Another good week for the markets, and an even better one for us with a 9.9% gain–our second best week of the year. This brings our year to date gain to 29.3%
The DOW was up 4.0%, NASDAQ was up 4.2% and the S+P 500 was up 4.1%. For the year the DOW is back up 3.6%. NASDAQ is up 24.7% and the S+P 500 is up 8.4%. The Russell 3000 and the Wilshire 5000 are also up 10-11% this year.
Last week we went 14 stocks up, 5 down and 1 even. Since inception we are now 31 stocks up, 17 down and 1 even.
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 29 stocks that we closed out in 2006, 2007, 2008 and 2009 the average net gain was 24%.
AEterna Zentaris (AEZS-Recommended 6/20/2009)
Buy price $1.78 (was $1.82 before double up)
Closed up $.38 to $2.14.
Just waiting on their Q3 news release.
Up 21%% HOLD
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.
Closed unchanged at $5.27.
Earnings out last week. Sales up 9% to $29 million (the highest quarter ever) and they lost $2 million or $.06 per share (25% less than last year). The loss included about $700,000 of legal expenses related to the FDA/ICE raids. Cash dropped to $.98 per share. Not bad.
SPNC recently announced that they settled their wrongful dismissal lawsuit with an ex-employee, who purportedly is the wistleblower in the FDA/ICE raids last year. Maybe these issues will be resolved soon too. It has been 10 months since the raids.
SPNC is suffering from the FDA, ICE raids that apparently eminated from the 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 $32 million in cash ($.98 per share), no debt and is growing about 15% a year.
Now down 7%. 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),
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 down $.01 at $1.78.
Cash is $.83 per share.
Earnings out in May. 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 it was 2 quarters ago.
Now down 26%. 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 $11.90 (was $11.30, $11.48, $11.47 $10.99, $10.28, $13.32, $12.89, $13.40)
Up $.01 at $5.31.
All we read is that medical records will be a hot area, so MEDW looks like the place to be.
MEDW announced it closed the earlier announced acquisition in June. Cost was $2 million cash and some earnout potential. It is another healthcare optimization software company. Earnings out in May. Sales up 4% and they made $.06 per share versu $.04 last year. Cash was $2.68 per share and our valuation rose to $11.90 a share.
Cannell Capital filed a 13D in February 2008, disclosing a 12.9% ownership stake. Cannell has been pushing MEDW management to sell the company. Cannell later filed an amended 13D showing they had reduced their ownership to 6.2%. 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 16%. 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 $.11 at $.98
Looks like they lost some of their claims against Palomar. While these findings are not final, not a good outcome.
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 74%. HOLD.
Vertro. (VTRO (was-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 $1.89 (was $5.61, $6.42, $6.84, $7.58, $7.59)
Up $.01 at $.19.
Earnings out in May. Horrible of course. Sales are now at a $25 million ANNUAL run rate, albeit at 93% gross margins. Cash ended up at just over $11 million or $.34 per share (after all the sale proceeds). They have amazed us at their ability to burn through all that cash they had. Current operating loss was almost $2.9 million in the quarter. Our valuation plunged to $1.89 per share (we were thinking $3 before the announcement).
We have no hope that we will ever make money on this one, nor are we sure they will survive at all. This one is teetering on the sell list–but not yet.
Down 88%. 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),
Valuation $2.78 (Was $4.67, $4.66, $6.00, $5.96)
Up $.01 at $.41.
13D filed in early July by Mill Road Capital disclosing a 6.4% ownership. Purchases were made in May, June and very early July at prices ranging from $.33 to $.45. Always encouraging when someone buys a 5% or better stake–even if the total investment is just over $1.3 million.
HPOL announced in early May 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 stock is still trading 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 41%. 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 $.19 at $1.90
IPASS had two ammouncements in early June. The first was a bit of a management shakeup-New CFO, new General Counsel, new VP of Marketing. The second was a settlement with Foxhill. Among other things they agreed to return $40 million of their $68 million cash hoard to shareholders. The first $20 million will be a dividend (about $.32 per share) and the second $20 million may be a dividend or a stock buyback (ICK).
Q1 earnings announced in May. 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.
Foxhill has been buying more IPASS. Ownership now up to 6.7%. Shamrock owns 9.8%, Royce 5.9% and Federated, 5.5%.
