12/29/2007 Update

Happy New Year soon. Pretty uneventful week heading into 2008. Getting to the end of tax-loss selling/gains taking and a lot of bad news-hopefully. All the indices were down .4-.6%. Our portfolio was down .1%.

Last week we went 8 stocks up, and 8 down.

For 2008 our favorite candidates for big gains are MEDW, AVSO.ob and BDAY. Although of all our stocks, we are only a bit worried about CLZR, as it continues to sink and is now our biggest DOG. MIVA at $1.83 is probably a good candidate for a January bounce.

For last week, 2007 year-to-date, and since we started this Blog in January 2006, our model portfolio is -.1%,+17.7% and +35.8% respectively. Since inception we are now 21 stocks up and 11 down( 7 of which are down less than 15%).

The DOW, NASDAQ and the S+P 500 were all down, with losses ranging from .4% (S+P 500) to .6% (NASDAQ) last week. The Dow is up 7.2%, NASDAQ is up 10.7% and the S+P 500 is up 4.2% for the year.

We are now up about 2.4 times the DOW, 1.6 times the NASDAQ and about 4 times the S+P 500 averages in 2007. The Russell 3000 and the Wilshire 5000 are up 4.0% and 4.6%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%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.

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 16 stocks that we have closed out in 2006 and 2007 the average gain was 22%. We have closed out 12 positions in 2007 compared to 4 in all of 2006.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $10.65, Valuation $20-$22
Down $.50 to $15.30.
Hackers are back. 100 share trades most of last week–just like old times. Things continue to look just fine here.
Now up 44%. HOLD.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (averaged down from $3.66), Valuation $10.30 (was $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $5.93, down $.25.
The ex-CEO keeps cashing in options and selling–another 20,000 or so last week. This looks like it will go on for a while. Maybe the company ought to find a buyer for all his shares. Then this stock will fly.
DWCH is now trading at 58% of our valuation.
Now up 88%. HOLD, it this hits $8.00 in 2007-SELL 1/2

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 $10.80 (Was $9.20, $8.63, $13.77)
PARL closed at $4.10, down $.18.
Lets see, sales up 38%, made $.10 a share fully taxed and paid down $8 million of debt over the past 6 months.
ECOM Ventures announced that it will merge with Model Reorg. Inc. ECOM will pay for it with shares, so that Nussdorf and family will end up owning 70% of ECOM. So maybe this was why he has been selling some PARL shares–lots of expenses and maybe some taxes to pay?
If they can get this deal done, can one with PARL be far behind?
Now trading at 38% of our valuation.
The new management has 2.0 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
Down 14%. 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 $20.51 (was $23.22, $20.99, $20.52)
Closed at $10.52 up $.16.
No one cares about this stock right now.
It is a quality company–just French.
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.
A buy-out is a decent possibility here.
Down 13%. HOLD

Celebrate Express (BDAY-recommended 4/17/2007)
Buy Price $8.38 (was $8.82 before double-up), NEW Valuation $15.51 (Was $17.85 $18.18)
Up $.02 to $7.90.
The “turnaround” is not yet done.
Earnings out January 3rd, after the close.
We like the recent insider buying again and are content to wait for this one.
Down 6%. BUY.

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.52, (was $6.67 ($10,000 added), $6.98 after double up) NEW Valuation $13.32 (was $12.89, $13.40)
Up $.66 to $6.92..
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%. BUY

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $7.26, Valuation $11.51
Down $.17 to $5.44.
Healthinvest fund filed a 13G/a last week. Looks like they have reduced their position from 1,435,000 shares (6.2%) to 1,106,000 shares (4.8%). Looks like they are the ones that have been driving the price down.
JP Morgan added 95,000 shares from 11/28-11/30, at $6.12 to $6.21. They now own 3,354,000 shares or about 10%.
They also filed an 8K in December. Seems they are sprucing up their senior officer change-of-control agreeemtnts. Wonder why? Meanwhile the stock just continues to sink and is now our biggest DOG.
Down 25%. HOLD

Angeion Corp. (ANGN-Recommended 10/14/2007)
Buy Price $7.55, Valuation $13.67
Up $.35 to $9.51.
No news to explain the big rise over the past month, but we like it.
UP 26%. HOLD

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $2.38 (Was $2.62 before another $10,000 and was $3.00 forst before double up), Valuation $7.58 (was $7.59)
Down $.27 to $1.83.
MIVA plunged on Friday. Tax loss selling here we think.
W. Blair disclosed a 10% stake in Miva in a 13G filing.
No news.
Down 23%. BUY

