Datalink (NASDAQ-DTLK)–BUY

Datalink (NASDAQ-DTLK)-BUY at $4.28
We are back to DTLK for the third time. We have had a 41% gain and a 25% gain on our prior visits with DTLK. Our current valuation of DTLK is $9.39 a share. With the stock closing at $4.28 yesterday the price to valuation ratio is 46%.
DTLK has $1.77 a share in cash–41% of its market cap. BUY.

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10/31/2007 Mini-update

ARIS.ob announced earnings this past week. Sales were good, bottom line still a slight loss. Our valuation moved up to $5.49 per share from $5.34. So it looks like they are still building value. This remains a BUY.

ILOG announced earnings this morning. Disappointing. Sales we up to $40.8 million, cash was up to $61.9 million, but they lost $.14 a share. Got to get control of those expenses. Our valuation has fallen to $20.51 from $23.22. Expect the price to fall a bit today. Still a good company, but another quarter like this and we will be out. HOLD.

SPNC also announced this morning. Numbers looked good to me. Guidance appears conservative as usual though. We’ll see how the stock reacts. Could go either way although they beat revenue guidance by a bit and raised the 2007 outlook. HOLD.

PDLI and MIVA–Again–BUYS

MIVA (NASDAQ-MIVA)-BUY at $3.00
We always keep track of our previous investments in case they come back to favorable discounts to our valuation, and MIVA has. Our current valuation of MIVA is $7.50 a share. With the stock closing at $3.00 on Friday the price to valuation ratio is 40%.
Earlier this month MIVA announced below expectation earnings and profits, so the stock got hammered. We have accounted for this in our valuation, even though final Q3 earnings will not be released until November. We bought some last week at $3.05. while MIVA is a bit of a dog as far as its performance, we think there is money to be made again here.
Last time we bought this at $3.80 and sold at $5.90.

PDL Biopharma (NASDAQ-PDLI)-BUY at $20.04
We are back for some more of PDLI. We sold in September at $19.95, after the company announced some complicated restructuring plans that gave no indication of what the value to shareholders would be. Now, they have finally conceeded to sell the whole company. The CEO has resigned also. Investment firm Third Point, which instigated these actions cut their stake from 11.3% to 5.1% (6 million shares), which is a bit puzzling, but we think that with the whole company for sale–it will be hard to lose money on this one. Their royalty stream, commercial products and their development pipeline should be worth more than $20 per share. The upside, we think is $24 to $30 a share. We bought some PDLI last week at $20.25 per share.

10/20/2007 Update

Bad week for everyone last week. But we were down less than the markets.

Last week we went 7 up, 8 down and 1 even. Our biggest DOGS are: LINN.ob, and BDR both down 10% or more. For last week, 2007 year-to-date, and since we started this Blog in January 2006, our model portfolio is -2.9%,+26.3% and +49% respectively. Since inception we are now 22 stocks up and 6 down(4 of which are down less than 10%).

We were down 2.9% this past week and are now up 26.3% so far in 2007. The DOW, NASDAQ and the S+P 500 were all down, with losses ranging from 2.9% (NASDAQ) to 4.1% (DOW) last week. The Dow is up 8.5%, NASDAQ is up 12.9 and the S+P 500 is up 5.8% for the year.

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 3 times the DOW and 2 times the NASDAQ and about 4.5 times the S+P 500 averages in 2007. The Russell 3000 and the Wilshire 5000 are both up between 5.8% and 6.4% 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)
2007-PDLI + 3% (Waited too long to sell)
2007-QADI +25%

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 (although you never know for sure as both PDLI and QADI have continued up after our sales). We have already closed out 8 positions in 2007 compared to 4 in all of 2006.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $10.65, Valuation $18-$20
Up $.54 to $15.12.
Earnings due out 10/31, before the market opens. TCT confernence next week also. Pre-earnings and conference excitement almost got us to $16 last week before the “mini-crash” on Friday. Hold tight.
Guidance has not been updated yet for the TURBO Booster.
Short interest only fell a little to 3.476 million shares from 3,586 million shares.
Now up 42% so far. 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 $5.20, unchanged.
Hopefully this quarter results will build on the last one and DWCH will get noticed again.
DWCH is now trading at 56% of our valuation.
Now up 65%. HOLD.

