Finally. A double digit gain week–at least for us.
SELL CYNO for a 25% gain.
The DOW was up 4.4%, NASDAQ was up 1.2% and the S+P 500 was up 5.9%. For the year the DOW is now down 2.3%, NASDAQ is UP 10.3% and the S+P 500 is up 2.9%. The Russell 3000 and the Wilshire 5000 are also down 1-2% this year.
We had a 10.6% gain last week and are now up 12.5% for the year.
Last week we went 15 stocks up 5 down and 1 even. Since inception we are now 26 stocks up, and 20 down.
Since our beginning, 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%
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)
2008-PDLI +9% (company split, and special dividend)
2008-BDAY -39% (long overdue takeover offer-or “take-under”)
2008-DTLK +40% (third trip on this one)
2008-ILOG +26% (Buy-out offer from IBM)
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 24 stocks that we closed out in 2006, 2007, 2008 and 2009 the average gain was 24%.
Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $5.68 (was $8.90, $9.40 before adding $10,000,and was $10.65 before double up), Valuation –Suspended.
Up $.37 to $4.17.
SPNC announced earnngs last week. Q1 revenues were $27.3 million, up 15% over last year. They lost $3.1 million after $1.4 million in legal expense related to the “investigation”. Cash is $1.07 per share.
SPNC is suffering from the FDA, ICE raids that apparently eminated from an ex-employee whistle-blower trying to collect some money from the company. SPNC has the financial where-with-all to deal with this. Growing nicely in a crappy economy. Just got to wait this one out.
The company has $34 million in cash ($1.07 per share), no debt and is growing about 15% a year.
Now down 27%. HOLD.
DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $2.41 (was $3.02 before adding another $10,000,was $3.21 before adding another $10,000, averaged down from $3.66),
NEW Valuation $8.12 (was $8.07, $8.12, $8.64, $8.47, $8.47, $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed up $.13 at $1.75.
Cash is $.83 per share.
Earnings out last week. Sales down 13% to $5.1 million, but they made $.04 per share (excluding an intangible write-off). New valuation is $8.12, back where is was 2 quarters ago.
Now down 27%. BUY
Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up)
Valuation $11.30 (was $11.48, $11.47 $10.99, $10.28, $13.32, $12.89, $13.40)
Down .06 to $4.06.
Earnings out in early February. Sales up 16% and they made $.04 per share. Cash was $2.34 per share and our valuation fell only a tad to $11.30 a share. With all of the below going on, when does MEDW get bought out?
Cannell Capital filed a 13D in February 2008, disclosing a 12.9% ownership stake. Cannell has been pushing MEDW management to sell the company. Meanwhile, Constellation Software, a Canadian public company that has been on an acquisition binge filed a 13D in April 2008, disclosing a 6.1% ownership in MEDW (499,000 shares). Constellation has $243 million in revenues and is profitable.
On November 14th, 2008, Constellation filed a 13D/A. One of their subsidiary officers bought over 300,000 MEDW shares in October 2008, bringing their combined owership in MEDW to 17.9%
Down 36%. BUY
Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $3.74 (was $7.26 before double up),
Valuation $7.60 (was $4.31, $5.88, $8.63, $9.90, $8.69, $11.51)
Up $.20 at $1.15
Earnings out in April. Much better than the prior quarter. While sales were down, they only lost half a million dollars. They have $1.13 per share in cash and our valuation spiked up to $7.60.
Down 69%. HOLD.
MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $1.63 (Was $2.38 before adding another $20,000, $2.62 before another $10,000 and was $3.00 before double up),
Valuation $5.61 (was $6.42, $6.84, $7.58, $7.59)
down $.02 at $.33.
Earnings out in April. Horrible of course. This all means nothing at this point due to the sale of the media business for $11.6 million after the quarter ended.
The MEDIA had 20-30% gross margins and likely lost money. Looks like this will reduce annual revenues to maybe $40 million with 90% gross margins. No info on the bottom line impact. With say $15-$20 million of cash (our guess) and a high margin sales base we think our valuation will be in the $3+ range.
Down 79%. HOLD
Harris Interactive. (HPOL-Recommended 5/25/2008)
Buy Price $.59 (was $1.79, $1.82 before adding $10,000 each time, $2.02 before $10,000 added and $2.15 before double up),
NEW Valuation $2.78 (Was $4.67, $4.66, $6.00, $5.96)
Down $.01 at $.37.
HPOL announced last week that they had successfully amended their bank line and also Q1 earnings. Sales were down 30% to $39.9 million, and they lost $6.7 million or $.12 per share. The loss included $5.3 million of “restructuring” charges. They reported that they had positive “adjusted EBITDA” of about half a million dollars.