PDL Biopharma. (PDLI-Recommended 10/21/2007)
Buy Price $20.04, Valuation $24.00 to $30.00
Down $.55 to $17.19.
PDLI announced the sale of a $30 million a year in sales drug–for $200 million.
Looks like our 3X product revenue valuation may be a tad low (below). The stock sank on this news. Makes no sense to us–other than tax loss selling.
At 7X the royalty revenue and 3X the product sales, you get $2.1 billion in value comapared to the current market cap of $2.1 billion. Their pipeline, and know-how has to be worth something.
No matter, they are still trying to sell the company.
So we are just waiting for them to announce the sale of the company and for how much.
Down 14%. BUY

Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, Valuation $9.39
Down $.02 to $3.71.
There is value here.
No news.
Trading at only 40% of our valuation.
Down 13%. 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), NEW Valuation $5.71 (was $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.65, up $.05.
Earnings two weeks ago were great. Sales up 21% and they made money. The stock initially went down! This market just stinks for mini/micro caps, and ARI does little to get any investor attention. Wake up management–you have a great little company here worth 3X what it is selling for.
Now up 2%. BUY. Still a Huge valuation gap here.

OPTIO Software Inc. (OPTO.ob-Recommended 3/22/2006)
Buy price $1.25, Valuation $2.74 (was $2.34, $2.28, $2.89, $2.89, $2.54 and 2.88)
Closed at $1.31, up $.01.
OPTIO has cash of $.41 per share–32% 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 6 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–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 5%. HOLD.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.93 (Was $.99 and $1.19 before adding $10,000-twice), Valuation $3.05 (was $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.90, up $.05.
Nice presentation filed in their 8K 3 weeks ago. Couple of nice mentions–including in Smart Money of the CEO interview with the Wall Street Reporter. Sigma Opportunity Fund has been buying more shares.
We are guessing $55 million of revenue this 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.
Now down 3%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.17 (Was $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price down $.01 to $.34. Closed at $.30.
Latest quarterly results were: Sales of $5.35 million, up 68% from $3.2 million last year. Without about $800,000 of patent enforcement costs, they would have broken even for the quarter, but this all dropped to the bottom line for a $808,000 loss—$.03 per share. One of these days CTIG is going to hit on all cylinders and get to $1.00.
Our valuation dropped a bit to $1.17, but, this is still trading at only 30% of our latest valuation.
Up 26% based on the ASK price. BUY

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $1.08 Valuation $2.08
Closed at $1.05, up $.08.
LTUS, filed an impressive investor presentation on Form 8K in early December.
As noted, China stocks are risky, but based on their published information we just cannot figure out why this stock is trading so low.
LTUS is on track to make $.18 a share this year. Even if these earnings were taxed at U.S. tax rates, that would be about $.12 a share. That is a PE of less than 10, for a company growing revenues at 50% year-over-year. We may continue to buy more if the price stays in this range.
Down 3%. BUY

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12/22/2007 Update

Merry Christmas all. What started out as a bad week for the markets and us, turned out OK. Getting to the end of tax-loss selling and a lot of bad news-hopefully. All the indices were up .8-2.1%. Our portfolio was up .4%.

Last week we went 7 stocks up, 8 down and 1 even.

For 2008 our favorite candidates for big gains are MEDW, AVSO.ob and BDAY. Although of all our stocks, we are only a bit worried about CLZR, as it continues to sink and is now our biggest DOG.

For last week, 2007 year-to-date, and since we started this Blog in January 2006, our model portfolio is +.4%,+17.8% and +35.9% respectively. Since inception we are now 19 stocks up and 13 down( 10 of which are down less than 15%).

The DOW, NASDAQ and the S+P 500 were all up, with gains ranging from .8% (DOW) to 2.1% (NASDAQ) last week. The Dow is up 7.9%, NASDAQ is up 11.5% and the S+P 500 is up 4.6% for the year.

We are now up about 2.2 times the DOW, 1.6 times the NASDAQ and about 4 times the S+P 500 averages in 2007. The Russell 3000 and the Wilshire 5000 are up 4.5% and 5.1%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%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.

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 16 stocks that we have closed out in 2006 and 2007 the average gain was 22%. We have closed out 12 positions in 2007 compared to 4 in all of 2006.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $10.65, Valuation $20-$22
Up $1.38 to $15.80.
After sinking down to the low $14 level, SPNC zoomed back up. Things continue to look just fine here.
Now up 48%. HOLD.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (averaged down from $3.66), Valuation $10.30 (was $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $6.18, down $.02.
We did manage to buy some more last week as low as $5.50.
The ex-CEO keeps cashing in options and selling. This looks like it will go on for a while. Maybe the company ought to find a buyer for all his shares. Then this stock will fly.
DWCH is now trading at 60% of our valuation.
Now up 96%. HOLD, it this hits $8.00 in 2007-SELL 1/2

