Finally a bit of a rebound for us last week.
Last week we went 12 up, 2 down and 1 even. Our biggest DOGS are: LINN.ob, BDR and PARL, all down 10% or more. For last week, 2007 year-to-date, and since we started this Blog in January 2006, our model portfolio is +5.5%,+16.5% and +34.4% respectively. Since inception we are now 21 stocks up and 6 down(3 of which are down less than 10%).
We were up 5.5% this past week and are now up 16.5% so far in 2007. The DOW, NASDAQ and the S+P 500 were all up, with gains ranging from .1% (S+P 500) to 1.1% (NASDAQ) last week. The Dow is up 11.5%, NASDAQ is up 11.8 and the S+P 500 is up 7.6% for the year.
Our OB-abies sparked up a bit last week with AVSO.ob up 27%, OPTO.ob up 6% and CTIG.ob up 9%. BDR and LINN.ob are the weakest companies fundamentally and we are looking for an economic exit on these two. We may be in luck with LINN.ob with their announcement on Friday. The rest of our stocks are looking good, in our opinion.
We are now up about 1.40 times the DOW and NASDAQ and about 2 times the S+P 500 averages in 2007. The Russell 3000 and the Wilshire 5000 are both up between 7.4% and 7.8% 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)
2007-PDLI + 3% (Waited too long to sell)
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 12 stocks that we have closed out in 2006 and 2007 the average gain was 32%. 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 8 positions in 2007 compared to 4 in all of 2006.
BDAY and AVSO.ob earnings out last week ans LINN.ob had some good news on Friday.
Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $10.65, Valuation $18-$20
Down $.62 to $13.48.
Guidance has not been updated yet for the TURBO Booster.
Short interest fell to 3.586 million shares from 4.502 million shares. But from the stock action, we believe there is still a lot of manipulation going on. Also think we saw some end of quarter profit taking, that weakened the stock. Nothing has fundamentally changed here for it to go down.
Now up 27% so far. HOLD.
QAD Inc. (QADI-Recommended 6/14/2006)
Buy price $6.93,Valuation $12.84 (was $11.27, $15.92, $13.69, $13.73 and $11.86)
SOLD at $8.66 for a 25% gain.
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 $4.45, down $.15.
Not much action here lately. Hopefully this quarter results will build on the last one and DWCH will get noticed again.
DWCH is now trading at 48% of our valuation.
Now up 41%. 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 $3.89, up $.03.
Another decent quarter and we should be back in the black on this one.
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 19%. 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 $1.26 up $.04.
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 $12.08 (was $12.92 before another $10,000 added, $13.60 before double-up), Valuation $23.22 (was $20.99, $20.52)
Closed at $11.70 up $.05.
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 3%. HOLD
Celebrate Express (BDAY-recommended 4/17/2007)
Buy Price $8.82, Valuation $17.85 (Was $18.18)
Up $.11 to $9.45.
The “turnaround” is not yet done.
Earning last week were so-so. Sales fell 12% to $17.6 million and their operating loss increased to $739,000 (excluding stock compensation). Gross margin % improved a bit over the prior year. Cash fell to $15.1 million as they built inventory for their big selling quarter coming up. Still has $1.90 in cash and while our valuation fell to $15.51 based on this weak seasonal quarter of the year, we still think this is a good bet.
The insider buying seems to have stopped for a while.
With the insider buying and discount to our valuation, we like this stock alot.
Up 7%. HOLD.
Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.67, (was $6.98 after double up ($10,000 added) Valuation $12.89 (was $13.40)
Up $.17 to $6.56.
Has cash of $2.70 a share (37% of its market cap.) and is trading at 51% of our valuation. We still like this one.
Penninsula Capital owns 1.67 million shares or over 20% of MEDW. Not sure how they liguidate there stake profitably without a takeover
Down 2%. BUY
Cimatron (CIMT-Recommended 8/12/2007)
Buy Price $2.12, Valuation $7.53
Up $.04 to $2.19.
Up 3%. BUY
Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $7.26, Valuation $11.51
Up $.42 to $8.49.
Up 17%. HOLD
Top Image Systems, Ltd. (TISA-Recommended 9/27/2007)
Buy Price $3.28, Valuation $5.46
Up $.14 to $3.42.
Up 4%. BUY
OB-abies (Bulletin Board Listed Stocks)
There is some life here!
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, unchanged.
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, unchanged.
Late Friday Lion announced the sale of their “Mortgage 101” website for $5 million or about $.12 per share in value. Based on their reported numbers, this is a better than 3 times multiple of revenue. Very nice. If they could get this multiple on the whole business, this thing could be worth our original valuation. Not likely though with the mortgage and housing markets in a tailspin.
In the press release they state that they “continue to review strategic alternatives”, so hopefully there will be more value realized here. Maybe we can actually see a gain here!
Down 57%. Hold.
OPTIO Software Inc. (OPTO.ob-Recommended 3/22/2006)
Buy price $1.25, Valuation $2.34 (was $2.28, $2.89, $2.89, $2.54 and 2.88)
Closed at $1.49, up $.09.
Has cash of $.38 per share–26% 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.
It has been over 2 months now since their announcement–We would expect to hear an update soon. They said in their latest earnings release that their healthcare business exceeded their goals. They better get a good price for this.
Still hoping we will see north of $2.00 this year–but may not happen now unless next quarter rebounds with some decent profit numbers, or they get a good deal on the Healthcare “division”.
Up 19% so far. HOLD.
Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.99 (was $1.19 before double up ($10,000 added), NEW Valuation $3.23 (was $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $1.08, up $.23.
Earning for the quarter and year announced last week. Sales up 16% for the quarter and 27% for the year. But, they lost a bit of money in Q4 as expected.
For FY 2008 they said on the conference call that they expect Q1 to be profitable, modest sales growth for the year and a focus on profitability.
We are guessing $55 million of revenue next year and being profitable–which should yield a valuation of over $3.50 a share, and hopefully a share price of at least $2.00–up 85% from here.
Our current valuation is based on the full year FY2007 results and dropped only $.02 from our last valuation.
Trading at 33% of our valuation.
Now up 9%. HOLD.
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 rose $.03 to $.35. Closed at $.30.
Little interest in this stock. Management needs to get some going.
Nice little partnership press release last week. Hopefully is will generate some revenue!
This is still trading at only 25% of our latest valuation.
Up 30% based on the ASK price. BUY