Small rebound in the markets for a while last week. Still, the overall direction is down and good news continues to get no respect (See AVSO.ob update). We are doubling up on LTUS.ob. We have not seen some of these type of valuations since 2002. The sky was falling then to. But it didn’t fall. The stock prices rose. If we were not so heavily weighted in DWCH, PARL, ILOG, BDAY and MIVA, we would add more in these also.
All of the major averages have lost all their 2007 gains and then some from 12/31/2006. And we have too.
We were down 2.3% last week, bringing our YTD 2008 loss to 27.7%. NASDAQ was up .7%, the DOW was up 1.4% and the S+P 500 was up 1.4%.
Last week we went 9 stocks up, 5 down and 1 even.
For last week, 2008 year-to-date, and since we started this Blog in January 2006, our model portfolio is -2.3%,-27.7 and +6.5% respectively. Since inception we are now 19 stocks up and 13 down.
So far in 2008 the DOW is down 6.9%, NASDAQ is down 12.5% and the S+P 500 is down 8.1%
The Russell 3000 and the Wilshire 5000 are both down just under 8% this 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)
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 closed out in 2006, 2007 and 2008 the average gain was 22%.
Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $10.65, Valuation $20-$22
Up $.40 to $12.70.
Earnings due on 2/20 beofre the open. Keep your fingers crossed.
Now up 19%. HOLD.
DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (averaged down from $3.66), Valuation $9.03 (was $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $3.58, up $.o4.
DWCH is now trading at 39% of our valuation.
Now up 14%. 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 $11.24 (Was $10.80 $9.20, $8.63, $13.77)
PARL closed at $3.45, down $.13.
Latest earnings were very good. Stock is down. The market in general is anticipating that the bottom will fall out of everything.
Now trading at 31% 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 28%. 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 $24.67 (was $20.51, $23.22, $20.99, $20.52)
Closed at $9.04 up $.26.
Our valuation moved back up to over $24 per share.
No one cares in this market. ANY negative comment, or lack of positive comment weighs on share pricing these days.
For FY2008 (this year) they are STILL projecting another 20% increase in sales but revised their earnings projections down. They still have $3.39 a share in cash.
A buy-out is a decent possibility here.
Down 24%. HOLD
Celebrate Express (BDAY-recommended 4/17/2007)
Buy Price $8.38 (was $8.82 before double-up), Valuation $15.51 (Was $17.85 $18.18)
Down $.28 to $5.13.
There will be no more birthdays or halloween. BDAY is not burning it up, but this is stupid.
Trading at 33% of our valuation.
The “turnaround” is not yet done.
Down 39%. BUY.
Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.52, (was $6.67 ($10,000 added), $6.98 after double up) Valuation $10.28 (was $13.32, $12.89, $13.40)
Up $.49 to $6.16.
Earnings out last week.
The stock buy-back seems to have stopped the hemmoraging for now.
Down 6%. HOLD
Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $7.26, Valuation $8.69 (was $11.51)
Up $.20 to $3.71
No much going on here.
Down 49%. HOLD
MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $2.38 (Was $2.62 before another $10,000 and was $3.00 before double up), Valuation $7.58 (was $7.59)
Down $.31 to $1.67.
Euphoria from Yahoo deal seems to have worn off.
Trading at 22% of our valuation
Down 30%. BUY
PDL Biopharma. (PDLI-Recommended 10/21/2007)
Buy Price $16.53 (was $20.04 before double-up), Valuation $24.00 to $30.00
Up $1.14 to $15.63.
PDLI announced the sale of of their remaining cardiovascular products–back to the guys they bought them from for a less than robust $85 million, future royalties on yet to be developed products and some possible future milestone payments.
So total cash deals are $285 million (about $2.40 per share). They are still trying to sell their royalty stream and R+D and manufacturing assets.
We guess their royalty stream just based on the current marketed products is worth $1.5 billion, so this, plus the sales above, are more that the current market cap. Their pipeline, know-how, and remaining commercial assets just add to this.
No matter, they are still trying to sell the company.
Down 6%. HOLD
Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, Valuation $10.66 (Was, $9.39)
Up $.05 to $3.96.
Trading at only 37% of our valuation.
Down 8%. 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 $5.71 (was $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.80, up $.06.
Earnings announced last month were great. Sales up 21% and they made money. 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 12%. 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, down $.05.
OPTIO has cash of $.41 per share–34% of the market cap.
In June 2007, OPTIO announced they had hired an investment banker to help them review the “Strategic Alternatives” related to their Healthcare software division.
It has been over 8 months now since their announcement–with no announcement. We have to assume there will be no deal here. Management is derelict in making no announcement.
Still hoping we will see north of $2.00–but may not happen now unless next quarter rebounds with some decent profit numbers.
Down 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 $.84, up $.02.
Earnings out last week. Sales up only 4%, but earnings up 69%!. EPS was $.04 compared to $.02 last year. Pre-tax earnings were up over 100%. Our valuation rose to $3.41. Stock went down. Who can figure.
Now down 10%. 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 at $.34. Closed at $.24.
Maybe these guys will wake up and create some shareholder value in 2008.
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 $.84, down $.06.
LTUS announced an earnings restatement last week–OH NO!–but wait–they are restating their earnings UP–so the stock falls. This is all part of the market irrationallity right now. We may continue to buy more if the price stays in this range. Double up here. New avg Buy Price will be $.95 next week.
Down 22%. BUY