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 $10.80 (Was $9.20, $8.63, $13.77)
PARL closed at $4.28, up $.16.
Lets see, sales up 38%, made $.10 a share fully taxed and paid down $8 million of debt over the past 6 months.
ECOM Ventures announced last week that it will merge with Model Reorg. Inc. ECOM will pay for it with shares, so that Nussdorf and family will end up owning 70% of ECOM. So maybe this was why he has been selling some PARL shares–lots of expenses and maybe some taxes to pay?
If they can get this deal done, can one with PARL be far behind?
Now trading at 40% of our valuation.
The new management has 2.0 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
Down 11%. 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 $20.51 (was $23.22, $20.99, $20.52)
Closed at $10.36 down $.60.
No one cares about this stock right now.
It is a quality company–just French.
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.
A buy-out is a decent possibility here.
Down 14%. HOLD

Celebrate Express (BDAY-recommended 4/17/2007)
Buy Price $8.38 (was $8.82 before double-up), NEW Valuation $15.51 (Was $17.85 $18.18)
Down $.10 to $7.88.
Looks like we were a few days premature with our double-up call as BDAY actually sank to under $7 for a brief time last week.
The “turnaround” is not yet done.
Earnings out January 3rd, after the close.
We like the recent insider buying again and are content to wait for this one.
Down 6%. BUY.

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.67, (was $6.98 after double up ($10,000 added) NEW Valuation $13.32 (was $12.89, $13.40)
down $.63 to $6.26.
We can’t stand it anymore. Add another $10,000 on MEDW. This is just too cheap to ignore. New Buy price will be $6.52.
Penninsula Capital owns 1.67 million shares or over 20% of MEDW. Not sure how they liguidate there stake profitably without a takeover
Down 6%. BUY

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $7.26, Valuation $11.51
Down $.43 to $5.61.
JP Morgan added 95,000 shares from 11/28-11/30, at $6.12 to $6.21. They now own 3,354,000 shares or about 10%.
They also filed an 8K in December. Seems they are sprucing up their senior officer change-of-control agreeemtnts. Wonder why? Meanwhile the stock just continues to sink and is now our biggest DOG.
Down 23%. HOLD

Angeion Corp. (ANGN-Recommended 10/14/2007)
Buy Price $7.55, Valuation $13.67
Up $1.18 to $9.16.
No news to explain the big rise over the past 3 weeks, but we like it.
UP 21%. HOLD

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $2.38 (Was $2.62 before another $10,000 and was $3.00 forst before double up), Valuation $7.58 (was $7.59)
Up $.01 to $2.10.
MIVA sank to under $2 last week and then rebounded on Friday. Tax loss selling here we think.
W. Blair disclosed a 10% stake in Miva in a 13G filing. We think this is overblown on the downside and are going to add another $10,000 here. New average BUY Price will be $2.38 per share.
No news.
Down 12%. BUY

PDL Biopharma. (PDLI-Recommended 10/21/2007)
Buy Price $20.04, Valuation $24.00 to $30.00
Down $.09 to $17.74.
PDLI announced the sale of a $30 million a year in sales drug, last week–for $200 million.
Looks like our 3X product revenue valuation may be a tad low (below). The stock sank on this news. Makes no sense to us.
At 7X the royalty revenue and 3X the product sales, you get $2.1 billion in value comapared to the current market cap of $2.1 billion. Their pipeline, and know-how has to be worth something.
No matter, they are still trying to sell the company.
So we are just waiting for them to announce the sale of the company and for how much.
Down 12%. BUY

Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, Valuation $9.39
Down $.09 to $3.73.
There is value here.
No news.
Trading at only 40% of our valuation.
Down 13%. 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), NEW Valuation $5.71 (was $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.60, up $.05.
Earnings last week were great. Sales up 21% and they made money. The stock initially went down! This market just stinks for mini/micro caps, and ARI does little to get any investor attention. Wake up management–you have a great little compnay here worth 3X what it is selling for.
Now down .7%. BUY. Still a Huge valuation gap here.

OPTIO Software Inc. (OPTO.ob-Recommended 3/22/2006)
Buy price $1.25, Valuation $2.74 (was $2.34, $2.28, $2.89, $2.89, $2.54 and 2.88)
Closed at $1.30, up $.10.
OPTIO has cash of $.41 per share–32% 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 6 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–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 4%. HOLD.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.93 (Was $.99 and $1.19 before adding $10,000-twice), Valuation $3.05 (was $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.85, up $.02.
Nice presentation filed in their 8K 2 weeks ago. Couple of nice mentions–including in Smart Money of the CEO interview with the Wall Street Reporter. Sigma Opportunity Fund has been buying more shares. I think it is time to add more here.
We are guessing $55 million of revenue this 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.
Now down 9%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.17 (Was $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price unchanged $.35. Closed at $.30.
Latest quarterly results were: Sales of $5.35 million, up 68% from $3.2 million last year. Without about $800,000 of patent enforcement costs, they would have broken even for the quarter, but this all dropped to the bottom line for a $808,000 loss—$.03 per share. One of these days CTIG is going to hit on all cylinders and get to $1.00.
Our valuation dropped a bit to $1.17, but, this is still trading at only 30% of our latest valuation.
Up 30% based on the ASK price. BUY

