Buy PTIX @ $2.70

Performance Technology Inc. (NASDAQ–PTIX)
Valuation-$7.13
Price March 26, 2010-$2.70

PTIX is a network product and service company.

As of December 31, 2009, PTIX had $30 million in net cash and investments and was actually slightly profitable in Q4 after you exclude all the special charges and credits. Our valuation is $7.13 per share so it is trading at 38% of our valuation. Cash is $2.64 per share or 98% of the market price.
Revenues are about $30 million a year, with 53% gross margins.

Institutions own about 50% of PTIX with Bank of America and Quaker Management both owning about 15% each.

This stock is supported by $2.64 per share in cash, has decent margins, survived the crash of 2009 and has no insider holders that could stop an acquirer if an offer was made to buy the company.

PTIX trades only about 10,000 shares a day, so patient buying is required.

There are about 11.1 million fully diluted shares outstanding.

About Performance Technology:
PT is a global supplier of advanced network communications solutions to carrier, government, and OEM markets. PT’s portfolio includes IP-centric network elements and applications designed for high availability, scalability, and long life cycle deployments. The company’s entire line of offerings is anchored by IPnexus®, PT’s own IP-native, highly integrated platforms and element management systems. OEMs and application developers, including PT itself, leverage the robust carrier grade Linux® development environment and rich suite of communications protocols (PT’s NexusWare®) of IPnexus Application-Ready Systems as a cornerstone component of their end product value proposition. PT’s SEGway™ Signaling Solutions provide low cost, high density signaling, advanced routing, IP migration, gateway capabilities, SIP bridge, and core-to-edge distributed intelligence. The company’s Xpress™ NGN applications enable evolving Mobile 2.0, Multi-media, and IMS based revenue generating services. PT is headquartered in Rochester, NY and maintains sales and engineering offices around the world
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Cheap Stocks, 3/26/2010 Update

Lousy week for us last week–down 2%, while the averages were up 1/2 to 1 percent.

But we are still up 18.4% for the year.

EXTR, BVSN, AVSO, IPAS, NINE, and CAW are our favorites.

The DOW was up 1%, NASDAQ was up .9% and the S+P 500 was up .6%. The Russell 3000 was up .6% and the Wilshire 5000 was up .6%. For the year the DOW is up 4%, NASDAQ is up 5.6% and the S+P 500 is up 4.6%. The Wilshire is up 5.5% and the Russell is up 4.1%.

Last week we went 4 stocks up, 11 down and 2 unchanged. Since inception we are now 45 stocks up and 11 down for a 80% winning percentage (which is our target win %).

Since our beginning, 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%
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)
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)
2008-PARL +56%
2009-MBRK +67%
2009-SNWL +14%
2009-CYNO +25%
2009-DTLK +33%
2009-NED +46%
2009-CUTR +13%
2009-HSTM +67% (continued good earnings)
2009-RNWK +36%
2009-OPK +116%
2009-CLZR -32% (a loser even on a buy-out)
2009-DTLK +28% (our 5th profitable trip on this one)
2010-HPOL +110%
2010-DIVX +25%
2010-CHRD +37% Buyout
2010-HPOL +30%
2010-MGIC +82%

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 39 stocks that we closed out since 2006 the average net gain was 33%.

Extreme Networks (EXTR-Recommended 3/22/2010)
Buy Price-$3.04
Valuation-$6.81
Closed down $.10 at $2.94
Down 3%

Broadvision (BVSN-Recommended 3/16/2010)
Buy Price-$13.50
Valuation-$27.15
$13.94 per share in cash, profitable.
Closed down $.15 at $13.50.
Even. BUY

Ninetowns Internet Technology (NINE-Recommended 1/25/2010)
Buy Price-$1.53
Valuation-$3.19
$2.68 per share in cash
Closed unchanged at $1.58.
180,000 shares bid at $1.52 all week last week again.
Up 3%. BUY

Gravity Company Ltd. (GRVY-Recommended 1/18/2010)
Buy Price-$1.68
Valuation-$5.15
Closed down $.15 at $1.70.
Their new online game will be delayed to the end of 2010.
Still trading below cash value ($2.17 per share).
Up 1%. HOLD

