Candela Corporation (NASDAQ–CLZR)

Candela Corporation, (NASDAQ–CLZR)
Valuation-$11.51
Price August 30, 2007-$7.26

This one continues to fall despite an FDA product approval this week and a share buy-back recently announced. Trading at just over 1 times annual sales.

With $2.10 a share in cash (29% of the market cap), 50% margins, a recent FDA approval, a 2.3 million share buy-back, we think this is a good bet for a turnaround.

The daily trading volume has been nearly 236,000 shares.

We think anything under $7.30 is a good price.

CLZR is trading at 63% of our valuation. Pretty cheap for a “medical” company.

About Candela:
Candela Corporation manufactures, and distributes innovative clinical solutions that enable physicians, surgeons, and personal care practitioners to treat selected cosmetic and medical conditions using lasers, aesthetic laser systems, and other advanced technologies. Founded near Boston in 1970, the company markets and services its products in over 70 countries from offices and distributors in the United States, Europe, Japan, China and other Asian locations. Candela established the aesthetic laser market 18 years ago, and currently has an installed base of an estimated 10,000 lasers worldwide. Visit Candela on the Web at http://www.candelalaser.com.

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PDLI (Coulda, wouda, shouda)

Well Third Point has forced a shake-up at PDL. CEO resigning, selling their commercial products/assets, going back to their knitting–product development. Only bad thing was the announcement that Nuvion was no good. Stock obviously got hammered yesterday–down $5 to $18.80, below our original buy price of $19.31.

The value here has diminished. We think it is still worth $25-$30 to a buyer.

Third Point is pressing the sale of the whole company, not just a part of it and the Chairman’s (Gage) resignation.

We will hold and look for an exit above our buy price (just hate to lose money). So if you see $20–sell PDLI.

8/25/2007 Update

Last week we went 10 up, 4 down and 1 even. Our biggest DOGS are: LINN.ob, BDR, PARL, AVSO,ob, ILOG, ARIS.ob and CIMT. For the week, 2007 year-to-date, and since we started this Blog in January 2006, our model portfolio is +3.2%,+12.4% and +29.7% respectively. Since inception we are now 18 stocks up and 7 down (3 of which are down less than 10%).

We were up 3.2% this past week and are now up 12.40% so far in 2007. The DOW, NASDAQ and the S+P 500 were all up, with gains ranging from 2.3% (DOW) to 2.9% (NASDAQ) last week, and are all now up from 4.3% (S+P 500) to 7.4% (DOW) for the year.

Our OB-abies contine to lag. 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 1.7 times the DOW, 1.9 times the NASDAQ and 3 times the S+P 500 averages in 2007. The Russell 3000 and the Wilshire 5000 are both up between 4 and 4.5% for the year.

Since inception we have closed out the following positions:

2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
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 QADI last week.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $10.65, Valuation $18-$20
Up $.51 to $14.43 last week.
Short Interest was 5.7 million at July 13th.
Looks like Montgomery upped their price target to $17 and Citigroup upped theirs to $19. Momentum is building while the shorts continue to sell into all this upward force.
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 36% so far. HOLD.

QAD Inc. (QADI-Recommended 6/14/2006)
Buy price $6.93, NEW Valuation $12.84 (was $11.27, $15.92, $13.69, $13.73 and $11.86)
Closed at $8.16, down $.31.
QAD announced earnings on Thursday. Pretty good in our opinion. Our valuation moved up to $12.84 from $11.27 (+14%) and was a hair off from rising to $14.80. Sales were up 10%, but apparently they missed their “earnings target”, so some people were disappointed. Not us.
Up 18% so far. BUY.

PDL BioPharma Inc. (PDLI-Recommended 5/21/2006)
Buy price $19.31, Valuation > $30
Closed at $23.87, up $2.71 last week.
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 24%. HOLD.

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 $4.76, down $.26 for the week.
DWCH is now trading at 51% of our valuation. We will look to buy some more of this next week.
Now up 48%. BUY.

Parlux Fragrances (PARL-Recommended 11/30/2006)
Buy price $4.78 (was $6.12 before another $10,000 added, $6.65 before double up), Valuation $9.20 (Was $8.63, $13.77)
PARL closed at $3.61, up $.25 last week.
Starting to see some insider buying here at $3.40 to $3.50, which is a good sign that maybe we are on the way up.
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.
No news.
Down 25%. BUY.

