What a lousy week in the market.
Last week we went 4 up, 10 down and 2 even. Our biggest DOGS are: LINN.ob, BDR, PARL, and ARIS,ob, all down 10% or more. For the week, 2007 year-to-date, and since we started this Blog in January 2006, our model portfolio is -2.6%,+11.4% and +28.5% respectively. Since inception we are now 18 stocks up, 7 down and 1 even (3 of which are down less than 10%).
We were down 2.6% this past week and are now up 11.4% so far in 2007. The DOW, NASDAQ and the S+P 500 were all down, with losses ranging from -1.2% (NASDAQ) to -1.8% (DOW) last week. The Dow is up 5.2%, NASDAQ is up 6.2 and the S+P 500 is up 2.5% for the year.
Our OB-abies contine to lag, and LINN.ob is killing us. 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 2 times the DOW, 1.8 times the NASDAQ and over 4 times the S+P 500 averages in 2007. The Russell 3000 and the Wilshire 5000 are both up between 2.35% and 2.79% 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 11 stocks that we have closed out in 2006 and 2007 the average gain was 33%. 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 7 positions in 2007 compared to 4 in all of 2006.
Sold PDLI last week for a measely 3% gain. MEDW earnings last week.
Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $10.65, Valuation $18-$20
Down $.20 to $14.53 last week.
Short Interest fell 21% to 4.5 million at August 15th.
Apparently SPNC lost their appeal on a patent case. Will cost under $1 million, and they already reserved for the case in 2006. So no P+L impact going forward.
We still think $18-$20 is in the cards for this year.
Guidance has not been updated yet for the TURBO Booster.
Now up 36% 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)
Closed at $7.63, down $.51.
QAD announced their quarterly $.025 dividend last week and a new 1 million share buy-back. No one cared.
Up 10% so far. BUY.
PDL BioPharma Inc. (PDLI-Recommended 5/21/2006)
Buy price $19.31, Valuation–maybe $25
Sold last week at $19.95. Should have taken profit in this one north of $25.
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 $4.58, down $.06 for the week.
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 49% of our valuation.
Now up 43%. 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 $3.75, down $.01 last week.
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 22%. 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 even 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 $12.08 (was $12.92 before another $10,000 added, $13.60 before double-up), Valuation $23.22 (was $20.99, $20.52)
Closed at $11.34 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 6%. BUY
Celebrate Express (BDAY-recommended 4/17/2007
Buy Price $8.82, Valuation $17.85 (Was $18.18)
Up $.36 to $9.19 last week.
Interesting action on Friday. Traded 490,000 shares, almost 25 times its normal avgerage daily volume and traded as high as $9.66.
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 4%. BUY on dips below $9.00.
Mediware (MEDW-Recommended 6/4/2007
Buy Price $6.67, (was $6.98 after double up ($10,000 added) NEW Valuation $12.89 (was $13.40)
Up $.36 to $7.33 last week.
As we wrote a few days ago, their earnings last week were ok.
Our valuation slipped a bit to $12.89 from $13.40, but we view this just as a seasonal variation. Has cash of $2.70 a share (37% of its market cap.) and is trading at 57% 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
Up 10%. HOLD
Cimatron (CIMT-Recommended 8/12/2007
Buy Price $2.12, Valuation $7.53
Down $.05 to $2.12 last week.
Candela Corp. (CLZR-Recommended 8/30/2007
Buy Price $7.26, Valuation $11.51
Down $.01 last week to $7.21.
Down .7%. BUY
OB-abies (Bulletin Board Listed Stocks)
If not for the drops in LINN.ob, AVSO.ob and OPTO.ob, we would have been up almost 1% last week.
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 $1.45, up $.07 last week.
Now down 10%. 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 $.08, 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 65%. 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 $1.52, down $.10 last week.
Has cash of $.44 per share–29% 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.
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 22% 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 $.90, down $.10 last week.
AVSO announced a restructuring in late July 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 28% of our valuation. Just too CHEAP.
Now down 9%. 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 $.39. Closed at $.34.
This is still trading at only 30% of our latest valuation, but we still have to until the VOIP business stops losing money, we are not buyers–yet.
Up 44% based on the ASK price. HOLD