Cheap Stocks, 3/29/2008 Update

Markets gave some gains up last week, except for NASDAQ, which was up a tad. We managed to rebound with a 6.4% gain.

All of the major averages have lost all their 2007 gains and then some from 12/31/2006. And we have too.

We were up 6.4% last week. NASDAQ was up .1% last week, the DOW was down 1.2% and the S+P 500 was down 1.1%.

Last week we went 6 stocks up, 6 down and 2 even.

For last week, 2008 year-to-date, and since we started this Blog in January 2006, our model portfolio is +6.4%,-39.2 and -3.7% respectively. Since inception we are now 18 stocks up and 13 down and 1 even.

So far in 2008 the DOW is down 7.9%, NASDAQ is down 14.8% and the S+P 500 is down 10.4%. The NASDAQ is now down a whopping 20.9% since October 31, 2007.

The Russell 3000 and the Wilshire 5000 are both down just about 10.5% this 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.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)

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 18 stocks that we closed out in 2006, 2007 and 2008 the average gain was 23%.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $9.40 (was $10.65 before double up), Valuation $20-$22
Up $.28 to $8.27.
SPNC continues to drift. Management will not so a stock buy-back to support the price.
The company has $54.4 million in cash ($1.73 per share), and is trading at about 2 times 2008 revenues (net of cash).
No news.
Now down 12%. BUY.

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 $3.43, up $.25. DWCH is now trading at 38% of our valuation.
No news.
Now up 9%. BUY

Parlux Fragrances (PARL-Recommended 11/30/2006)
New Buy price $4.14 (was $4.78 before $10,000 adder, $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 $3.10, up $.06.
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 28% 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 25%. 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 $9.48 down $.06.
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 22%. HOLD

Celebrate Express (BDAY-recommended 4/17/2007)
NEW Buy Price $6.15 (was $8.38 before $10,000 adder and $8.82 before double-up), Valuation $15.51 (Was $17.85 $18.18)
Dwon $.15 to $4.60.
There will be no more birthdays or halloween. BDAY is not burning it up, but this is stupid.
Trading at 30% of our valuation.
The “turnaround” is not yet done.
Down 25%. 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)
Down $.11 at $5.72.
Cannell Capital filed a 13D on February 19th, disclosing a 12.9% ownership stake. Most of this was purchased from Penninsula at $7.03 a share. Cannell is pushing MEDW management to sell the company. It seems the only was any stock can go up these days is on a buy-out.
Down 12%. HOLD

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $7.26, Valuation $8.69 (was $11.51)
Up $.22 to $3.24
No news.
Down 55%. 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 $6.84 (was $7.58, $7.59)
Down $.05 to $1.70.
For 2008 they are projecting revenue of $145-$150 million and EBITDA breakeven. But it sounds like this will not happen until the second half of 2008. If they can turn this around-a double or triple from here is possible.
Our valuation dropped to $6.84. If they can do what they say in 2008, a valuation of close to $8 is possible.
Trading at 25% of our latest valuation
Down 25%. BUY

PDL Biopharma. (PDLI-Recommended 10/21/2007)
Buy Price $12.69 (was $14.15, before $10,000 adder, $16.53 before $10,000 adder, and $20.04 before double-up), Valuation $18.00 to $20.00
Up $.98 to $10.61.
Finally an UP week.
PDLI announced that they had closed all their asset sales ($240 million, $200 million and $85 million). Next should be a dividend of maybe $4 a share and then some deal involving their royalty income.
Down 16%. HOLD

Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, Valuation $10.66 (Was, $9.39)
Down $.05 to $3.72.
No news.
Trading at only 35% of our valuation.
Down 13%. BUY

OB-abies (Bulletin Board Listed Stocks)

Interestingly, our OB-abies have held up better than the “higher-quality” stocks so far this year. They are down about 10% on average, compared to almost 25% for the stocks above. At least so far. As proven by OPTIO, patience is necessary with these 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 $5.61 (was $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.65, down $.15
Earnings were great, stock goes down. 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.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.93 (Was $.99 and $1.19 before adding $10,000-twice), Valuation $3.41 (was $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.83, unchanged.
Earnings out in early February. 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.
Now down 11%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, NEW Valuation $1.31 (Was $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price unchanged at $.27. Closed at $.27.
Earnings out late Friday. Not bad at all. Q4 revenues were $4.8 million, gross margin was 72%, and excluding a $200,000 impairment charge, CTI actually made about $77k of income. Net cash (net of debt) grew by $350,000.
Our valuation went up to $1.31 per share.
Maybe these guys will wake up and create some shareholder value in 2008.
This is still trading at only 21% of our latest valuation.
EVEN. BUY

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up) Valuation $2.08
Closed at $.70, up $.11.
No apparent reason for the recent decline. More sellers than buyers.
LTUS announced a $5 million private placement of stock in late February. 5,547,000 shares and warrants to purchase another 2.9 million shares at $1.20. Also in the agreement, the current big holders have to put up a chunk of their personal stock in escrow, which will be released on hitting certain earnings target. The target for 2007 is $8.5 million. For the 9 months ended September 30, they made $6.1 million. So this should make $2.4 million Q4 earnings a slam dunk–$.05 per share. Target for 2008 is $13.8 million (about $.28 a share) and 2009–$17.5 million or about $.35 per share.
Earnings should be out in about 2 weeks.
This is still a BUY.
Down 16%.

