1%,+5.8% and +22.1% respectively. Since inception we are 14 stocks up and 5 down (2 of which are down 5% or less).

Avatech released earnings last week. Valuation moved up 22% and stock price barely moved.

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). Up $.52 to $11.01 last week. Shorts lost the battle last week. Earnings due out on February 22, before the market opens. We think that either this quarter or next we could see a significant revenue and stock price pop . Now up 3% so far. BUY.

QADI-(Buy price $6.93, Valuation $13.69 (was $13.73 and $11.86). Closed at $8.07, down $.09. Trading at 59% of valuation. Earnings due March 15th. No news. Has $1.07 in cash also. Up 17% so far. HOLD.

PDLI-(Buy price $19.31, Valuation > $30)–Closed at $19.16, down $.42. Earnings due out on February 21st after the market close. This remains a very volatile stock. Now down 1%. BUY.

MIVA-(Buy price $3.80, Valuation $7.52 (was $7.38 and $9.10)). MIVA closed at $4.34, down $.06. No news last week. Now up 14%. HOLD.

DWCH-(Buy price $3.21 (averaged down from $3.66), Valuation $8.32 (was $7.50, $7.63, $9.31)). Closed at $2.90, down $.16 for the week. Now down 10%. BUY.

INFT-(Buy price $4.11, Valuation $6.13 (was $6.95, $6.86)). Down $.04 to $3.60 last week. Has $2.64 per share in cash. Price objective $5.50. Now down 12%. HOLD.

MOBI-(Buy price $6.68 (averaged down from $7.08), Valuation $12.82, was $12.69). Up $.05 to $7.05 last week. We are now trading at 55% of our valuation and cash is 41% of the market cap. Up 6%. HOLD.

RITT-(Buy price $1.00, Valuation $3.36 (Was $2.69). No news. Closed up $.07 at $1.40 last week. Up 40%. HOLD.

PARL-(Buy price $6.65, Valuation $13.77). PARL closed at $6.79, down $.46 last week. Price fell last week after the $1.02 run-up the previous week. We think the stock price will vacilate for a while until we get some more news. Up 2%. HOLD.

OB-abies

ARIS.ob-(Buy price $2.06, Valuation $5.28 (was $5.28, $5.21)). Closed at $1.95, down $.05 last week. This stock is still illiquid, although volume does seem to be increasing over the last couple of weeks, so price moves are fairly meaningless at this point. Now down 5% so far. Still a Huge valuation gap here.

LINN.ob-(Buy price $.36, Valuation $.62 (was $.66 and before that-$.79)). Closed at $.30, up $.03 last week. Volume was a “huge” 190,000 shares on Friday. Good to see some interest here. Still trading at only 48% of our current valuation. Down 17%. HOLD until we get some revenue growth and stop losing money (same story as last quarter).

OPTO.ob-(Buy price $1.25, Valuation $2.89 (was $2.54 and 2.88)). Closed at $1.70, up $.05. Has $.44 in cash per share also. Price continues to creep up and there seems to be a lack of sellers. Maybe we will see north of $2.00 this year. 36% gain so far. HOLD.

AVSO.ob-(Buy price $1.19, NEW Valuation $3.29 (was $2.69, $3.36, $3.81)). Stock closed at $1.66, up $.03. Now up 40%. See our post earlier this week on their earnings release. Valuation jumped 22%, which is a good sign after 2 previous drops. HOLD.

CTIG.ob-(Buy price $.27 ask, Valuation $1.13 (Was $1.05, $.82)). Ask price fell $.01 to $.34. Closed at $.34. Cash is (was) $.24 per share. Eight weeks ago CTI announced the purchase of Ryder Systems LTD. an international provider of electronic and on-line billing solutions and developer of VoIP business applications. Seven weeks ago they filed an 8-K, with details of the financing they got to fund the $11 million purchase–but still no details of what they bought. Now up 26% so far (based on ask price). HOLD until we see what we just bought.

IYXI.ob-(Buy price $1.91, Valuation–over $3.00). Closed up $.04 at $2.30, up 20% to date. Still waiting for the “attractive cash offer” that management says is coming in February. Hopefully it will be attractive by our standards and be at least $3 per share–so we can book at least a 50% gain on this one. Bank debt is now scheduled for repayment by March 31, 2007 and they have arranged financing for their latest acquisition. HOLD.

