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-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.
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.
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
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.
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.