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ARI Networks

ARIS.ob, announced Q2 earnings this morning (1/31/2008).

Sales up 17%, earnings up 35%. Made $.05 per share (not-taxed, but I doubt ARI will pay any taxes (in the next 5 years anyway) with their net-operating loss carryforwards). Cash earnings were $.09 this quarter.

Our valuation actually fell a bit from $5.71 to $5.61 (on more shares ourstanding), but this is turning into an earnings play it seems.

Stock has not traded. Terrific results on a crappy day in the market (few days haven’t been crappy this year).

This should be trading at $4 a share at least–even in this market.

BUY.

Cheap Stocks, 3/15/2008 Update

Well we got a big head fake last week as the markets soared on Tuesday, then gave it all back by the end of the week. NASDAQ is back to where it was in December 2005! Last week LTUS.ob dropped 19% for no apparent reason leaving us down 2.5% for the week.

We are adding another $10,000 to both PDLI and LTUS.ob this week.

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 2.5% last week, bringing our YTD 2008 loss to 35.8%. NASDAQ was even last week, the DOW was up .5% and the S+P 500 was down .4%. There are lots of cheap stocks around now, but we keep coming back to the ones we already own as being the best values.

Last week we went 5 stocks up, 6 down and 3 even.

For last week, 2008 year-to-date, and since we started this Blog in January 2006, our model portfolio is -2.5%,-35.8 and -2.8% respectively. Since inception we are now 19 stocks up and 13 down.

So far in 2008 the DOW is down 9.9%, NASDAQ is down 16.6% and the S+P 500 is down 12.2%. The NASDAQ is now down a whopping 22.6% since October 31, 2007.

The Russell 3000 and the Wilshire 5000 are both down just about 12.3% this 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.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)

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 18 stocks that we closed out in 2006, 2007 and 2008 the average gain was 23%.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $9.40 (was $10.65 before double up), Valuation $20-$22
Down $.46 to $7.95.
SPNC continues to flounder. Insider buying perked it up a bit for a while.
Zack’s put out a tepid report last week with a price target of $9.50–because SPNC missed their estimate by $.01. Lets see that’s $300,000 miss. It is just too easy in this market to say things are bad. Zacks can’t even get their numbers right. They ignore the $55 million in cash (22% of the market cap) that SPNC has and says that at 3.1 times 2008 sales it should trade at $9.50. They are idiots.
The company has $54.4 million in cash ($1.73 per share), and is trading at about 2 times 2008 revenues (net of cash). Stupid.
Now down 16%. BUY.

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 $3.57, up $.17. Zeff Capital Partners filed a 13G last week disclosing a 303,100 (5.1%) ownership position.
DWCH is now trading at 40% of our valuation.
No news.
Now up 13%. BUY

Parlux Fragrances (PARL-Recommended 11/30/2006)
New Buy price $4.14 (was $4.78 before $10,000 adder, $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 $2.99, up $.12.
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 27% 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 $10.38 down $.22.
Our valuation moved back up to over $24 per share.
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 14%. HOLD

Celebrate Express (BDAY-recommended 4/17/2007)
NEW Buy Price $6.15 (was $8.38 before $10,000 adder and $8.82 before double-up), Valuation $15.51 (Was $17.85 $18.18)
Up $.31 to $4.70.
There will be no more birthdays or halloween. BDAY is not burning it up, but this is stupid.
Trading at 30% of our valuation.
The “turnaround” is not yet done.
Down 24%. 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)
Unchanged at $6.00.
Cannell Capital filed a 13D on February 19th, disclosing a 12.9% ownership stake. Most of this was purchased from Penninsula at $7.03 a share. Cannell is pushing MEDW management to sell the company. It seems the only was any stock can go up these days is on a buy-out.
Down 8%. HOLD

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $7.26, Valuation $8.69 (was $11.51)
Down $.65 to $3.26
Funds selling (Third Point–who has been hammered lately–PDLI also)
No news.
Down 55%. 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), NEW Valuation $6.84 (was $7.58, $7.59)
Up $.01 to $1.81.
Earnings out last week. Not great–but there seems to be hope. Sales down %5 to $34.6 million, and they had an adjusted EBITDA loss of $2.9 million. For 2008 they are projecting revenue of $145-$150 million and EBITDA breakeven. But it sounds like this will not happen until the second half of 2008. If they can turn this around-a double or triple from here is possible.
Our valuation dropped to $6.84. If there can do what they say in 2008, a valuation of close to $8 is possible.
Trading at 26% of our new valuation
Down 25%. BUY