AEterna Zentaris (AEZS-Recommended 6/20/2009)
Buy price $1.42 (was $1.78 before adding another $10,000, $1.82 before double up)
Valuation –Speculation.
Closed up $.03 at $.83.
Earnings out last week. Excluding the $30 million in deferred revenue from the canceled Sandofi deal, sales were $9.8 million. Looks like they lost about $10 million of cash earnings in the quarter. Still they have $38 million in cash and a good pipeline of products. Speculative for sure.
With a 52 million market cap, $38 million in cash and say close to $40 million in revenue, this stock still looks cheap–as long as they don’t run out of cash from their losses!
AEZS’s shelf registration statement for up to $60 million in equity raise went effective in mid-March. Nice to have some insurance, but at this price the dilution will be significant–unless they can get the share price up. We hope they do.
Their pipeline and the related announcements will be what drives this stock.
Just waiting for some more good developement news here.
Down 42% 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 –$15.00
Closed down $.29 at $6.91.
Earnings out in February. Record sales of $29.7 million, up 11% from last year. The litigation is behind them with a $5 million P+L hit in Q4. Another $1.1 million write down of their auction rate securities and a total net loss for the quarter of $5.5 million. Excluding all the abnormal stuff, they actually made about $600,000!
Guidance was tepid. Looks like maybe a 10% sales increase, a Q1 loss and a profitable year. SPNC has always been very conservative in their guidance. 2010 is their year to show us what they can do–assuming they don’t step on their …..’s again.
Wells Fargo filed a 13G in early February disclosing that they had upped their stake to 5.3 million shares or about 16%–up from their previously disclosed position of about 11.6%.
Canaccord Adams upgraded SPNC on the settlement announcement in December. Target price is $11.
The company has $30 million in cash ($.90 per share), no debt and is growing about 10% a year.
Up 22%. 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 $5.86 (was $7.17, $7.46, $8.12, $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 $.06 at $2.48
Earnings out in February. The economy finally caught up to DWCH. Revenue down 19% as you would expect this year, but they slipped into a loss of $.03 a share (only $200,000 though). Cash rose to $.99 a share, but sales and margins fell and so did our valuation–to $5.86 per share. Stil trading at only 41% of our valuation.
KVO Capital management filed a 13D in September 2009. They own 402,000 shares (just under 7% of the company). Purchases were all in the second half of August from $1.66 to $2.74 per share.
Up 3%. HOLD

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up)
Valuation $12.13 (was $12.57, $12.29, $11.90, $11.30, $11.48, $11.47 $10.99, $10.28, $13.32, $12.89, $13.40)
Down $.27 at $9.08.
Earnings out in February. Sales were up 8% and EPS more than doubled to $.10 per share. Cash is $2.23 per share. Our valuation fell $.44 to $12.13 per share, but we think that when they get a full quarters revenue from the acquisitions that reduced cash, this will rebound.
Constellation Software filed a 13D/A in late August 2009. Bought 290,000 shares at $5.20 raising their stake to 21.8%. When is the take-over offer??
All we read is that medical records will be a hot area, so MEDW looks like the place to be.
Up 43%. 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),
NEW Valuation $2.51 (was $2.17, $1.65, $1.89, $5.61, $6.42, $6.84, $7.58, $7.59)
Up $.01 at $.44.
Earnings out last week. Actually kind of good! Sales were $8 million, they had positive EBITDA of $400,000 and made $.02 a share. Cash was $4.8 million.
Our valuation rose to $2.51 per share. I they can keep going and grow revenues and earnings, we might see that price some day, but that is a big “IF”. With only a penny price increase after these earnings, the market was not impressed.
We have no hope that we will ever make money on this one, nor are we sure they will survive at all.
Down 73%. HOLD