Cash declined to about $16.9 million and debt was $24.2 million. Our new valuation plunged to $2.78 a share. But the sock is still tading at only 13% of our valuation. Give this one one more quarter to see if they can stabilize things.
Finaciere De Sainte Marine, is a big investor in HPOL. They now own 7,779,000 shares up from 6,640,381 shares in mid-2008, or over 14% of the company.
Down 47%. BUY
IPASS. (IPAS-Recommended 6/1/2008)
Buy Price-$1.90 (Was $2.07 before another $10,000 added and $2.15 before double up), Valuation $4.75 (was $4.12, $4.99, $4.30, $4.09)
Up $.32 to $1.50
Q1 earnings announced last week. Revenues were down YOY 7% to $44.6 million. Their “dial-up” businss revenues dropped from $11.5 million last year to $6 million this quarter. Their ongoing business grew over last year. GAAP loss was $3 million and non-GAAP income was $1.3 million–$.02 a share. Cash stayed healthy at $68 million–$1.10 per share. Our valuation rose to $4.75 per share and the stock responded by rising 27% last week.
Foxhill has been buying more IPASS. Ownership now up to 6.7%. They are also nominating 3 new Board members. Shamrock owns 9.8%, Royce 5.9% and Federated, 5.5%.
our valuation fell to $4.12, as margins dipped a bit.
Down 21%. BUY
Healthstream Inc. (HSTM-Recommended 8/4/2008)
NEW Valuation $4.81 (Was $4.83, $4.62, $4.42)
Up $.39 at $2.69.
Earnings out in late April. Sales up 19% to $13.6 million and they made $.9 million pre-tax. Reported EPS was $.04. Our valuation stayed about the same at $4.81 per share. Not that easy to do in this economy.
Up 12%. BUY
CCA Industries. (CAW-Recommended 8/4/2008)
Buy Price-$5.51 (was $6.14 before $10,000 added, $6.66 before $10,000 added, $7.00 before $10,000 added) (9.0% dividend yield)
Valuation $17.05 (Was $14.51, $17.23, $18.36)
Up $.06 to $3.11.
CCA filed their 10Q last week. Our new valuation was better than we expected–$17.05 and cash was $2.11 per share.
Down 44%. HOLD
Magic Software Enterprises. (MGIC-Recommended 8/18/2008)
Buy Price-$1.93 (was $2.08 before another $10,000 added, $2.00 before $10,000 added at $2.16)
Valuation $3.97 (was $4.18, $4.15)
Closed down $.06 at $1.33
Earnings out in late February. They were good, but the markets nullified any positive action in MGIC. Our valuation fell a bit to $3.97 and cash stayed steady at $1.01 per share. Sales were only down 4% to $15.1 million and net income (before discontinued operations) tripled to $.03 per share. Not bad.
Formula Systems (NASDAQ-FORTY) holds 17,605,000 shares of MGIC or 55.4%. FORTY is a long-term investor that at some point will want to sell MGIC.
Down 31%. BUY
Angeion Corporation. (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $9.53 (was $13.30, $13.03)
Closed up $.50 at $2.75
Earnings out in late February. Sales fell from $7.5 million to $6.4 million and they lost $600,000 (actually less of a loss than last year). Cash was $2.11 per share, but our valuation fell to $9.53 (still almost 4 times the current share price).
Blueline Partners filed a 13D on ANGN on June 23, 2008. They own 216,000 shares or about 5.3% of the company. All of their purchases were well North of the current price.
Down 28%. BUY
Noah Educational. (NED-Recommended 10/5/2008)
Buy Price-$3.03(was $3.00 before $10,000 added)
Valuation $7.79 (Was $7.98, $7.18)
Closed up $.22 at $3.32
Earnings out in February. Revenue up 11% and they made $.04 per share.
Our valuation fell a tad to $7.79. Has cash of $3.58 per share–10% more than its share price. This valuation is just stupid.
Up 28% (adjusted for $.56 dividend). BUY
Datalink . (DTLK-Recommended 10/12/2008)
Valuation $8.55 (Was $10.27, $10.26)
Closed up $.11 at $3.55
Cash is $2.34 per share.
Earnings out in mid-April. Sales down about 16% at $40 million, and they lost $.05 per share compared to a profit of $.04 last year. As expected, our valuation fell to $8.55. Still trading at less than 50% of even that reduced projected valuation.