PDL Biopharma. (PDLI-Recommended 10/21/2007)
New Buy Price $14.15 (was $16.53 before $10,000 adder, and $20.04 before double-up), Valuation $18.00 to $20.00
Down $1.44 to $9.69.
PDLI announced that they had closed all their asset sales ($240 million, $200 million and $85 million) last week. Next should be a dividend of maybe $4 a share and then some deal involving their royalty income. As scary as this whole thing is–we still think that this current valuation is stupid. At $9.69, less a $4 dividend–this will be trading at around $5.69–or a $680 million market cap. Doing $150 million a year in royalties (and growing), a bunch of clinical developments, ongoing.
So we are adding ANOTHER $10,000 to this one. New avg. buy price will be-$12.69.
Down 32%. HOLD

Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, Valuation $10.66 (Was, $9.39)
Down $.02 to $4.02.
No news.
Trading at only 38% of our valuation.
Down 6%. BUY

OB-abies (Bulletin Board Listed Stocks)

Interestingly, our OB-abies have held up better than the “higher-quality” stocks so far this year. They are down about 5% on average, compared to almost 25% for the stocks above. At least so far.

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 $1.85, unchanged.
Earnings announced in January 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.
Earnings due out Monday, March 17th, before the open.
Now up 15%. BUY. Still a Huge valuation gap here.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.93 (Was $.99 and $1.19 before adding $10,000-twice), Valuation $3.41 (was $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.90, up $.05.
Earnings out in early February. 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 goes down. Who can figure.
Hired a PR firm last week. Maybe they are ready to go prime time with the Street. Hope somebody is left out there to listen.
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 unchanged at $.29. Closed at $.24.
Maybe these guys will wake up and create some shareholder value in 2008.
This is still trading at only 25% of our latest valuation.
Up 7% based on the ASK price. BUY

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.95 (Was $1.08 before double-up) Valuation $2.08
Closed at $.68, down $.16.
No apparent reason for the decline. More sellers than buyers.
LTUS announced a $5 million private placement of stock in late February. 5,547,000 shares and warrants to purchase another 2.9 million shares at $1.20. Also in the agreement, the current big holders have to put up a chunk of their personal stock in escrow, which will be released on hitting certain earnings target. The target for 2007 is $8.5 million. For the 9 months ended September 30, they made $6.1 million. So this should make $2.4 million Q4 earnings a slam dunk–$.05 per share. Target for 2008 is $13.8 million (about $.28 a share) and 2009–$17.5 million or about $.35 per share.
We bought more last week at $.72. Add another $10,000 here too. New avg. buy price will be $.84.
This is still a BUY.
Down 28%.

Cheap Stocks, 3/8/2008 Update

Relentless is this market in it’s downward swoon. NASDAQ is back to where it was in December 2005! We joined the market last week again, despite booking a 40% gain on the OPTIO buy-out. We got nailed with a 30%+ loss on PDLI as well as others to post a 5.4% loss last week. We have not seen some of these type of valuations since 2002 and they just keep getting cheaper every week. The sky was falling then too. But it didn’t fall. Stock prices rose. We took the plunge last week and added to PARL, PDLI and BDAY.

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 5.4% last week, bringing our YTD 2008 loss to 33.3%. NASDAQ was down 2.6%, the DOW was down 3.1% and the S+P 500 was down 2.8%. There are lots of cheap stocks around now, but we keep coming back to the ones we already own as being the best values.

Last week we went 4 stocks up and 11 down.

For last week, 2008 year-to-date, and since we started this Blog in January 2006, our model portfolio is -5.4%,-33.1 and +.6% respectively. Since inception we are now 19 stocks up and 12 down.

So far in 2008 the DOW is down 10.3%, NASDAQ is down 16.6% and the S+P 500 is down 11.9%. The NASDAQ is now down a whopping 22.6% since October 31, 2007.

The Russell 3000 and the Wilshire 5000 are both down just about 12% this 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.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)

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 18 stocks that we closed out in 2006, 2007 and 2008 the average gain was 23%.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $9.40 (was $10.65 before double up), Valuation $20-$22
Down $.59 to $8.41.
SPNC gave back the prior weeks gains.
The company has $54.4 million in cash ($1.73 per share–21% of the current share price), and is trading at about 2 times 2008 revenues (net of cash). Stupid.
Now down 11%. BUY.