Healthstream Inc. (HSTM-Recommended 8/4/2008)
Valuation $4.81 (Was $4.83, $4.62, $4.42)
Up $.38 at $2.96.
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 23%. HOLD
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) (8.1% dividend yield)
Valuation $17.09 (Was $17.05, $14.51, $17.23, $18.36)
Up $.38 to $3.83.
CCA announced earnings in July and another $.07 dividend. Made $.10 per share, down from $.11 last year. Sales were down 15% year over year. Our valuation moved up slightly to $17.09 per share. Cash was $2.06 per share.
Down 31%. 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 $3.80 (was $3.97, $4.18, $4.15)
Closed up $.32 at $1.80
Earnings out in May. Sales down 9% to $13.8 million. They managed to INCREASE earnings from zero to $.02 per share. Our valuation fell a bit to $3.80- and cash rose to $1.13 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 7%. BUY
Angeion Corporation. (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $11.16 (was $9.53, $13.30, $13.03)
Closed down $.11 at $2.84
Earnings out in late May. Sales fell 15% from $7.3 million to $6.2 million and they essentially broke-even. Cash was $2.34 per share, and our valuation rose to $11.16 (still more than 3 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 26%. BUY
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 down $.02 at $1.20
Current dividend yield–suspended
They got another waiver from their bank, to July 31. We just wait on this one.
Earnings out in May. Let’s see, revenues up 47%, operating income up 56%. They made $.21 per share. Yet we sit at $1.22 with no dividend due to the banks that don’t lend. All their ships are chartered and payments are current. Could be the buy of a lifetime–or the banks could screw us. We would add more of this–but the banks are just acting so stupid in general there is no telling what they might do.
Their average ship charter life is around 10 years and the closest-in renewal is at the end of 2012.
Down 54%. HOLD
OPKO Health Inc. (OPK-Recommended 2/16/2009)
Closed up $.12 to $1.81.
OPKO announced the completion of a $31 million private placement of stock at $1 per share in mid-June. Then the stock took off.
This is still a Phillip Frost play–Key and KOS Pharmaceutical sold for billions. Frost keeps buying on the open market all the time. His ownership has now exceeded 50% with just over 100 million shares (now about 130 million.
Up 45%. HOLD
DIVX Inc. (DIVX-Recommended 5/26/2009)
Closed down $.01 at $5.44.
$4.24 in cash and a real business.
UP 10%. HOLD
RealNetworks Inc.. (RNWK-Recommended 5/26/2009)
Closed up $.44 at $3.22
$2.91 per share in cash and a real businss.
Up 26%. HOLD
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),
Valuation $4.72 (was $5.19, $5.66, $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $.82, up $.07.
Earnings out in June. Not bad. Sales up slightly from $4.16 to $4.17 million and they made $278,000 pre-tax income. Our valuation fell to $4.72 per share.
Wake up management–you have a great little company here worth 5X what it is selling for.
Now down 49%. 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 $2.81 (was $2.78, $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 $.47, up $.12.
Earnings out in May. Sales down 38% to $8 million. But they only lost $.01 per share. While results were not good, our valuation actually moved up $.03 to $2.81.
Down 56%. HOLD.
CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $.85 (Was $1.57, $1.40, $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price $.12 down $.02. Closed at $.09.
Announced a patent grant in July. Any news is a surprise on this stealth stock.
Earnings out in May. Sales down 26% to $3.9 million and they lost $522,000. Our valuation plummeted to $.85 (still 8 times the current selling price)
Their VOIP business continues to struggle and lose money–$771,000 on $72,000 of revenues. They also spent $245,000 on patent enforcement, which may result in some future gains for the company but there is no way to tell for sure.
They might have to sell or shut this VOIP business down in our opinion. Just losing too much money, and eroding shareholder value–or it could be a home run.
Still an “undercover” company and stock.
Down 56%. BUY
Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up)
Valuation-$1.56 (Was $1.99, $2.22, $1.61, $1.06, $2.28, $2.08)
Closed at $.58, up $.13.
10Q for Q1 filed in May. Sales were up only 1%, but margins and earnings soared. Gross margin rose from 34% to 56% and they made $.07 per share versus $.02 last year. Not bad at all. LTUS business is seasonal, with this quarter being the weakest revenue quarter. Our “unadjusted” valuation fell to $1.56 per share–but this is up 50% from last year Q1.
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 31%. BUY