Avatech Solutions

AVSO.ob posted Q2 results (December ending quarter) yesterday and they were good, in our opinion. Revenues grew 31% to $12.4 million, but EPS fell to $.02 per share, versus $.05 per share last year as their investment in more sales folk has depressed short term earnings. They did also lower revenue guidance to $51-$55 million in this fiscal year (ending June 30, 2007). So why is this all good? Because our valuation rose 22% to $3.29 per share from the previous $2.69 per share. At todays closing price of $1.66, AVSO is trading at only 50% of our valuation which makes it an outstanding value. If you don’t have this one at a lower price, we would pick some up for the next 12 month ride.

Nice week

Last week we went 8 up, 5 down and 2 even. LINN.ob holds first place on our “biggest dog” list followed by INFT, DWCH, ARIS.ob and SPNC. For the week, 2007 year-to-date, and since we started this Blog in January 2006 our model portfolio is +2.8%,+5.7% and +22.0% respectively. Since inception we are 14 stocks up and 5 down (3 of which are down 5% or less). The DOW, NASDAQ and the S&P 500 are all up 2% or less so far in 2007.

Parlux and MIVA news last week. Also, we are noticing more interest (share volume) in some of our thinly traded stocls, like CTIG.ob, ARIS.ob, MOBI, DWCH. We are finding it hard to find new value stocks over the past couple of months (although we think we have 1 or 2 that we might write about shortly), other than the ones we already have, so maybe others are finding that ours are looking pretty good relative to the stock universe.

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). Down $.48 to $10.49 last week. Shorts won the battle last week. Prospects are really great for this company. No news. Now down 2% so far. BUY.

QADI-(Buy price $6.93, Valuation $13.69 (was $13.73 and $11.86). Closed at $8.16, down $.01. Trading at 60% of valuation. Earnings due March 15th. No news. Has $1.07 in cash also. Up 18% so far. HOLD.

PDLI-(Buy price $19.31, Valuation > $30)–Closed at $19.58, down $.93. No news. This remains a very volatile stock. Now up only 2%. BUY.

MIVA-(Buy price $3.80, Valuation $7.52 (was $7.38 and $9.10)). MIVA closed at $4.40, up $.08. MIVA announced a “restructuring plan” last week. They expect a $4 million charge in Q1, but will save $10 million a year. Right move. Could be prettying this up for a sale. Now up 16%. HOLD.

DWCH-(Buy price $3.21 (averaged down from $3.66), Valuation $8.32 (was $7.50, $7.63, $9.31)). Closed at $3.06, up $.30 for the week. Volume “soared” on Friday to 44,000 shares–big for this stock. With our “double-up” on this one, now down “only” 5%. BUY.

INFT-(Buy price $4.11, Valuation $6.13 (was $6.95, $6.86)). Down $.13 to $3.64 last week. Has $2.64 per share in cash. Price objective $5.50. Now down 11%. HOLD.

MOBI-(Buy price $6.68 (averaged down from $7.08), Valuation $12.82, was $12.69). Up $.50 to $7.00 last week. There seems to be some decent accumulation going on here. So we are now trading at 55% of our valuation and cash is 41% of the market cap. Up 5%. BUY.

RITT-(Buy price $1.00, Valuation $3.36 (Was $2.69). Interest seems to have died down a bit last week, but this is still a good one we think. Closed down $.06 at $1.33 last week. Up 33%. HOLD.

PARL-(Buy price $6.65, Valuation $13.77). PARL closed at $7.25, up $1.02 last week. We never got to cast our vote in the Proxy contest–they announced that all the lawsuits were dropped, the CEO resigned and the Board of Directors will be changed significantly. The CEO got a severance deal that will hurt short-term earnings, but we like the trade. Part of the agreement was a deal that Nussdorf would not try to buy the company over the next 2 years–unless he offers at least $11 per share. Not too far from what we think PARL is worth. Wish we had doubled up on this in the $5 range, but at least we are in positive territory again. Up 9%. HOLD.