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $1.08 Valuation $2.08
Closed at $.97, down $.13.
LTUS, filed an impressive investor presentation on Form 8K in early December.
As noted, China stocks are risky, but based on their published information we just cannot figure out why this stock is trading so low.
LTUS is on track to make $.18 a share this year. Even if these earnings were taxed at U.S. tax rates, that would be about $.12 a share. That is a PE of less than 10, for a company growing revenues at 50% year-over-year. We may continue to buy more if the price stays in this range.
Down 10%. BUY

ARI Networks (ARIS.ob)

ARI announced Q1 FY 2008 results (quarter ended 10/31/2007) this morning. Surprise! They were good. Sales increased 21% and they made $.04 per share in earnings (untaxed). Their net cash position improved, margins held at 82% and our valuation went up to $5.71 from $5.49 (4%). Not bad. This is a great buy–but nobody has cared so far. Maybe management will make an effort now with some positive results to tout.

BUY.

12/15/2007 Update

Bad week for the markets again last week. All the indices were down 2.1-2.6%. Our portfolio was down a whopping 10.5% giving back just about all of our whopping 12.5% gain two weeks ago, This week MIVA, AVSO.ob, PARL and DWCH accounted for just about all of our losses.

We are adding to our positions in MIVA, AVSO.ob and BDAY this week.

Last week we went 5 stocks up, 11 down.

For last week, 2007 year-to-date, and since we started this Blog in January 2006, our model portfolio is -10.5%,+17.4% and +35.5% respectively. Since inception we are now 20 stocks up and 12 down( 10 of which are down less than 10%).

The DOW, NASDAQ and the S+P 500 were all down, with losses ranging from 2.1% (DOW) to 2.6% (NASDAQ) last week. The Dow is up 7.0%, NASDAQ is up 9.1% and the S+P 500 is up 3.5% for the year.

We are now up about 2.5 times the DOW, 1.9 times the NASDAQ and about 5 times the S+P 500 averages in 2007. The Russell 3000 and the Wilshire 5000 are up 3.75% and 3.1% 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%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.

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 16 stocks that we have closed out in 2006 and 2007 the average gain was 22%. We have closed out 12 positions in 2007 compared to 4 in all of 2006.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $10.65, Valuation $20-$22
Down $.49 to $14.42.
No news and trading volume has dropped. Not worried here. Looks like some hacker shorts may be back in playing too.
Now up 35%. HOLD.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (averaged down from $3.66), Valuation $10.30 (was $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $6.20, down $.83.
DWCH closed down for the week and down big on Friday.
We still like this one and may buy some more next week at this level, if we can get it.
DWCH is now trading at 60% of our valuation.
Now up 97%. HOLD, it this hits $8.00 in 2007-SELL 1/2

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 $10.80 (Was $9.20, $8.63, $13.77)
PARL closed at $4.12, down $.41.
Lets see, sales up 38%, made $.10 a share fully taxed and paid down $8 million of debt over the past 6 months.
But Glenn Nussdorf has been selling PARL shares! About 250,000 shares. Could be taking some tax losses, could be dealing with some margin debt issues, no one knows except for Glenn. Not a good sign with no explanation coming from the company, but this is still so cheap that we are staying with it for now.
Now trading at 38% of our valuation.
The new management has 2.0 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
Down 14%. 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 $20.51 (was $23.22, $20.99, $20.52)
Closed at $10.96 down $.48.
Two Directors bought a total of 15,000 shares recently at about $11. This is very unusual.
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.
A buy-out is a decent possibility here.
Down 9%. HOLD

Celebrate Express (BDAY-recommended 4/17/2007)
Buy Price $8.82, NEW Valuation $15.51 (Was $17.85 $18.18)
Down $.54 to $7.98.
The “turnaround” is not yet done.
Boring to watch this–but so was DWCH. We like the recent insider buying again and are content to wait for this one. Add another $10,000 here. New average BUY price will be $8.38.
Down 9%. BUY.