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 $4.38, down $.55.
Our journey into the plus column was short-lived. Back in the red this week.
The new management has 2.2 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
Down 8%. 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 $1.29 down $.01.
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 31% of our valuation.
No news.
Down 30%. 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 $13.11 up $.25.
Seems to be some decent buying interest last week as we spiked up to $13.70 on some “heavy” volume (at least for ILOG)-15,000 shares on Thursday. Friday’s action took a lot of this back.
This quarter earnings will probably not be that great due to the $500,000 or so bad debt thay previously announced.
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.
UP 9%. HOLD

Celebrate Express (BDAY-recommended 4/17/2007)
Buy Price $8.82, NEW Valuation $15.51 (Was $17.85 $18.18)
Down $.10 to $9.00.
The “turnaround” is not yet done.
The insider buying seems to have stopped for a while.
Up 2%. 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 $.45 to $7.09.
MEDW announced an acquisition last week, but gave no financial details. Have ot wait and see what they bought here. But the price action was encouraging.
Has cash of $2.70 a share (38% of its market cap.) and is trading at 55% of our valuation. We still like this one and will buy some more personnally if we can get it at this price next 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 6%. HOLD

Cimatron (CIMT-Recommended 8/12/2007)
Buy Price $2.12, Valuation $7.53
UP $.08 to $2.67.
No news.
Up 26%. HOLD

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $7.26, Valuation $11.51
Down $.36 to $7.60.
No news.
Up 5%. HOLD

Top Image Systems, Ltd. (TISA-Recommended 9/27/2007)
Buy Price $3.28, Valuation $5.46
UP $.01 to $3.01.
TISA pre-announced Q3 last week. They will not do over $7 million in revenue and will do only between $6 and $6.3 million–and will lose between $1.4 and $1.6 million. Some of this loss is from integration costs from their acquisitions of Asiasoft and CPL, but not clear how much. The final earnings release will not be out until November 28th. They still have plenty of cash, but looks like we will be waiting another quarter or two to make money on this one. Price was steady last week despite the carnage all around Wall Street.
Down 8%. HOLD

Angeion Corp. (ANGN-Recommended 10/14/2007)
Buy Price $7.55, Valuation $13.67
Down $.41 to $7.14.
No news.
Down 5%. BUY

OB-abies (Bulletin Board Listed Stocks)

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 $1.55, up $.05.
We actually traded almost 8,000 shares last week!
Earnings due out Monday October 29th after the close.
Now down 4%. 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 $.125, down 2.5 cents.
Volume soared to over a million shares last week. Not huge dollars, but maybe somebody is sniffing the possible value here. We hope they sell everything and liquidate. We could get back to even here.
Lion announced 2 weeks ago, an agreement to sell their TRMS unit for $1.2 million minuimum. Not clear what this units revenues are, or the multiple they got on the sale, but between the 2 tranactions they have announced deals worth at least $6.2 million or $.16 per share. They still have their “loan” business and said in their press release:
“The sale of the TRMS business, together with our recent sale of Mortgage 101 to Internet Brands, strengthens the Company’s financial footing and allows us to fully concentrate on our core business, the loans group, while continuing to explore a variety of strategic alternatives.”
Teo weeks ago 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. Maybe we can actually see a gain here!
Down 46%. 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 $1.40, down $.05.
Has cash of $.38 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.
It has been over 3 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 12% 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 $3.23 (was $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $1.01, up $.01.
For FY 2008 they said on the last 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 100% from here.
Our current valuation is based on the full year FY2007 results and dropped only $.02 from our last valuation.
Trading at 31% of our valuation.
Now up 2%. 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 fell $.02 to $.33. Closed at $.33.
Still, little interest in this stock. Management needs to get some going.
This is still trading at only 25% of our latest valuation.
Up 22% based on the ASK price. BUY

Angeion Corp. (NASDAQ–ANGN)-BUY

ANGN
Valuation-$13.67
Price October 12, 2007-$7.55

We are recommending ANGN for purchase. ANGN is trading at 55% of our valuation, which for a medical equipment maker is very unusual.

