Last week we went 7 up, 10 down and 2 even. Our biggest DOGS are: LINN.ob, and BDR both down 10% or more. For the last two weeks, 2007 year-to-date, and since we started this Blog in January 2006, our model portfolio is -6.8%,+19.5% and +38% respectively. Since inception we are now 23 stocks up and 8 down( 3 of which are down less than 10%).
We were down 6.8% this past two weeks and are now up 19.5% so far in 2007. The DOW, NASDAQ and the S+P 500 were all up, with gains ranging from 3.1% (NASDAQ) to .6% (DOW) last week. The Dow is up 9.1%, NASDAQ is up 16.4 and the S+P 500 is up 6.4% 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 2 times the DOW and 1.2 times the NASDAQ and about 3 times the S+P 500 averages in 2007. The Russell 3000 and the Wilshire 5000 are both up about 6.4% 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 (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 $20-$22
Up $.75 to $15.87.
Earnings were good. Continued revenue growth, slightly increased conservative guidance as always. Stock spiked up to about $16.50 before the markets became unhinged. Analysts are busy raising their price targets. Citigroup to $19 and another to $17 (big deal). SPNC is becoming a real growth story. We are raising our expectation to $20-$22 over the next year.
Now up 49% 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 $4.70, down $.50.
Hopefully this quarter results will build on the last one and DWCH will get noticed again.
Their former CEO–Robert Hagger announced his retirement–as he continues to sell his shares each week. Hard to tell what this means. Just have to wait for quarter to be announced on November 27th.
DWCH is now trading at 56% of our valuation.
Now up 49%. 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 $3.99, down $.39.
Our journey into the plus column was short-lived. Back in the red.
The new management has 2.2 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
Down 17%. 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 $1.15 down $.14.
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.
Down 37%. 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), NEW Valuation $20.51 (was $23.22, $20.99, $20.52)
Closed at $12.69 down $.42.
ILOG Q1 earnings were disappointing. Our valuation dropped to $20.51 from $23.22.
For FY2008 (this year) they are STILL projecting another 20% increase in sales and a tripling of operating income. They still have $3.35 a share in cash.
UP 5%. HOLD
Celebrate Express (BDAY-recommended 4/17/2007)
Buy Price $8.82, NEW Valuation $15.51 (Was $17.85 $18.18)
Down $.15 to $8.85.
The “turnaround” is not yet done.
Spencer Capital has resumed buying BDAY lately. Added about 6,000 shares at $9.10 to $9.28 bringing their total holdings to 1,497,141 shares or about 19%.
Up .3%. BUY.
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)
Down $.27 to $6.82.
MEDW announced their acquisition closed last week, and said it cost $5.2 million. No revenue or earnings details disclosed yet. Have to wait and see what they bought here. Should have cash of $2.15 a share after the acquisition (32% of its market cap.) and is trading at 53% of our valuation.
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%. HOLD
Cimatron (CIMT-Recommended 8/12/2007)
Buy Price $2.12, Valuation $7.53
UP $.03 to $2.70.
Up 27%. HOLD
Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $7.26, Valuation $11.51
Down $.35 to $7.25.
Down .1%. HOLD
Top Image Systems, Ltd. (TISA-Recommended 9/27/2007)
Buy Price $3.28, Valuation $5.46
Down $.11 to $2.90.
TISA pre-announced Q3 three weeks ago. 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.
Down 12%. HOLD
Angeion Corp. (ANGN-Recommended 10/14/2007)
Buy Price $7.55, Valuation $13.67
Up $.48 to $7.62.
Up 1%. BUY
MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $3.00, Valuation $7.59
Down $.32 to $2.68.
MIVA had moved up to the $3.20 range, and then got hammered on Thursday and Friday as the markets tumbled. We may buy some more next week.
Earnings out Thursday 11/8 after the close.
Down 11%. BUY
PDL Biopharma. (PDLI-Recommended 10/21/2007)
Buy Price $20.04, Valuation $24.00 to $30.00
Up $.62 to $20.66.
No news. Just waiting for them to announce the sale of the company.
Up 3%. BUY
Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, Valuation $9.39
Up $.64 to $4.92.
No news, but volume and the price spiked on Friday.
Up 15%. HOLD
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), NEW Valuation $5.49 (was $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.59, up $.04.
Earnings were OK as we mentioned in our earlier mini-update. Our valuation moved up to its highest level ever.
Now down 1%. 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 $.105, down 2.0 cents.
Back to sleep here. We figure Lion has about $.16 a share in cash now. Should be trading higher.
Lion announced a month 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.”
Four 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 55%. 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 $1.50, up $.10.
Has cash of $.38 per share–25% 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 4 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 20% 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 $.90, down $.11.
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 28% of our valuation.
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 unchanged at $.33. Closed at $.31.
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