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.67, (was $6.98 after double up ($10,000 added) NEW Valuation $13.32 (was $12.89, $13.40)
down $.20 to $6.89.
Penninsula Capital owns 1.67 million shares or over 20% of MEDW. Not sure how they liguidate there stake profitably without a takeover
UP 3%. BUY

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $7.26, Valuation $11.51
Up $.04 to $6.04.
JP Morgan added 95,000 shares from 11/28-11/30, at $6.12 to $6.21. They now own 3,354,000 shares or about 10%.
They also filed an 8K in December. Seems they are sprucing up their senior officer change-of-control agreeemtnts. Wonder why?
Down 17%. HOLD

Angeion Corp. (ANGN-Recommended 10/14/2007)
Buy Price $7.55, Valuation $13.67
Up $.40 to $7.98.
No news to explain the big rise over the past 2 weeks, but we like it.
UP 6%. HOLD

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $2.62 (Was $3.00 before double up), Valuation $7.58 (was $7.59)
Down $.47 to $2.09.
W. Blair disclosed a 10% stake in Miva in a 13G filing. We think this is overblown on the downside and are going to add another $10,000 here. New average BUY Price will be $2.38 per share.
No news.
Down 18%. BUY

PDL Biopharma. (PDLI-Recommended 10/21/2007)
Buy Price $20.04, Valuation $24.00 to $30.00
Down $.37 to $17.93.
At 7X the royalty revenue and 3X the product sales, you get $2.1 billion in value comapared to the current market cap of $2.1 billion. Their pipeline, and know-how has to be worth something.
No matter, they are still trying to sell the company.
So we are just waiting for them to announce the sale of the company and for how much.
Down 11%. HOLD

Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, Valuation $9.39
Down $.17 to $3.82.
There is value here.
No news.
Trading at only 41% of our valuation.
Down 11%. 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 $5.49 (was $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.55, up $.05.
Earnings out on Monday morning. Trading volume has picked up to about 85,000 shares last week. Hopefully some good news next week. This has been very boring.
Now down 4%. BUY. Still a Huge valuation gap here.

OPTIO Software Inc. (OPTO.ob-Recommended 3/22/2006)
Buy price $1.25, Valuation $2.74 (was $2.34, $2.28, $2.89, $2.89, $2.54 and 2.88)
Closed at $1.20, up $.03.
OPTIO has cash of $.41 per share–35% 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 6 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–but may not happen now unless next quarter rebounds with some decent profit numbers, or they get a good deal on the Healthcare “division”.
DOWN 4%. HOLD.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.99 (was $1.19 before double up ($10,000 added), Valuation $3.05 (was $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.83, down $.07.
Nice presentation filed in their 8K last week. Couple of nice mentions–including in Smart Money of the CEO interview with the Wall Street Reporter. Sigma Opportunity Fund has been buying more shares. I think it is time to add more here.
Add another $10,000 here. We bought a couple thousand more shares last week too. New average Buy Price will be $.93 per share.
We are guessing $55 million of revenue this 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.
Now down 16%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.17 (Was $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price moved down to $.35. Closed at $.30.
Latest quarterly results were: Sales of $5.35 million, up 68% from $3.2 million last year. Without about $800,000 of patent enforcement costs, they would have broken even for the quarter, but this all dropped to the bottom line for a $808,000 loss—$.03 per share. One of these days CTIG is going to hit on all cylinders and get to $1.00.
Our valuation dropped a bit to $1.17, but, this is still trading at only 30% of our latest valuation.
Up 30% based on the ASK price. BUY

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $1.08 Valuation $2.08
Closed at $1.10, up $.05.
LTUS, filed an impressive investor presentation on Form 8K in early December.
As noted, China stocks are risky, but based on their published information we just cannot figure out why this stock is trading so low.
LTUS is on track to make $.18 a share this year. Even if these earnings were taxed at U.S. tax rates, that would be about $.12 a share. That is a PE of less than 10, for a company growing revenues at 50% year-over-year. We bought more last week at $1.07 to $1.12. May buy more if the price stays in this range.
Up 2%. BUY

12/8/2007 Update

Big week for the markets again last week. All the indices were up 1.5-1.9%. Our portfolio was down 1.3% after last weeks whopping 12.5% gain, This week OPTIO gave back last weeks gains and was down 22% and cost us 2% in our total portfolio–even though our valuation moved up significantly.

Last week we went 6 stocks up, 9 down and 1 even.

For last week, 2007 year-to-date, and since we started this Blog in January 2006, our model portfolio is -1.3%,+27.9% and +47.6% respectively. Since inception we are now 19 stocks up and 13 down( 10 of which are down less than 10%).

The DOW, NASDAQ and the S+P 500 were all up, with gains ranging from 1.6% (S+P 500) to 1.9% (DOW) last week. The Dow is up 9.3%, NASDAQ is up 12% and the S+P 500 is up 6.1% for the year.

We are now up about 3 times the DOW, 2.3 times the NASDAQ and about 4.6 times the S+P 500 averages in 2007. The Russell 3000 and the Wilshire 5000 are up about 5.9% and 6.6% 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%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.