OB-abies

ARIS.ob-(Buy price $2.06, Valuation $5.28 (was $5.28, $5.21)). Closed at $2.00, unchanged last week. Their OC-Net acquisition looks pricey to us. If ARIS was selling at the multiple of sales they paid, it would be a $5 stock. We are maintaining a HOLD on this one for now, until we see some results. This stock is still illiquid, although we actually traded 14,000 shares on Friday, so price moves are fairly meaningless at this point. Now down 3% so far. Still a Huge valuation gap here.

LINN.ob-(Buy price $.36, Valuation $.62 (was $.66 and before that-$.79)). Closed at $.27, unchanged last week. Still trading at only 44% of our current valuation. Down 25%. HOLD until we get some revenue growth and stop losing money (same story as last quarter).

OPTO.ob-(Buy price $1.25, Valuation $2.89 (was $2.54 and 2.88)). Closed at $1.65, up $.05. Has $.44 in cash per share also. Volume dried up last week, but the price held firm. We think this is a good sign of some favorable events ahead. Maybe we will see north of $2.00 this year. 32% gain so far. HOLD.

AVSO.ob-(Buy price $1.19, Valuation $2.69 (was $3.36, $3.81)). Stock closed at $1.63, up $.15. Now up 37%. No significant news last week. HOLD.

CTIG.ob-(Buy price $.27 ask, Valuation $1.13 (Was $1.05, $.82)). Ask price jumped $.07 to $.35. Closed at $.35. CTIG actually traded 140,000 shares on Friday. Yikes! Not a lot of dollars of course, but at least some interest. Maybe somebody knows what they bought, and likes it. Cash is (was) $.24 per share. Seven weeks ago CTI announced the purchase of Ryder Systems LTD. an international provider of electronic and on-line billing solutions and developer of VoIP business applications. Six weeks ago they filed an 8-K, with details of the financing they got to fund the $11 million purchase–but still no details of what they bought. Now up 30% so far (based on ask price). HOLD until we see what we just bought.

IYXI.ob-(Buy price $1.91, Valuation–over $3.00). Closed up $.09 at $2.26, up 18% to date. Still waiting for the “attractive cash offer” that management says is coming in February. Hopefully it will be attractive by our standards and be at least $3 per share–so we can book at least a 50% gain on this one. Bank debt is now scheduled for repayment by March 31, 2007 and they have arranged financing for their latest acquisition. HOLD.

Optio

Last week we went 9 up, 6 down. LINN.ob moved into first place on our “biggest dog” list by a fraction over DWCH. INFT, PARL, ARIS.ob and MOBI follow them. For the week, 2007 year-to-date, and since we started this Blog in January 2006 our model portfolio is +2.9%,+.2% and +15.7% respectively. Since inception we are 13 stocks up and 6 down (4 of which are down 10% or less).

Optio (OPTO.ob) finally looks like it has cracked the $1.50 level it has reached several times in the past. It even hit $1.80 last week before closing back down at $1.60. Even so, volume has picked up significantly and maybe this one is finally being “discovered”.

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). Up $.68 to $10.97 last week. Shorts lost the battle last week. Prospects are really great for this company. No news. Now up 3% so far. BUY.

QADI-(Buy price $6.93, Valuation $13.69 (was $13.73 and $11.86). Closed at $8.17, up $.07. Trading at 60% of valuation. Earnings due March 15th. No news. Has $1.07 in cash also. Up 18% so far. HOLD.

PDLI-(Buy price $19.31, Valuation > $30)–Closed at $20.51, down $.42. No news. This remains a very volatile stock. Now up 6%. HOLD.

MIVA-(Buy price $3.80, Valuation $7.52 (was $7.38 and $9.10)). MIVA closed at $4.32, up $.15. Now up 14%. HOLD.

DWCH-(Buy price $3.66, NEW Valuation $8.32 (was $7.50, $7.63, $9.31)). Closed at $2.76, up $.09 for the week, now down 25%. See our post earlier this week on the earnings report. With the valuation moving up, and the price now only 33% of our valuation, we are going to officially double up on this one at $2.76. BUY.

INFT-(Buy price $4.11, NEW Valuation $6.13 (was $6.95, $6.86)). Down $.07 to $3.77 last week. Has $2.64 per share in cash. See our post earlier this week on INFT’s earning report. With the valuation moving down again, our hope here is that all these big funds that seem to be buying this stock know what they are doing and INFT is being prepped for a sale in the near future. Price objective $5.50. Earnings due on January 31st. Now down 8%. HOLD.