IPASS. (IPAS-Recommended 6/1/2008)
Buy Price-$1.42 (adjusted for $.32 and $.16 dividends) (Was $2.07 before another $10,000 added and $2.15 before double up
Valuation $3.34 (was $4.17, $4.73, $4.75, $4.12, $4.99, $4.30, $4.09)
Down $.04 at $1.13
Earnings out in February So-so at best. Sales down 12%, but were only down 3% if you exclude their legacy dial-up revenues. On a Non-GAAP basis they lost $700,000 or $.01 per share. Aside from their $3.8 restucturing charge, they also had a $1.2 million charge to fix “historical billing errors”. This on top of their sales tax charges, make it look like they had some pretty shoddy accounting going on. Hopefully this is the last shoe they drop on us. Seems like they are cleaning the books up though–for a sale maybe? Our valuation dropped to $3.34 per share as cash dropped ($.16 from their last dividend), margins dropped and sales fell. Still, at this price IPAS is only trading at 31% of our valuation. Cheap.
Foxhill ownership is 6.7%. Millenium owns 9.9% and Federated, 5.5%.
Down 15%. 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) (5% dividend yield)
Valuation $13.80 (Was $18.89, $17.09, $17.05, $14.51, $17.23, $18.36)
Down $.04 at $5.45.
Earnings out in February. Revenues were up 5% to $12.6 million and they earned $.14 per share compared to a loss of $.12 last year. They made $.49 per share for the year. They also declared their $.07 quarterly dividend. Our valuation dropped to $13.80 per share. A $1.20 less than we estimated, but even at $5.49, CAW is trading at 39% of our valuation on a seasonally weak quarter.
Down 1%. BUY

Angeion Corporation. (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $11.29 (was $11.73, $11.47, $11.16, $9.53, $13.30, $13.03)
Closed down $.04 at $4.67
Zacks actually recommended ANGN in early March with a short term price target of $6.
Earnings out in March. Sales up 5% to $6.6 million (about flat with last quarter) and they lost $800,000 or $.20 per share. Cash decreased to $2.53 per share, and our valuation fell to $11.29 (still about 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.
UP 22% HOLD

Global Shipping . (GSL-Recommended 10/12/2008)
Buy Price $2.16-(Was $2.59, $3.69 before adding another $10,000 each time)
Valuation NA-Dividend yield play
Closed down $.22 at $2.44
Current dividend yield–suspended
Container rates are rising and CGM appears to be getting its feet back under them.
Earnings out in March. Good again. Revenues up 52% to $39.9 million. Made $7.3 million or $.13 per share excluding a $8 million “mark-to-market” derivative gain. Everything else seems good.
CGM (their main customer continues to struggle. Trying to restructure their debt, get funding from the French goverment etc. We would think that GSL would be the last “supplier” to CGM to feel any effects of this due to CGM’s equity ownership in GSL.
Big announcements in late August 2009. They finally made a deal with their bank and survived the ordeal. They had the rest of their credit line canceled, were allowed to take delivery of a used ship, no dividend until the loan to ship value is less than 75% and they have to start prepaying their loans. CGM has to stay in as an equity holder until at least November 30, 2010. Meanwhile their business is great. This is definitely going to be long-term though.
Could be the buy of a lifetime if the ecomomy–and ship prices recover.
Their average ship charter life is around 10 years and the closest-in renewal is at the end of 2012.
Up 11%. HOLD

OB-abies (Bulletin Board Listed Stocks)

As proven by OPTIO, patience is necessary with these stocks, especially in this 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 $5.54 (was $5.74, $5.96, $4.72, $5.19, $5.66, $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $.75 down $.10.
Earnings out in March. Sales up 35% to $5.4 million, 82% gross margins and they made $.02 a share.
Our valuation backed off a bit to $5.54 per share.
No one cares.
Wake up management–you have a great little company here worth 5-6X what it is selling for.
Now down 53%. 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),
NEValuation $3.03 (was $2.38, $2.57, $2.81, $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 $.83, down $.02
13D filing in early March. A group of investors including a prior CEO of AVSO that controls 14.5% of the stock, is clamoring for an increase in shareholder value. Basically they are hanging out a “for sale” sign. I hope they are successful!
Earnings out in February. Sales fell 19% to $7.7 million, and they made $600,000 or $.02 per share. Net cash rose to $.14 per share. Our valuation surged to $3.03. Market cap is about $15 million, sales are about $30 million, with decent margins, profitable and with $.14 in net cash.
Up 5%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
NEW Valuation $.96 (Was $.93, $.75, $.85, $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 $.05 unchanged. Closed at $.05.
Earnings out today. Sales rebounded to $4.1 million, and they actually made $200,000 of income (almost a penny!). Their VOIP business continues to drain the company. Q4 sales were a whopping $152,000 and it lost $686,000. Other than saying Q4 sales were up and we made a profit, none of the Q4 numbers were in the press release, or the 10K. Amazing. It seems like they want to keep their results a secret.
At a $1.5 million market cap, this is stupidly cheap. Their itellectual property is probably worth 10 times this price. They need to liquify this value somehow.
Our valuation rose to $.96 ( 19 times the current selling price).
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 82%. HOLD