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 16 stocks that we have closed out in 2006 and 2007 the average gain was 22%. We have closed out 12 positions in 2007 compared to 4 in all of 2006.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $10.65, Valuation $20-$22
Down $.26 to $14.91.
No news and trading volume has dropped. Not worried here.
Now up 40%. HOLD.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (averaged down from $3.66), Valuation $10.30 (was $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $7.03, up $.08.
DWCH closed up for the week but down big on Friday. Although technically DWCH hit $8 last week–it may have been for only 1 trade. So we are not counting this as a 1/2 sell as we recommended last week.
We still like this one.
DWCH is now trading at 68% of our valuation.
Now up 123%. HOLD, it this hits $8.00 in 2007-SELL 1/2

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 $10.80 (Was $9.20, $8.63, $13.77)
PARL closed at $4.53, up $.51.
Lets see, sales up 38%, made $.10 a share fully taxed and paid down $8 million of debt over the past 6 months.
Now trading at 42% of our valuation.
The new management has 2.2 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
Down 5%. BUY.

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 $20.51 (was $23.22, $20.99, $20.52)
Closed at $11.44 down $.55.
Two Directors bought a total of 15,000 shares recently at about $11. This is very unusual.
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.
A buy-out is a decent possibility here.
Down 5%. HOLD

Celebrate Express (BDAY-recommended 4/17/2007)
Buy Price $8.82, NEW Valuation $15.51 (Was $17.85 $18.18)
Down $.35 to $8.52.
The “turnaround” is not yet done.
Boring to watch this–but so was DWCH. We like the recent insider buying again and are content to wait for this one.
Down 3%. BUY.

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.67, (was $6.98 after double up ($10,000 added) NEW Valuation $13.32 (was $12.89, $13.40)
down $.12 to $7.09.
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%. BUY

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $7.26, Valuation $11.51
Down $.20 to $6.00.
JP Morgan added 95,000 shares from 11/28-11/30, at $6.12 to $6.21. They now own 3,354,000 shares or about 10%.
They also filed an 8K in December. Seems they are sprucing up their senior officer change-of-control agreeemtnts. Wonder why?
Down 17%. HOLD

Top Image Systems, Ltd. (TISA-Recommended 9/27/2007)
Buy Price $3.28, Valuation $5.46
Down $.58 to $2.01.
SOLD at a 39% loss. Taking some tax losses.

Angeion Corp. (ANGN-Recommended 10/14/2007)
Buy Price $7.55, Valuation $13.67
Up $1.28 to $7.58.
No news to explain the big rise, but we like it.
UP .4%. BUY

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $2.62 (Was $3.00 before double up), Valuation $7.58 (was $7.59)
Down $.32 to $2.56.
No news.
Down .2%. HOLD

PDL Biopharma. (PDLI-Recommended 10/21/2007)
Buy Price $20.04, Valuation $24.00 to $30.00
Up $.49 to $18.20.
At 7X the royalty revenue and 3X the product sales, you get $2.1 billion in value comapared to the current market cap of $2.1 billion. Their pipeline, and know-how has to be worth something.
No matter, they are still trying to sell the company.
So we are just waiting for them to announce the sale of the company and for how much.
Down 9%. HOLD

Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, Valuation $9.39
Down $.30 to $3.99.
There is value here.
No news.
Trading at only 42% of our valuation.
Down 7%. 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 $5.49 (was $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.50, unchanged.
No news.
Now down 7%. BUY. Still a Huge valuation gap here.

OPTIO Software Inc. (OPTO.ob-Recommended 3/22/2006)
Buy price $1.25, NEW Valuation $2.74 (was $2.34, $2.28, $2.89, $2.89, $2.54 and 2.88)
Closed at $1.17, down $.33.
OPTIO announced earnings last week. Our valuation moved up 17% to $2.74.
Sales were $6.8 million down from $7.6 million last year, but up from the $6.6 million last quarter. Net loss was cut to only $160,000 or $.01 per share. Not a bad quarter in our opinion, but this has been a frustrating stock and some people are giving up (and taking tax losses).
OPTIO has cash of $.41 per share–35% 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 5 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”.
DOWN 6%. HOLD.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.99 (was $1.19 before double up ($10,000 added), Valuation $3.05 (was $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.90, up $.03.
The CEO has bought 8,000 shares recently at $.85 to $.95. He is also giving an interview on the Wall Street Reporter on December 12th. Looks like maybe they are trying to get some attention to the under-valued stock they have.
AVSO is trading at 30% of our valuation.
We are guessing $55 million of revenue this 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.
Now down 9%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.17 (Was $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price moved up to $.36. Closed at $.30.
Earning out last month. Sales were $5.35 million, up 68% from $3.2 million last year.
Without about $800,000 of patent enforcement costs, they would have broken even for the quarter, but this all dropped to the bottom line for a $808,000 loss–$.03 per share. One of these days CTIG is going to hit on all cylinders and get to $1.
Our valuation dropped a bit to $1.17, but, this is still trading at only 31% of our latest valuation.
Up 33% based on the ASK price. BUY