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 $3.40, down $.05.
DWCH is now trading at 38% of our valuation.
We bought more last week around $3.30.
No news.
Now up 8%. BUY

Parlux Fragrances (PARL-Recommended 11/30/2006)
New Buy price $4.14 (was $4.78 before $10,000 adder, $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 $2.87, down $.51.
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 26% of our valuation.
The new management has 2.0 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
We bought more last week under $3.00.
Down 31%. 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 $10.60 up $.76.
The over $1 price rise in this crappy market over the last 2 weeks, may signal a buy-out is near–lets hope so. Seems that this is the only way for any stock to go up this year.
Our valuation moved back up to over $24 per share.
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 12%. HOLD

Celebrate Express (BDAY-recommended 4/17/2007)
NEW Buy Price $6.15 (was $8.38 before $10,000 adder and $8.82 before double-up), Valuation $15.51 (Was $17.85 $18.18)
Down $.74 to $4.39.
There will be no more birthdays or halloween. BDAY is not burning it up, but this is stupid.
Trading at 28% of our valuation.
The “turnaround” is not yet done.
Down 29%. 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)
Down $.12 to $6.00.
Cannell Capital filed a 13D on February 19th, disclosing a 12.9% ownership stake. Most of this was purchased from Penninsula at $7.03 a share. Cannell is pushing MEDW management to sell the company. It seems the only was any stock can go up these days is on a buy-out.
Down 8%. HOLD

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $7.26, Valuation $8.69 (was $11.51)
Down $.61 to $3.91
No news.
Down 46%. 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 $.30 to $1.80.
Trading at 24% of our valuation
Down 25%. BUY

PDL Biopharma. (PDLI-Recommended 10/21/2007)
New Buy Price $14.15 (was $16.53 before $10,000 adder, and $20.04 before double-up), Valuation $18.00 to $20.00
Down $4.85 to $11.13.
PDLI announced that they decided to dissappoint everyone last week and not sell the company. So it got the customary 30%+ market haircut.
Instead of doing what they said they were going to do, they took the company off the block and announced that they will pay out over $500 million of the asset sale proceeds, when they get them, and then sometime after that. Oh yeah, they will do other things to get the shareholders some value too. These guys have been entirely inept so far.
But, we still think the company is worth way more than $11. So we added some more last week.
Down 21%. HOLD

Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, Valuation $10.66 (Was, $9.39)
Down $.02 to $4.04.
No news.
Trading at only 38% of our valuation.
Down 6%. BUY

OB-abies (Bulletin Board Listed Stocks)

Interestingly, our OB-abies have held up better than the “higher-quality” stocks so far this year. They are down about 3% on average, compared to almost 23% for the stocks above. At least so far.

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 $1.85, up $.07.
Earnings announced in January 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.
Earnings due out Monday, March 17th, before the open.
Now up 15%. 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)
SOLD last week at $1.75 for a 40% gain. Took a while, but it did happen.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.93 (Was $.99 and $1.19 before adding $10,000-twice), Valuation $3.41 (was $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.85, down $.03.
Earnings out in early February. 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 goes down. Who can figure.
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 down $.04 at $.29. Closed at $.24.
Maybe these guys will wake up and create some shareholder value in 2008.
This is still trading at only 25% of our latest valuation.
Up 7% based on the ASK price. BUY

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.95 (Was $1.08 before double-up) Valuation $2.08
Closed at $.84, up $.03.
LTUS announced a $5 million private placement of stock in late February. 5,547,000 shares and warrants to purchase another 2.9 million shares at $1.20. Also in the agreement, the current big holders have to put up a chunk of their personal stock in escrow, which will be released on hitting certain earnings target. The target for 2007 is $8.5 million. For the 9 months ended September 30, they made $6.1 million. So this should make $2.4 million Q4 earnings a slam dunk–$.05 per share. Target for 2008 is $13.8 million (about $.28 a share) and 2009–$17.5 million or about $.35 per share. This is still a BUY.
Down 11%.

Taking the plunge

This market has been relentlessly depressing. NASDAQ is down over 22% since October 31, 2007. But we can not stand it anymore. We are taking the 40% profit from the Optio takeover announced this week and putting an additional $10,000 into each of PDLI, BDAY and PARL. The adjusted average buy prices for these will be:

BDAY–$6.15
PDLI–$14.15
PARL–$4.14

The reaction to the PDLI news this week that they are not selling the company was crazy in our opinion, but anything less that great news seems to warrant a 30% haircut in this market.

Optio Software—CHA-CHING

Bottomline Technologies offered to buy Optio this morning. Obviously this is why the company has been so quiet lately. Buy-out price is $1.85 a share. Less than we think OPTIO is worth–but in this market, we will take it.

Bottomline has the cash to do this deal, so the risk here is minimal for the deal not to go through. Nevertheless, we will not wait. Sell at $1.75 a share or better for a 40% gain on this one.