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up)
Valuation-$2.00 (Was $1.84, $1.56, $1.99, $2.22, $1.61, $1.06, $2.28, $2.08)
Closed at $1.43, up $.06.
LTUS celebrated the groundbreaking of their Mongolian facility in early March. They expect to finish by July and be certified for production by December. Looks like they are really going to do it! They also said they expect to reach $150 million in sales in the first year after the facility is “fully operational”. They did not say 2011, so this could mean 2012. No matter, if they get even near this level this stock will be over $5, in our opinion.
Early in March LTUS disclosed a deal to sell up to 10 million dollars of stock from time-to-time at about a 7% discount to market. While under no obligation to sell any shares, they paid YA Global (the purchaser) 228,000 shares as a committment fee. This company does things without explaning to investors why. Annoying, but as long at they keep cranking out the good earnings reports, we don’t care anymore.
Remember our $2 valuation is a true “value” calculation. EPS is not given much weight. But LTUS looks like it will earn $.40 this year, fully diluted. So at even a measly 8 multiple we could see over $3 per share.
Earnings out in November. Sales fell only 13% from last year, but they were up from Q2. They made $5.5 million in profit or $.11 per share. For the nine months they have now earned $.28 per share. Our valuation headed back up again to $2.00 per share.
Lotus announced in February 2009 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.
UP 71%. HOLD

BUY EXTR

Extreme Networks Inc. (NASDAQ–EXTR)
Valuation-$6.81
Price March 22, 2010-$3.04

EXTR is a network product and service company.

As of December 27, 2009, EXTR had $135 million in net cash and investments and was slightly unprofitable (about $1.4 million loss in latest quarter on a GAAP basis). Our valuation is $6.81 per share so it is trading at 45% of our valuation. Cash is $1.52 per share or 50% of the market price.
Revenues are about $300 million a year, with 58% gross margins.

Ramius LLC filed a 13D on March 15th disclosing over 5% ownership. Ramius usually stirs things up a bit (like the share price). Good valuation, lots of cash, not losing much money and a catalyst in Ramius. Seems like a cheap stock to us.

EXTR trades over 500,000 shares a day.

There are about 90 million fully diluted shares outstanding.

Extreme Networks, Inc.
Extreme Networks provides converged Ethernet network infrastructure that support data, voice and video for enterprises and service providers. The company’s network solutions feature high performance, high availability and scalable switching solutions that enable organizations to address real-world communications challenges and opportunities. Â Operating in more than 50 countries, Extreme Networks provides wired and wireless secure LANs, data center infrastructure and Service Provider Ethernet transport solutions that are complemented by global, 24×7 service and support.

Cheap Stocks, 3/19/2010 Update

Busy week for us last week. We sold CHRD on a buyout for a 37% gain in less than 2 weeks, HPOL for a 30% gain in 2 weeks and finally MGIC for an 82% gain. We thought we made a mistake selling MGIC at $3 as it continued upward as high as $3.19, but it settled the week at $2.55. We also bought BVSN last week.

With all that action we posted a 5.1% gain last week. The averages were up 1/2 a percent to 1.1 percent.

BVSN, AVSO, IPAS, NINE, and CAW are our favorites.

The DOW was up 1.1%, NASDAQ was up .3% and the S+P 500 was up .9%. The Russell 3000 was up .7% and the Wilshire 5000 was up .6%. For the year the DOW is up 3%, NASDAQ is up 4.6% and the S+P 500 is up 4%. The Wilshire is up 5% and the Russell is up 3.5%.

Last week we went 11 stocks up, and 7 down. Since inception we are now 45 stocks up and 10 down for a 80%+ winning percentage (which is our target win %).