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $1.08 Valuation $2.08
Closed at $1.05, down $.03.
LTUS, filed an impressive investor presentation on Form 8K last week.
As noted, China stocks are risky, but based on their published information we just cannot figure out why this stock is trading so low.
LTUS is on track to make $.18 a share this year. Even if these earnings were taxed at U.S. tax rates, that would be about $.12 a share. That is a PE of less than 10, for a company growing revenues at 50% year-over-year. We bought more last week at $1.07 to $1.12. May buy more if the price stays in this range.
Down 3%. BUY

Lotus Pharmaceuticals—BUY

Lotus Phamaceuticals, Inc. (Bulletin Board—LTUS.OB)
Valuation-$2.08
Price November 30, 2007-$1.08

We are recommending LTUS.ob for purchase. LTUS is trading at 52% of our valuation.

We have not recommended an OB-aby in quite some time. Mostly because we could not find one that looked like a real company at a low valuation.

We purchased this at about $1.25 a while ago. The company has continued to perform, but the stock has not.

Q3 sales (9/30/2007) were up 80% to $16.5 million and net income was up 50% to $.05 per share (fully diluted, but untaxed).

This company/stock looks much like American Oriental Bioengineering, which we bought a few years back at around $1. It is now about $11.70 and trades on the NYSE under the symbol AOB. AOB is about three times the size of LTUS ($43.5 million in sales last quarter and $.16 per share in earnings—partially taxed), but its market cap is like 18 times higher ($877 million vs. $50 million). Part of the reason for this is that AOB has 70% gross margins, while LTUS has 40% gross margins.

LTUS has about as much cash as debt. Not as cash flush as we like, but not overleveraged either.

The daily trading volume is about 50,000 shares.

We think anything under $1.15 is a good price.

Like all Chinese stocks there are many transactions with affiliates and related parties that always give us pause. LTUS has not participated in the Chinese stock run-up at all. The 52 week low is $.90 and the high is $3.30. So while we plan to buy more next week—we will not “pile-on”.

About Lotus Pharmaceuticals, Inc.

Lotus Pharmaceuticals, Inc. (“Lotus”) controls and operates Liang Fang Pharmaceutical, Ltd. (“Liang”) and En Zhe Jia Shi Pharmaceutical, Ltd. (“En Zhe”), two Chinese pharmaceutical companies located in Beijing. Liang and En Zhe form a large comprehensive enterprise, which deals in an integration of the production, trade, sales and marketing of pharmaceuticals. Together, they possess some of the most advanced pharmaceutical-production equipment used in China, workshops authenticated by the National GMP, a suite of various medicines produced by Liang and/or En Zhe (together, “Lotus East”), and a number of high-tech personnel. Lotus East has business and office facilities of 2,000 square meters, warehouse of 1,000 square meters and operates ten retail pharmacies in the Beijing area. Lotus East performs scientific research on new medicines, and the production, wholesale and retail sale of medicines. For more information, visit http://www.LotusEast.com.

12/1/2007 Update–Great week for all

Big week for the markets last week. All the indices were up 2-3%. Our portfolio was up a whopping 12.5%, driven by a 36% gain in Datawatch and a 23% gain in Optio.

Last week we went 9 stocks up and 7 down.

For last week, 2007 year-to-date, and since we started this Blog in January 2006, our model portfolio is +12.5%,+29.1% and +49% respectively. Since inception we are now 22 stocks up and 9 down( 6 of which are down less than 15%).

We were up 12.5% 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 2.5% (NASDAQ) to 3.0% (DOW) last week. The Dow is up 7.3%, NASDAQ is up 10.2 and the S+P 500 is up 4.4% for the year.

We are now up about 4 times the DOW, 2.9 times the NASDAQ and about 6.5 times the S+P 500 averages in 2007. The Russell 3000 and the Wilshire 5000 are up about 4% and 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)
2007-PDLI + 3% (Waited too long to sell)
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)

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 15 stocks that we have closed out in 2006 and 2007 the average gain was 26%. We have closed out 11 positions in 2007 compared to 4 in all of 2006.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $10.65, Valuation $20-$22
Down $.35 to $15.17.
SPNC did not participate last week. But everything seems to be be clicking along on plan here.
Now up 42%. HOLD.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (averaged down from $3.66), NEW Valuation $10.30 (was $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $6.95, up $1.85.
As we noted earlier in the week, DWCH had a blow-out quarter and is on a roll. Our valuation moved up 11% to $10.30, which is great.
Their former CEO–Robert Hagger who has announced his retirement–has continued to sell his shares each week at much lower prices. Guess it just proves that even insiders don’t know everything.
DWCH is now trading at 67% of our valuation.
Now up 121%. HOLD, it this hits $8.00 in 2007-SELL 1/2

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 $10.80 (Was $9.20, $8.63, $13.77)
PARL closed at $4.02, down $.16.
Lets see, sales up 38%, made $.10 a share fully taxed and paid down $8 million of debt over the past 6 months.
Now trading at 37% of our valuation.
The new management has 2.2 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
Down 16%. BUY.