MOBI-(Buy price $6.68 (averaged down from $7.08), Valuation $12.82, was $12.69). Up $.22 to $6.50 last week. The stock got dumped down below $6 last week, but rebounded nicely by Fridays to end up, on the week. Some large holder looks like they got frustrated with the stock and dumped a bunch on Thursday (876,000 shares) So we are now trading at 51% of our valuation and cash is 41% of the market cap. Down 3%. BUY.

RITT-(Buy price $1.00, NEW Valuation $3.36 (Was $2.69). See our post earlier this week on their earnings report. It looked good to us. Closed up $.14 at $1.39 last week. Up 39%. HOLD.

PARL-(Buy price $6.65, Valuation $13.77). PARL closed at $6.23, up $.48 last week. We got our Proxy card last week and are voting for Nussdorf. Parlux signed a new fragrance deal announced on Friday. Wish we recognized the name! Down 6%. This remains a BUY.

OB-abies

ARIS.ob-(Buy price $2.06, Valuation $5.28 (was $5.28, $5.21)). Closed at $2.00, down $.02 last week. Their OC-Net acquisition looks pricey to us. If ARIS was selling at the multiple of sales they paid, it would be a $5 stock. We are slapping a HOLD on this one for now, until we see some results. This stock is still illiquid, so price moves are fairly meaningless at this point. Now down 3% so far. Still a Huge valuation gap here.

Linn.ob-(Buy price $.36, Valuation $.62 (was $.66 and before that-$.79)). Closed at $.27, down $.01 last week. Still trading at only 44% of our current valuation. Down 25%. HOLD until we get some revenue growth and stop losing money (same story as last quarter).

OPTO.ob-(Buy price $1.25, Valuation $2.89 (was $2.54 and 2.88)). Closed at $1.60, up $.11. Has $.44 in cash per share also. Looks like OPTIO is being discovered. It got up to $1.80 last week on some good volume. Maybe we will see north of $2.00 this year. 28% gain so far. HOLD.

AVSO.ob-(Buy price $1.19, Valuation $2.69 (was $3.36, $3.81)). Stock closed at $1.48, up $.02. Now up 24%. No significant news last week. HOLD.

CTIG.ob-(Buy price $.27 ask, Valuation $1.13 (Was $1.05, $.82)). Ask price was down $.015 at $.28. Closed at $.26. Cash is (was) $.24 per share. Six weeks ago CTI announced the purchase of Ryder Systems LTD. an international provider of electronic and on-line billing solutions and developer of VoIP business applications. Five weeks ago they filed an 8-K, with details of the financing they got to fund the $11 million purchase–but still no details of what they bought. Now up 4% so far (based on ask price). HOLD until we see what we just bought.

IYXI.ob-(Buy price $1.91, Valuation–over $3.00). Closed down $.11 at $2.17, up 14% to date. Still waiting for the “attractive cash offer” that management says is coming. Hopefully it will be attractive by our standards and be at least $3 per share–so we can book at least a 50% gain on this one. Bank debt is now scheduled for repayment by March 31, 2007 and they have arranged financing for their latest acquisition. HOLD.

RiT Technologies

RITT announced Q4 results also this morning. Sales up 17% over last quarter, were slightly profitable, gross margins increased from 50% to 54% and have $.44 of cash per share.
Valuation moved up 25% to $3.36 a share from the previous $2.69. Based on yesterdays closing price, of $1.40, we are up 40% on this one. HOLD, this could be good.

Inforte

INFT released earnings last night. Noting to write home about at all. Sales up 4% YOY, operating “income” swung to a loss of $224,000. It looks like they are doing SOMETHING, although exactly what is the question. They wrote-off some old, bad investment and the related tax effects which caused an overall loss of $4.6 million in the quarter ($.40 per share). Also made the CFO the new President and CEO, although they don’t seem to say what is happening with the current CEO. So either they are preparing for a sale of the company (cleaning up the balance sheet and putting the finance guy in charge) or this is just a new way to get the current management higher pay and some cheap stock options. Valuation has dropped again. Now $6.13. Now a HOLD. Only good news is that they have $2.64 a share in cash–70% of the current market value. Still expect this to be sold, but $5.50 is looking more like $5 to me.