Since our beginning, 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%
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)
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)
2008-PARL +56%
2009-MBRK +67%
2009-SNWL +14%
2009-CYNO +25%
2009-DTLK +33%
2009-NED +46%
2009-CUTR +13%
2009-HSTM +67% (continued good earnings)
2009-RNWK +36%
2009-OPK +116%
2009-CLZR -32% (a loser even on a buy-out)
2009-DTLK +28% (our 5th profitable trip on this one)
2010-HPOL +110%
2010-DIVX +25%
2010-CHRD +37% Buyout
2010-HPOL +30%
2010-MGIC +82%

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 39 stocks that we closed out since 2006 the average net gain was 33%.

Broadvision (BVSN-Recommended 3/16/2010)
Buy Price-$13.50
Valuation-$27.15
$13.94 per share in cash, profitable.
Closed up $.15 at $13.65.
Up 1%. BUY

Chordiant Software (CHRD-Recommended 3/4/2010)
Buy Price-$3.63
Valuation-$7.50
Sold at $4.97 for a 37% gain

Harris Interactive (HPOL-Recommended 3/1/2010)
Buy Price-$1.04
Valuation-$3.24
Sold at $1.25 for a 30% gain

Ninetowns Internet Tecnology (NINE-Recommended 1/25/2010)
Buy Price-$1.53
Valuation-$3.19
$2.68 per share in cash
Closed up $.06 at $1.58.
180,000 shares bid at $1.52 all week last week.
Up 3%. BUY

Gravity Company Ltd. (GRVY-Recommended 1/18/2010)
Buy Price-$1.68
Valuation-$5.15
Closed down $.15 at $1.85.
Their new online game will be delated to the end of 2010.
Still trading below cash value ($2.17 per share).
Up 10%. HOLD

AEterna Zentaris (AEZS-Recommended 6/20/2009)
Buy price $1.42 (was $1.78 before adding another $10,000, $1.82 before double up)
Valuation –Speculation.
Closed down $.01 at $.80.
AEZS’s shelf registration statement for up to $60 million in equity raise went effective last week. Nice to have some insurance, but at this price the dilution will be significant–unless they can get the share price up. We hope they do.
Following the early December announcement that Cetrorelix is dead, Sandofi and AEZS canceled their agreement to develop Cetrorelix. On the other hand Kerx (AEZS partner in U.S. on Perifosine) announced positive news, “The data presented here further supports the planned Phase 3 trial design which has been granted Special Protocol Assessment by the FDA”. This is still a “lottery ticket”.
Earnings out in November. Revenues about $8.5 million and they lost $11.3 million. This of course all means nothing yet.
Their pipeline and the related announcements will be what drives this stock.
Just waiting for some more good developement news here.
They still have $45 million in cash, marketed products and a good pipeline
Down 44% 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 –$13.00
Closed down $.16 at $7.20.
Earnings out in February. Record sales of $29.7 million, up 11% from last year. The litigation is behind them with a $5 million P+L hit in Q4. Another $1.1 million write down of their auction rate securities and a total net loss for the quarter of $5.5 million. Excluding all the abnormal stuff, they actually made about $600,000!
Guidance was tepid. Looks like maybe a 10% sales increase, a Q1 loss and a profitabe year. SPNC has always been very conservative in their guidance. 2010 is their year to show us what they can do–assuming they don’t step on their …..’s again.
Wells Fargo filed a 13G in early February disclosing that they had upped their stake to 5.3 million shares or about 16%–up from their previously disclosed position of about 11.6%.
Canaccord Adams upgraded SPNC on the settlement announcement in December. Target price is $11.
The company has $30 million in cash ($.90 per share), no debt and is growing about 10% a year.
Up 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),
Valuation $5.86 (was $7.17, $7.46, $8.12, $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 $2.42
Earnings out in February. The economy finally caught up to DWCH. Revenue down 19% as you would expect this year, but they slipped into a loss of $.03 a share (only $200,000 though). Cash rose to $.99 a share, but sales and margins fell and so did our valuation–to $5.86 per share. Stil trading at only 41% of our valuation.
KVO Capital management filed a 13D in September 2009. They own 402,000 shares (just under 7% of the company). Purchases were all in the second half of August from $1.66 to $2.74 per share.
Up 1%. HOLD