Angeion reported sales of $8.9 million in its third quarter ended July 31, 2007, up only 1% from the prior year. Gross margins were 50%., up slightly. Net income was essentially break-even for the quarter. Angeion sales had been benefiting from one large customer that represented $3.3 million in sales in last years quarter compared to about $1 million in the current quarter. Excluding this customer, their sales to other customers increased by 44% year-over-year. Also, net income was burdened by a number of unusual expenses in the latest quarter.

Angeion has only 4.2 million shares outstanding, and its market capitalization is less than one times annual revenue. It has traded from $5.62 to $18.50 over the last 52 weeks. It is unlikely that Q4 revenues will exceed last years ($10.70) million, so there maybe some time to buy this one.

With $1.19 a share in “net” cash (16% of the market cap), 50% margins, making money, we think this is a good bet.

The daily trading volume is 57,000 shares.

We think anything under $7.60 is a good price.

About Angeion Corporation
Founded in 1986, Angeion Corporation acquired Medical Graphics Corporation in December 1999. Medical Graphics develops, manufactures and markets non-invasive cardiorespiratory diagnostic systems that are sold under the MedGraphics (www.medgraphics.com) and New Leaf (www.newleaffitness.com) brand and trade names. These cardiorespiratory diagnostic systems have a wide range of applications in healthcare as well as health and fitness. The Company’s products are sold internationally through distributors and in the United States through a direct sales force that targets heart and lung specialists located in hospitals, university-based medical centers, medical clinics and physicians’ offices, pharmaceutical companies, medical device manufacturers, clinical research organizations, health and fitness clubs, personal training studios, and other exercise facilities. For more information about Angeion, visit http://www.angeion.com.

10/13/2007 Update–UP 12.4% last week

Good week for us last week, as we almost doubled our year-to-date gains.

Last week we went 8 up, 5 down and 2 even. Our biggest DOGS are: LINN.ob, and BDR both down 10% or more. For last week, 2007 year-to-date, and since we started this Blog in January 2006, our model portfolio is +12.4%,+29.1% and +49% respectively. Since inception we are now 22 stocks up and 5 down(3 of which are down less than 10%). We have finally hit our goal of 80% winners.

We were up a whopping 12.4% this past week and are now up 29.1% so far in 2007. The DOW, NASDAQ and the S+P 500 were all up, with gains ranging from .2% (DOW) to .9% (NASDAQ) last week. The Dow is up 13.1%, NASDAQ is up 16.2 and the S+P 500 is up 10.1% for the year.

LINN.ob was our best stock last week, up 58% but we are still down 35% on this one.
PARL was also up 21% and DWCH was up 11%. 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 2.2 times the DOW and 1.8 times the NASDAQ and about 2.9 times the S+P 500 averages in 2007. The Russell 3000 and the Wilshire 5000 are both up between 10.2% and 10.7% 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)
2007-PDLI + 3% (Waited too long to sell)
2007-QADI +25%

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 (although you never know for sure as both PDLI and QADI have continued up after our sales). We have already closed out 8 positions in 2007 compared to 4 in all of 2006.

TISA nailed up right out of the gate last week with a pre-announcement of a lousy quarter.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $10.65, Valuation $18-$20
Up $1.15 to $14.58.
SPNC announced some positive reimbursement news from Belgium last week–this seems to have sparked the stock.
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. Nothing has fundamentally changed here for it to go down.
Now up 37% so far. 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 $5.20, up $.50.
Hopefully this quarter results will build on the last one and DWCH will get noticed again.
DWCH is now trading at 56% of our valuation.
Now up 65%. HOLD.

