Last week we went 5 up, 8 down and 1 even. Our biggest DOGS are: PARL, LINN.ob, BDR, AVSO.ob, ARIS.ob and ILOG. For the week, 2007 year-to-date, and since we started this Blog in January 2006, our model portfolio is -2.2%,+23.8% and +42.9% respectively. Since inception we are now 18 stocks up and 6 down (1 of which is down less than 10%).
We were down 2.2% this past week and are now up 23.8% so far in 2007. The DOW, NASDAQ and the S+P 500 were all down, with losses ranging from 4.2% (DOW) to 4.9% (S+P 500) last week, and are all now up from 2.9% (S+P 500) to 6.4% (DOW) for the year.
We are now up more than triple the DOW and NASDAQ and 8 times the S+P 500 averages in 2007.
Since inception we have closed out the following positions:
2006-ONXS +11% (Buyout offer)
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007 DTLK +25% (2 weeks)
The model portfolio assumes $10,000 invested in each stock, less $10 commission each way (TD Ameritrade rate).
For the 10 stocks that we have closed out in 2006 and 2007 the average gain was 35%. We are tired of watching our stocks go up–and then down. So we are planning to take profits a bit sooner than in 2006. We have already closed out 6 positions in 2007 compared to 4 in all of 2006.
Earnings on SPNC, ILOG, and BDAY–and all pretty good. AVSO.ob news also.
Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $10.65, Valuation $18-$20
Up $.78 to $13.04 last week.
Up in a horrible week!
SPNC announced Q2 results last week. Revenues were up 27% from last year. Laser placements were 36 in Q2 versus 25 last year. Gross margin was 75% versus 74%. Pre-tax INCOME was $1,017,000 compared to $516,000 last year. This is a very good report, in our opinion. Yet short interest grew from 4.9 million to 5.7 million at July 13th and you can see the shorts playing their game almost every morning when they take the price down $.20 or $.30.
Guidance has not been updated yet for the TURBO Booster. If this market didn’t stink so bad, and the shorts realized that this is the wrong pony to be riding, we should have gone to $16 last week.
Now up 22% so far. HOLD.
QAD Inc. (QADI-Recommended 6/14/2006)
Buy price $6.93, Valuation $11.27 (was $15.92, $13.69, $13.73 and $11.86)
Closed at $7.99, down $.29.
Our valuation has fallen from $15.92 to $11.27, but if they can hit their guidance for the year, the valuation would be approximately $14.60–76% above the current price. But since they seem to have trouble hitting their numbers–we will hold for now.
Earnings coming out Thursday, 8/23 after the close.
Up 15% so far. HOLD.
PDL BioPharma Inc. (PDLI-Recommended 5/21/2006)
Buy price $19.31, Valuation > $30
Closed at $23.81, down $2.12 last week.
No significant news last week.
Activist investment firm Third Point LLC, owns 11.2 million shares or 9.7% of the company and has more than $200 million invested. They continue to exert pressure on PDL to improve shareholder value. This however, remains a very volatile stock.
Earnings out Wednesday 8/1 after the close.
If this reaches $30, without a buy-out, we would sell.
Now up 23%. HOLD.
DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (averaged down from $3.66), Valuation $9.20 (was $8.32, $7.50, $7.63, $9.31)
Closed at $5.86, up $.01 for the week.
No significant news.
Earnings due out Monday 7/30 before the market opens. Hold on.
Hold for earnings.
Now up 83%. HOLD.
Parlux Fragrances (PARL-Recommended 11/30/2006)
Buy price $6.12 (was $6.65 before double up), Valuation $8.63 (Was $13.77)
PARL closed at $4.15, down $.26 last week.
New management needs to get to work on this one fast.
The new management has 2.2 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
Down 32%. HOLD.
Blonder Tongue Laboratories (BDR-Recommended 3/4/2007)
Buy price $1.83, Valuation $4.01 (was $5.12, $5.88).
Closed at $1.51 down $.17 for the week.
Our valuation has dropped to $4.01. BDR is still cheap in our opinion, but they need a decent quarter to get this stock moving up.
Trading at 38% of our valuation.