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up)
Valuation $12.13 (was $12.57, $12.29, $11.90, $11.30, $11.48, $11.47 $10.99, $10.28, $13.32, $12.89, $13.40)
Up $.50 at $9.35.
Earnings out in February. Sales were up 8% and EPS more than doubled to $.10 per share. Cash is $2.23 per share. Our valuation fell $.44 to $12.13 per share, but we think that when they get a full quarters revenue from the acquisitions that reduced cash, this will rebound.
Constellation Software filed a 13D/A in late August 2009. Bought 290,000 shares at $5.20 raising their stake to 21.8%. When is the take-over offer??
All we read is that medical records will be a hot area, so MEDW looks like the place to be.
Up 48%. 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 $2.17 (was $1.65, $1.89, $5.61, $6.42, $6.84, $7.58, $7.59)
Up $.10 at $.43.
Earnings out Tuesday, March 23rd after the market close. Hopefully it will be good news and we can get out of this dog.
In early February VTRO issued a very encouraging press release with good growth in their key business metrics, and saying they belived they would be EBITDA positive in the December quarter.
Earnings out in November. Sales were $7.4 million and they lost $1.8 million before a $1.2 million gain from discontinued operations. Cash was about $6.9 million or $.20 per share. Our valuation rose to $2.17 per share.
We have no hope that we will ever make money on this one, nor are we sure they will survive at all.
Down 74%. HOLD

IPASS. (IPAS-Recommended 6/1/2008)
Buy Price-$1.42 (adjusted for $.32 and $.16 dividends) (Was $2.07 before another $10,000 added and $2.15 before double up
Valuation $3.34 (was $4.17, $4.73, $4.75, $4.12, $4.99, $4.30, $4.09)
Up $.02 at $1.17
Earnings out in February So-so at best. Sales down 12%, but were only down 3% if you exclude their legacy dial-up revenues. On a Non-GAAP basis they lost $700,000 or $.01 per share. Aside from their $3.8 restucturing charge, they also had a $1.2 million charge to fix “historical billing errors”. This on top of their sales tax charges, make it look like they had some pretty shoddy accounting going on. Hopefully this is the last shoe they drop on us. Seems like they are cleaning the books up though–for a sale maybe? Our valuation dropped to $3.34 per share as cash dropped ($.16 from their last dividend), margins dropped and sales fell. Still, at this price IPAS is only trading at 31% of our valuation. Cheap.
Foxhill ownership is 6.7%. Millenium owns 9.9% and Federated, 5.5%.
Down 13%. 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) (5% dividend yield)
Valuation $13.80 (Was $18.89, $17.09, $17.05, $14.51, $17.23, $18.36)
Up $.24 at $5.49.
Earnings out in February. Revenues were up 5% to $12.6 million and they earned $.14 per share compared to a loss of $.12 last year. They made $.49 per share for the year. They also declared their $.07 quarterly dividend. Our valuation dropped to $13.80 per share. A $1.20 less than we estimated, but even at $5.49, CAW is trading at 39% of our valuation on a seasonally weak quarter.
Down 1%. BUY

Magic Software Enterprises. (MGIC-Recommended 8/18/2008)
Buy Price-$1.43 (adjusted for $.50 special dividend) (was $2.08 before another $10,000 added, $2.00 before $10,000 added at $2.16)
Valuation $3.71 (was $3.78, $3.84, $3.80, $3.97, $4.18, $4.15)
SOLD for 82% gain last week.

Angeion Corporation. (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $11.29 (was $11.73, $11.47, $11.16, $9.53, $13.30, $13.03)
Closed up $.06 at $4.71
Zacks actually recommended ANGN in early March with a short term price target of $6.
Earnings out in March. Sales up 5% to $6.6 million (about flat with last quarter) and they lost $800,000 or $.20 per share. Cash decreased to $2.53 per share, and our valuation fell to $11.29 (still about 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.
UP 23% HOLD

Global Shipping . (GSL-Recommended 10/12/2008)
Buy Price $2.16-(Was $2.59, $3.69 before adding another $10,000 each time)
Valuation NA-Dividend yield play
Closed up $.13 at $2.66
Current dividend yield–suspended
Container rates are rising and CGM appears to be getting its feet back under them.
Earnings out in March. Good again. Revenues up 52% to $39.9 million. Made $7.3 million or $.13 per share excluding a $8 million “mark-to-market” derivative gain. Everything else seems good.
CGM (their main customer continues to struggle. Trying to restructure their debt, get funding from the French goverment etc. We would think that GSL would be the last “supplier” to CGM to feel any effects of this due to CGM’s equity ownership in GSL.
Big announcements in late August 2009. They finally made a deal with their bank and survived the ordeal. They had the rest of their credit line canceled, were allowed to take delivery of a used ship, no dividend until the loan to ship value is less than 75% and they have to start prepaying their loans. CGM has to stay in as an equity holder until at least November 30, 2010. Meanwhile their business is great. This is definitely going to be long-term though.
Could be the buy of a lifetime if the ecomomy–and ship prices recover.
Their average ship charter life is around 10 years and the closest-in renewal is at the end of 2012.
Up 22%. HOLD