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 $4.93, up $.84.
We are finally back in the plus column here. Purportedly rumors of a buy-out surfaced last week (IPAR)moving the stock over $5 on Friday. Take-over or not, there is still good value here.
The new management has 2.2 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
UP 3%. HOLD.

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 down $.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 31% of our valuation.
No news.
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 $12.86 up $.94.
No news. This quarter earnings will probably not be that great due to the $500,000 or so bad debt thay previously announced.
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.
UP 6%. HOLD

Celebrate Express (BDAY-recommended 4/17/2007)
Buy Price $8.82, NEW Valuation $15.51 (Was $17.85 $18.18)
UP $.21 to $9.10.
The “turnaround” is not yet done.
The insider buying seems to have stopped for a while.
With the previous insider buying and discount to our valuation, we like this stock alot.
Up 3%. 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 $.22 to $6.64.
Has cash of $2.70 a share (41% of its market cap.) and is trading at 52% of our valuation. We still like this one and will buy some more personnally if we can get it at this price next week.
Penninsula Capital owns 1.67 million shares or over 20% of MEDW. Not sure how they liguidate there stake profitably without a takeover
Down .3%. BUY

Cimatron (CIMT-Recommended 8/12/2007)
Buy Price $2.12, Valuation $7.53
Down $.02 to $2.59.
The buying “frenzy” from last week seems to have subsided.
No news.
Up 22%. HOLD

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $7.26, Valuation $11.51
Down $.45 to $7.96.
No news.
Up 10%. HOLD

Top Image Systems, Ltd. (TISA-Recommended 9/27/2007)
Buy Price $3.28, Valuation $5.46
Down $.30 to $3.00.
TISA pre-announced Q3 on Monday. They will not do over $7 million in revenue and will do only between $6 and $6.3 million–and will lose between $1.4 and $1.6 million. Some of this loss is from integration costs from their acquisitions of Asiasoft and CPL, but not clear how much. The final earnings release will not be out until November 28th. They still have plenty of cash, but looks like we will be waiting another quarter or two to make money on this one. Price fell to a 52 week low last week ($2.80) but rebounded later in the week. Makes us feel a bit better–but not much.
Down 9%. HOLD

OB-abies (Bulletin Board Listed Stocks)

LINN.ob perked up last week, and AVSO.ob is looking interesting.

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.
No news. Hasn’t traded since September 28th. Really boring.
Earnings due out Monday October 29th after the close. Maybe it will trade a share or 2 after earnings.
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 $.15, up 5.5 cents.
Lion announced on Friday an agreement to sell their TRMS unit for $1.2 million minuimum. Not clear what this units revenues are, or the multiple they got on the sale, but between the 2 tranactions they have announced deals worth at least $6.2 million or $.16 per share. They still have their “loan” business and said in their press release:
“The sale of the TRMS business, together with our recent sale of Mortgage 101 to Internet Brands, strengthens the Company’s financial footing and allows us to fully concentrate on our core business, the loans group, while continuing to explore a variety of strategic alternatives.”
Prior to last week 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. Maybe we can actually see a gain here!
Down 35%. 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 $1.45, down $.02.
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 3 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 16% 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 $3.23 (was $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $1.00, up $.08.
Large “blocks” keep appearing on the sell side–20,000 to 60,000. But these seem to be being bought right up last week. So while the selling is concerning, we like he fact that they are not staying out there very long.
For FY 2008 they said on the last 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 100% from here.
Our current valuation is based on the full year FY2007 results and dropped only $.02 from our last valuation.
Trading at 31% of our valuation.
Now up 1%. 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 unchanged at $.35. Closed at $.34.
Still, little interest in this stock. Management needs to get some going.
This is still trading at only 25% of our latest valuation.
Up 30% based on the ASK price. BUY