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 $20.51 (was $23.22, $20.99, $20.52)
Closed at $11.99 up $.41.
Two Directors bought a total of 15,000 shares recently at about $11. This is very unusual.
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.
A buy-out is a decent possibility here.
Down 1%. HOLD

Celebrate Express (BDAY-recommended 4/17/2007)
Buy Price $8.82, NEW Valuation $15.51 (Was $17.85 $18.18)
Up $.25 to $8.85.
The “turnaround” is not yet done.
Boring to watch this–but so was DWCH. We like the recent insider buying again and are content to wait for this one.
Up .3%. BUY.

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.67, (was $6.98 after double up ($10,000 added) NEW Valuation $13.32 (was $12.89, $13.40)
Up $.21 to $7.21.
Penninsula Capital owns 1.67 million shares or over 20% of MEDW. Not sure how they liguidate there stake profitably without a takeover
UP 8%. BUY

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $7.26, Valuation $11.51
Down $.15 to $6.20.
JP Morgan added 95,000 shares from 11/28-11/30, at $6.12 to $6.21. They now own 3,354,000 shares or about 10%.
They also filed an 8K last week. Seems they are sprucing up their senior officer change-of-control agreeemtnts. Wonder why?
Down 15%. HOLD

Top Image Systems, Ltd. (TISA-Recommended 9/27/2007)
Buy Price $3.28, Valuation $5.46
Down $.58 to $2.01.
This is smelling like another LINN.ob right now. They announced their final eqrnings last week and it was worse than we expected. They spent all this money on acquisitions and ended up losing $2 million for the quarter and their margins plunged. We are not going to wait around for another 50%+ loser.
Worse, our valuation fell to only $1.77.
Down 39%. SELL

Angeion Corp. (ANGN-Recommended 10/14/2007)
Buy Price $7.55, Valuation $13.67
Down $.06 to $6.30.
No news.
Down 17%. BUY

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $2.62 (Was $3.00 before double up), Valuation $7.58 (was $7.59)
UP $.20 to $2.88.
No news.
UP 12%. HOLD

PDL Biopharma. (PDLI-Recommended 10/21/2007)
Buy Price $20.04, Valuation $24.00 to $30.00
Down $.28 to $17.71.
Third Point, the guys who started all the commotion about getting the CEO out and selling the company—sold all their shares. Lots of speculation as to why–but no one knows for sure except Third Point.
At 7X the royalty revenue and 3X the product sales, you get $2.1 billion in value comapared to the current market cap of $2.1 billion. Their pipeline, and know-how has to be worth something.
No matter, they are still trying to sell the company.
So we are just waiting for them to announce the sale of the company and for how much.
Down 12%. HOLD

Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, Valuation $9.39
UP $.17 to $4.29.
There is value here.
No news.
Trading at only 46% of our valuation.
Up .2%. 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 $5.49 (was $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.50, up $.10.
ARI actually traded about 50,000 shares last week–YIKES. Maybe some day their managment will take care of us shareholders.
Now down 7%. BUY. Still a Huge valuation gap here.

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 $.28.
OPTIO announced that they bought back 701,250 shares last week from a single shareholder at $1.20 per share. Not a big deal since they had over $9 million in cash and 25 million shares outstanding, but it looks like it removed the “overhang” on the sell side and allowed the stock to rebound last week.
OPTIO 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 5 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%. HOLD.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.99 (was $1.19 before double up ($10,000 added), Valuation $3.05 (was $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.87, down $.02.
The CEO has bought 8,000 shares recently at $.85 to $.95. He is also giving an interview on the Wall Street Reporter on December 12th. Looks like maybe they are trying to get some attention to the under-valued stock they have.
AVSO is trading at 29% of our valuation.
We are guessing $55 million of revenue this 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.
Now down 12%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.17 (Was $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price moved up to $.34. Closed at $.30.
We actually traded over 40,000 shares last week.
Earning out 3 weeks ago. Sales were $5.35 million, up 68% from $3.2 million last year.
Without about $800,000 of patent enforcement costs, they would have broken even for the quarter, but this all dropped to the bottom line for a $808,000 loss–$.03 per share. One of these days CTIG is going to hit on all cylinders and get to $1.
Our valuation dropped a bit to $1.17, but, this is still trading at only 29% of our latest valuation.
Up 26% based on the ASK price. BUY