Last week we went 3 up, 11 down and 1 even. Our biggest DOGS are: LINN.ob,PARL, BDR, AVSO.ob, ARIS.ob, ILOG, MEDW and CIMT. For the week, 2007 year-to-date, and since we started this Blog in January 2006, our model portfolio is -7.8%,+9.2% and +26.0% respectively. Since inception we are now 17 stocks up and 8 down (1 of which is down less than 10%).
We were down a whopping 7.8% this past week and are now up 9.2% so far in 2007. The DOW, NASDAQ and the S+P 500 were all down, with losses ranging from .6% (S+P500) to 1.6% (NASDAQ) last week, and are all now up from 1.9% (S+P 500) to 4.9% (DOW) for the year.
Our OB-abies mostly got nailed along with BDR and ILOG as investors fled the market and ran to big-cap, liquid names. BDR and LINN.ob are the weakest companies fundamentally and we are looking for an economic exit on these two. The rest of our stocks are looking good, in our opinion.
We are now up about than double the DOW, triple NASDAQ and 5 times the S+P 500 averages in 2007. The Russell 3000 and the Wilshire 5000 are both up between 1 and 2% for the year.
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 (unless we double-up–then it is $20,000), 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 PARL, CTIG.ob and LINN.ob last week.
Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $10.65, Valuation $18-$20
Up $.08 to $13.92 last week.
Short Interest was 5.7 million at July 13th.
We jumped to $14.50 on Friday, but couldn’t hold. There is definitely a lot of buying interest here, but also people dealing with margin calls on other stocks, the persistent short-sellers and people just trying to take some gains amidst the carnage out there.
We still think $18-$20 is in the cards for this year.
Guidance has not been updated yet for the TURBO Booster. If this market didn’t stink so bad, helping to bail the shorts out, I think we would be North of $15 (and we were for a little while at least).
Now up 31% 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 $8.47, up $.11.
There seemed to be a fair amount of buying interest in QAD last week. Not sure why, but we will take it.
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 $14.60–75% 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 22% so far. HOLD.
PDL BioPharma Inc. (PDLI-Recommended 5/21/2006)
Buy price $19.31, Valuation > $30
Closed at $21.16, even last week.
It was disclosed last week that the legendary George Soros has accumulated over 2 million shares in PDL. We like it when big money investors take a position in our companies.
Over the long haul (years) we like this stock, but right now the play is a sale of the company due to Third Points involvement.
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.
If this reaches $30 in 2007, without a buy-out, we would sell.
Now up 10%. BUY.
DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (averaged down from $3.66), Valuation $9.28 (was $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $5.02, down $.08 for the week.
DWCH is now trading at 54% of our valuation. We have been buying more in the $5 to $5.40 range. Bought some on Thursday at $5.00
Now up 56%. BUY.
Parlux Fragrances (PARL-Recommended 11/30/2006)
Buy price $6.12 (was $6.65 before double up), NEW Valuation $9.20 (Was $8.63, $13.77)
PARL closed at $3.36, up $.01 last week.
As we noted earlier in the week, PARL results last week seemed to show that maybe things are stabilizing and improving. Our valuation moved up 7% to $9.20 and PARL is trading at only 37% of our valuation.
We are adding another $10,000 increment to our investment here. This will lower our average cost to $4.78 per share.
New management needs to keep moving this company is the right direction.
The new management has 2.2 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
Down 45%. BUY.
Blonder Tongue Laboratories (BDR-Recommended 3/4/2007)
Buy price $1.83, NEW Valuation $4.31 (was $4.01, $5.12, $5.88).
Closed at $1.27 down $.16 for the week.
BDR is still cheap in our opinion, but they need a decent quarter to get this stock moving up. As we mentioned above, we are looking to get back to even on this one and get out, even though the valuation is compelling.
Trading at 29% of our valuation.
Down 31%. HOLD
ILOG SA (ILOG-recommended 3/26/2007)
Buy price $12.92 (was $13.60 before double-up), Valuation $23.22 (was $20.99, $20.52)
Closed at $10.70 down $1.36 for the week.
We are adding another $10,000 to our investment here, which will lower our average cost to $12.08 per share.
For FY2008 they are projecting another 20% increase in sales and a tripling of operating income. They still have $2.95 a share in cash.
Down 17%. BUY
Celebrate Express (BDAY-recommended 4/17/2007
Buy Price $8.82, Valuation $17.85 (Was $18.18)
Down $.35 to $9.00 last week.
Stephen Roseman continues to buy BDAY. Another 8.700 shares at prices from $9.16 to $9.51 in August. Now has 627,728 shares or 7.9% of the company.
With the insider buying in the last couple of months, we like this stock alot.
Up 2%. BUY on dips below $9.00
Mediware (MEDW-Recommended 6/4/2007
Buy Price $6.98, Valuation $13.40
Down $.35 to $6.37 last week.
We are doubling up on MEDW–another $10,000 which will bring our average cost down to $6.66 per share.
Penninsula Capital owns 1.67 million shares or over 20% of MEDW. Not sure how they liguidate there stake profitably without a takeover
Down 9%. BUY
Cimatron (CIMT-Recommended 8/12/2007
Buy Price $2.12, Valuation $7.53
Down $.10 to $2.02 last week.
Bad week to recommend almost anything I think.
Down 5%. 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 $1.41, down $.26 last week.
Announced a deal with Triton last week–but sure didn’t help the stock price.
We are adding another $10,000 to our investment here, which will bring our average cost down to $1.61 per share.
Now down 21%. 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 $.29 (was $.49, $.57, $.62, $.66 and before that $.79)
Closed at $.12, down another $.02 last week.
LINN continues to decline. Our valuation has dropped to $.29 as there business continues to deteriorate. They need to sell this thing quickly if they can.
This “stinker” has chopped over 10% off our 2007 performance all by itself.
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 48%. 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 $1.57, down $.05 last week.
Has cash of $.44 per share–28% of the market cap.
OPTO dropped as low as $1.35 last week. But there seems to be some decent buying interest in this OB-aby. Maybe a deal will happen soon?
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 26% 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 $.85, down $.05 last week.
We are doubling up on AVSO (adding $10,000) which will bring our average cost down to $.99 per share.
AVSO announced a restructuring last month 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 26% of our valuation. Just too CHEAP.
Now down 29%. BUY.
CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, NEW Valuation $1.38 (Was $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price fell $.02 last week to $.36. Closed at $.36.
As we wrote last week, CTI’s earning were pretty good and our valuation inched up to $1.38.
This is still trading at only 26% of our latest valuation, but we still have to until the VOIP business stops losing money, we are not buyers–yet.
Up 33% based on the ASK price. HOLD