UP 18%. HOLD
Global Shipping . (GSL-Recommended 10/12/2008)
Buy Price $2.59-(Was $3.69 before adding another $10,000)
Valuation NA-Dividend yield play
Closed up $.06 at $1.83
Current dividend yield–suspended
Well the screwed up banking envoronment, the decline in ship values, the relectance of appraisers to even give appraisals all converged on GSL last week. They announced that they were trying to get appraisals on their ships but needed more time (until June 30) and that they would suspend their dividend until the banking crap was sorted out. Meanwhile they also announced that operating income is expected to increase 30% to $13 million as the impact of the last 3 ships put in service took effect. Unbelievable. They also said they would revisit the dividend after this mess is resolved.
Their average ship charter life is around 10 years and the closest-in renewal is at the end of 2012.
Down 30%. HOLD
Cynosure. (SNWL-Recommended 10/29/2008)
Buy Price-$6.84 (Was $9.10 before double-up)
Closed up $2.05 at $8.54
CYNO has $7.45 per share in cash.
Earnings last week. Sales down to $14.8 million from $36.8 million. Yikes! They also lost about $7 million pre-tax. Nothing good other than “order rates picked up slightly in March”. Cash ended up at about $89 million–$6.99 per share.
We will take this opportunity and SELL CYNO
Up 25%. SELL
Cutera. (CUTR-Recommended 10/29/2008)
NEW Valuation-$ 15.40 (Was $18.06, $18.88, $21.07)
Closed up $1.28 at $7.75
Earnings out last week. Sales down 33% to $14.4 million and they lost about $2.2 million pre-tax (excluding the one-time litigation settlement). Again, not bad given the economy. Cash fell a bit to $7.88 a share, and our valuation fell to $15.40. Yes, the business is “free” and you get $.13 per share of cash as a gift to buy it.
Down 2%. HOLD
OPKO Health Inc. (OPK-Recommended 2/16/2009)
Unchanged at $1.16.
This is still a Phillip Frost play–Key and KOS Pharmaceutical sold for billions. Frost put in $20 million to buy shares at $1.00–and keeps buying on the open market all the time. His ownership has now exceeded 50% with just over 100 million shares.
Down 7%. BUY
OB-abies (Bulletin Board Listed Stocks)
As proven by OPTIO, patience is necessary with these stocks, especially in this Bear Market.
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),
aluation $5.19 (was $5.66, $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.03, up $.03.
Earnings out in March. Not bad. Sales down about 6% from $3.4 to $3.2 million and they made $273,000 pre-tax income. Our valuation remained over $5 per share at $5.19.
Wake up management–you have a great little company here worth 5X what it is selling for.
Now down 36%. BUY. Still a Huge valuation gap here.
Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.79 (Was $.93, $.99 and $1.19 before adding $10,000-each time),
Valuation $2.78 (was $3.30, $3.76, $4.00 $3.41, $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.46, up $.15.
They announced more cost cuts in April and made it sound like this quarter will be a bummer. They are taking out $500k per quarter in expenses. Hopefully this will be enough to keep them going. Their current market cap of $8 million is about 21% of annual sales.
Earnings out in February. Sales down 27%, and they lost $.03 per share.
Our valuation fell to $2.78 from $3.30. Still, they are not hemoragging cash and the current share price is less than 20% of our valuation.
Down 42%. HOLD.
CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $1.57 (Was $1.40, $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price $.13 down $.01. Closed at $.12.
Earnings out in late March. Sales for the year of $22.5 million, and they made $.03 per share. Our new valuation is $1.57 per share.
Their VOIP business continues to struggle and lose money–$2.7 million last year on $212,000 of revenues.
They might have to sell or shut this VOIP business down in our opinion. Just losing too much money, and eroding shareholder value.
Still an “undercover” company and stock.
Down 50%. BUY
Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up)
Valuation-$1.99 (Was $2.22, $1.61, $2.28, $2.08)
Closed at $.44, up $.13.
Nice article in The Street.com touting LTUS as one of the yop 10 China microcap stocks.
Sales for 2008 were up 30% to $74 million and they made $.27 per share. Q4 sales were a whopping $26 million and they made $.14 per share in the QUARTER. Our valuation fell a bit though as gross margin fell to 46% and net cash continued to decline–to $1.99 per share. Still a lot of upside here we think.
Lotus announced in February that it bought the land use rights in Mongolia for $26 million, subject to contruction approvals etc. If the project is not approved, they get the money back. They paid for this out of internally generated funds. Pretty impressive. 3 years and $58 million to go to build this plant. They are also looking to sell or rent up to 80% of the land to other pharma companies to create a pharma industrial park.
This may work out ok. Unusual legal structure, $58 million construction project all hang over this company.
Down 47%. BUY