Down 18%. HOLD
ILOG SA (ILOG-recommended 3/26/2007)
Buy price $12.92 (was $13.60 before double-up), NEW Valuation $23.22 (was $20.99, $20.52)
Closed at $12.10 last week, down $.90.
Earnings last week. Q4 revenues up 35% to $46.3 million, earnngs up 40% to $.14 per share. For FY2008 they are projecting another 20% increase in sales and a tripling of operating income. Our valuation has moved up to $23.22, and they still have $2.95 a share in cash. We can’t find anything wrong with this stock other than they are based in France and the stock is thinly traded. We bought some more on Friday at $12.14.
Down 6%. BUY
Celebrate Express (BDAY-recommended 4/17/2007
Buy Price $8.82, NEW Valuation $17.85 (Was $18.18)
Down $.07 to $8.99 last week
Earnings last week. Q4 sales were down 17% to $20.1 million from $24.2 million last year. Discontinuance of their “Storybook Heirloom” product line accounted for more than the revenue decline–$6.9 million. Net loss was reduced to $62,000 from $324,000 last year. Our valuation stayed essentially the same–$17.85 versus $18.18.
With the insider buying in the last couple of months, we like this stock alot.
Up 2%. BUY
Mediware (MEDW-Recommended 6/4/2007
Buy Price $6.98, Valuation $13.40
Up $.32 to $7.04 last week.
Penninsula Capital owns 1.67 million shares or over 20% of MEDW. Not sure how they liguidate there stake profitably without a takeover
Up 1%. BUY
OB-abies (Bulletin Board Listed Stocks)
Nobody is liking our OB-abies lately (except maybe OPTIO). Just not their “time” yet. Patience.
ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $1.78 (was $2.06 before double up), Valuation $5.34 (was $5.03, $5.28, $5.28, $5.21)
Closed at $1.50, up $.01 last week.
Now down 16%. BUY. Still a Huge valuation gap here.
Lion Inc. (LINN.ob-Recommended 4/15/2006)
Buy price $.23 (was $.36 before double-up on investment), Valuation $.49 (was $.57, $.62, $.66 and before that $.79)
Closed at $.17, even last week.
Lion management has announced the formation of a “Strategic Review Committee” to explore the sale of the company or parts of the company. They said that they has received “preliminary” and “conditional” indications of interest from parties interested in acquiring “portions of the company”. Hopefully something will happen here.
Down 26%. Hold.
OPTIO Software Inc. (OPTO.ob-Recommended 3/22/2006)
Buy price $1.25, Valuation $2.28 (was $2.89, $2.89, $2.54 and 2.88)
Closed at $1.60, up $.20 last week.
Has cash of $.44 per share–28% of the market cap.
Up 14% last week, with some respectable volume. Maybe a deal is in the works?
In late June, OPTIO announced they had hired an investment banker to help them review the “Strategic Alternatives” related to their Healthcare software division. In other words, a “for sale” sign has gone up. Having been through their SEC filings, there appears to be no disclosure on the sales or operating results for this “division”, so there is no way for us to determine what this could mean from a valuation standpoint.
Still hoping we will see north of $2.00 this year–but may not happen now unless next quarter rebounds with some decent numbers, or they get a good deal on the Healthcare “division”.
Up 28% so far. HOLD.
Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $1.19,Valuation $3.25 (was $3.29 $2.69, $3.36, $3.81)
Stock closed at $1.00, down $.10 last week.
AVSO announced a restructuring last week that is expected to save more than $2.5 million annually. They also narrowed their revenue guidance to between $50 and $51 million for 2007. They expect to lose money in Q4 (partly due to $500k in severance charges), but are projecting “significantly” better margins over recent results. They do not expect to lose money in FY 2008. We will wait to see this quarters results and any impact on our valuation.
Trading at 30% of our valuation. Just too CHEAP.
Now down 16%. BUY.
CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.29 (Was $1.42, $1.28 $1.13, $1.05, $.82)
Ask price fell $.01 last week at $.38. Closed at $.38.
This is still trading at only 29% of our latest valuation, but until the VOIP business stops losing money, we are not buyers–yet.
Up 41% based on the ASK price. HOLD.