Blonder Tongue Laboratories (BDR-Recommended 3/4/2007)
Buy price $1.83, Valuation $4.31 (was $4.01, $5.12, $5.88).
Closed at $1.30 up $.03 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 30% of our valuation.
Down 29%. HOLD

ILOG SA (ILOG-recommended 3/26/2007)
Buy price $12.08 (was $12.92 before another $10,000 added, $13.60 before double-up), Valuation $23.22 (was $20.99, $20.52)
Closed at $11.14 up $.44 for the week.
No news.
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 8%. BUY

Celebrate Express (BDAY-recommended 4/17/2007
Buy Price $8.82, Valuation $17.85 (Was $18.18)
Up $.23 to $9.23 last week.
Stephen Roseman (Director) now has 627,728 shares or 7.9% of the company after steady buying all this year.
With the insider buying and discount to our valuation, we like this stock alot.
Up 5%. BUY on dips below $9.00

Mediware (MEDW-Recommended 6/4/2007
Buy Price $6.98, (was $6.98 after double up ($10,000 added) Valuation $13.40
Up $.43 to $6.80 last week.
Earnings due out Wednesday Sept. 5th before the market opens.
Penninsula Capital owns 1.67 million shares or over 20% of MEDW. Not sure how they liguidate there stake profitably without a takeover
Up 2%. BUY

Cimatron (CIMT-Recommended 8/12/2007
Buy Price $2.12, Valuation $7.53
Up $.09 to $2.11 last week.
No news.
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 $1.61 (Was $1.78 before another $10,000 added, was $2.06 before double up), Valuation $5.34 (was $5.03, $5.28, $5.28, $5.21)
Closed at $1.50, up $.09 last week.
No news
Now down 7%. 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 $.10, 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 57%. 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 $1.61, up $.04 last week.
Has cash of $.44 per share–27% of the market cap.
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”.
No news.
Up 29% so far. HOLD.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.99 (was $1.19 before double up ($10,000 added),Valuation $3.25 (was $3.29 $2.69, $3.36, $3.81)
Stock closed at $.80, down $.05 last week.
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 25% of our valuation. Just too CHEAP.
Now down 19%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.38 (Was $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price was unchanged at $.36. Closed at $.35.
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

8/18/2007 Update–Bad Week–Again

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-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
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.
No news.
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.
No news.
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.
No news.
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”.
No news.
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

Parlux, CTI and Lion

All released earnings this afternoon.

Parlux cut their losses to about $100,000 for the quarter. Our valuation moved up from $8.66 to $9.20. Looking like things are stabilizing. Changing our view to a cautious BUY here at $3.31.

Lion continues to decline. Revenues fell and losses grew. Our valuation plummeted to $.29 from $.49. Our only hope here is that maybe someone will pay $10 million or so for their online assets and we can recoup our losses. HOLD.

CTI, revenues up big time (due to Ryder acquisition) and they actually made a profit,albeit a small one of $40,000. Still better than losing. Our valuation moved up again to $1.38 from $1.29. Their VOIP business continued to lose money ($500,000 or so)but their irregular IP enforcement activities made almost $300,000. Still, altough CTI is still only trading at only 28% of our valuation. We still need to see better results in the VOIP group before we will change to a buy from a HOLD.

Cimatron Ltd. (NASDAQ-CIMT)

Cimatron Ltd, (NASDAQ–CIMT)
Valuation-$7.53
Price August 10, 2007-$2.12

With some trepidation, we are recommending CIMT for purchase. We bought this stock several years ago at about the same price and ending up selling it for about a 50% loss for taxes. It has been a “value-trap” for years.

Q2 results (6/30/2007) showed sales up 9% to $5.5 million, gross margin was up to 85%, and the company made $291,000 or $.04 per share (un-taxed). The stock has traded as high as $4.73 and as low as $1.12 over the last year.

The catalyst, aside from new products that will hopefully continue to drive sales and profits, is that they have exercised an option in early July to purchase a 51% share in their Italian distributor that did over $10 million in sales in 2006. The purchase price is cheap (under $1 million) and the company is supposedly profitable. At a 51% ownership level (previously owned 27.5%), they will have to consolidate Microsystems sales and operations results (less 49% of any profit or loss). Aside from growing fundamentals, this should boost their reported revenues by a substantial percentage beginning in the September quarter (Q3).

Our hope here is that the sales increase will get more attention for Cimatron, and investors will realize how undervalued it is.

With $1.16 a share in cash (55% of the market cap), 85% margins, making money and a publicly announced catalyst that has not been reflected in the stock price, we think this is a good bet.

The daily trading volume has been nearly 35,000 shares.

We think anything under $2.25 is a good price.

CIMT is trading at a measley 28% of our valuation.

About Cimatron
With more than 20,000 installations worldwide, Cimatron is a leading provider of integrated, CAD/CAM solutions for mold, tool and die makers as well as manufacturers of discrete parts. Cimatron is committed to providing comprehensive, cost-effective solutions that streamline manufacturing cycles, enable collaboration with outside vendors, and ultimately shorten product delivery time. Cimatron’s cutting-edge CAD/CAM solutions are widely used in the automotive, medical, consumer plastics, electronics, and other industries.
Founded in 1982, Cimatron is publicly traded on the NASDAQ exchange under the symbol CIMT. Cimatron’s subsidiaries and extensive distributor network are located in over 35 countries to serve customers worldwide with complete pre- and post-sales support. For more information, please visit http://www.cimatron.com.

8/11/2007 Update–Wild Ride

Last week we went 6 up, 8 down and 2 even. Our biggest DOGS are: PARL, LINN.ob, AVSO.ob, BDR, ARIS.ob, ILOG and MEDW. For the week, 2007 year-to-date, and since we started this Blog in January 2006, our model portfolio is -1.0%,+17.0% and +35.0% respectively. Since inception we are now 17 stocks up and 7 down (3 of which are down less than 10%).

We were down 1% this past week and are now up 17.0% so far in 2007. The DOW, NASDAQ and the S+P 500 were all up, with gains ranging from .4% (DOW) to 1.4% (S+P 500) last week, and are all now up from 2.5% (S+P 500) to 6.2% (DOW) for the year.

We are now up more than double the DOW, triple NASDAQ and 7 times the S+P 500 averages in 2007. The Russell 3000 and the Wilshire 5000 are both up about 2.5% for the year.

Since inception we have closed out the following positions:

2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
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 BDR last week.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $10.65, Valuation $18-$20
Up $.44 to $13.84 last week.
Short Interest was 5.7 million at July 13th.
We got some huge volume last week, almost 2 million shares on 2 days and over 900,000 on Friday. May be some short covering going on that is driving the price and volume. Price got as high as $15.25, but got nailed on Friday.
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 30% 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 $8.36, up $.49.
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 21% so far. HOLD.

PDL BioPharma Inc. (PDLI-Recommended 5/21/2006)
Buy price $19.31, Valuation > $30
Closed at $21.16, down $1.75 last week.
Like we have said in the past–this is a very volatile stock.
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%. HOLD.

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 $5.10, down $.25 for the week.
DWCH is now trading at 55% of our valuation. We have been buying more in the $5 to $5.40 range.
Now up 59%. BUY.

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 $3.35, down $.03 last week. It actually fell to the mid-$2 range 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.
No news.
Down 45%. HOLD.

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 $1.43 up $.01 for the week.
Earnings last week. Not great. Lost $822,000 after a $558,000 inventory reserve. Excluding the inventory charge, our valuation moved up to $4.31. Including the the charge, it fell slightly to $3.96. BDR is still cheap in our opinion, but they need a decent quarter to get this stock moving up.
Trading at 33% of our valuation.
Down 22%. 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 $12.06 down $.20 for the week.
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 7%. BUY

Celebrate Express (BDAY-recommended 4/17/2007
Buy Price $8.82, Valuation $17.85 (Was $18.18)
Down $.54 to $9.35 last week.
Stephen Roseman has still been buying a bit of BDAY. Another 7,300 shares at prices from $9.01 to $10.00 in late July and early August. Now has 619,000 shares or 7.8% of the company.
With the insider buying in the last couple of months, we like this stock alot.
Up 6%. BUY on dips below $9.00

Mediware (MEDW-Recommended 6/4/2007
Buy Price $6.98, Valuation $13.40
Up $.07 to $6.65 last week.
No news.
Penninsula Capital owns 1.67 million shares or over 20% of MEDW. Not sure how they liguidate there stake profitably without a takeover
Down 4%. 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 $1.66, up $.06 last week.
No news.
Now down 7%. 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 $.14, even last week.
No news.
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 39%. 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 $1.62, up $.08 last week.
Has cash of $.44 per share–27% of the market cap.
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”.
No news.
Up 30% 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 $.90, down $.05 last week.
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 27% of our valuation.I bought some more on Friday at $.80. Just too CHEAP.
Now down 24%. 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 stayed the same last week at $.38. Closed at $.36.
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.