OB-abies (Bulletin Board Listed Stocks)

As proven by OPTIO, patience is necessary with these stocks, especially in this 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),
NEW Valuation $5.54 (was $5.74, $5.96, $4.72, $5.19, $5.66, $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $.85 down $.05.
Earnings out last week. Let’s see…… sales up 35% to $5.4 million, had 82% gross margins and they made $.02 a share. Stock drops 6%. Just no volume, no interest.
Our valuation backed off a bit to $5.54 per share. No one cares.
Wake up management–you have a great little company here worth 5-6X what it is selling for.
Now down 47%. 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),
NEValuation $3.03 (was $2.38, $2.57, $2.81, $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 $.85, unchanged.
We missed a significant 13D filing in early March. A group of investors including a prior CEO of AVSO that controls 14.5% of the stock, is clamoring for an increase in shareholder value. Basically they are hanging out a “for sale” sign. I hopr they are successful!
Earnings out in February. Sales fell 19% to $7.7 million, and they made $600,000 or $.02 per share. Net cash rose to $.14 per share. Our valuation surged to $3.03. Market cap is about $15 million, sales are about $30 million, with decent margins, profitable and with $.14 in net cash.
Up 7%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $.93 (Was $.75, $.85, $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 $.05 down $.01. Closed at $.05.
At a $1.5 million market cap, this is stupidly cheap. Their itellectual property is probably worth 10 times this price. They need to liquify this value somehow.
Earnings out in November. Sales down 54% to $3.6. million (down from $4.1 in Q2) and they lost $320,000 (essentially breakeven excluding depreciation). They blame the sales decline on currency issues and the economy. Our valuation rose to $.93 ( 11 times the current selling price) as losses were reduced and margins gapped up over 70%.
Their VOIP business continues to struggle and lose money, sales were $112,000 down from $188,000 last quarter. They VOIP loss was $675,000. They also spent $129,000 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 78%. HOLD

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up)
Valuation-$2.00 (Was $1.84, $1.56, $1.99, $2.22, $1.61, $1.06, $2.28, $2.08)
Closed at $1.37, down $.08.
LTUS celebrated the groundbreaking of their Mongolian facility in early March. They expect to finish by July and be certified for production by December. Looks like they are really going to do it! They also said they expect to reach $150 million in sales in the first year after the facility is “fully operational”. They did not say 2011, so this could mean 2012. No matter, if they get even near this level this stock will be over $5, in our opinion.
Early in March LTUS disclosed a deal to sell up to 10 million dollars of stock from time-to-time at about a 7% discount to market. While under no obligation to sell any shares, they paid YA Global (the purchaser) 228,000 shares as a committment fee. This company does things without explaning to investors why. Annoying, but as long at they keep cranking out the good earnings reports, we don’t care anymore.
Remember our $2 valuation is a true “value” calculation. EPS is not given much weight. But LTUS looks like it will earn $.40 this year, fully diluted. So at even a measly 8 multiple we could see over $3 per share.
Earnings out in November. Sales fell only 13% from last year, but they were up from Q2. They made $5.5 million in profit or $.11 per share. For the nine months they have now earned $.28 per share. Our valuation headed back up again to $2.00 per share.
Lotus announced in February 2009 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.
UP 64%. HOLD

BUY BVSN @ $13.50

BroadVision Inc. (NASDAQ–BVSN)
Valuation-$27.15
Price March 16, 2010-$13.50

BVSN is another software company.

As of December 31, 2009, BVSN had $61.8 million in net cash and investments and was profitable in Q4 ($.10). Our valuation is $27.15 per share so it is trading at 50% of our valuation. Cash is $13.94 per share or 103% of the market price.
Revenues are about $30 million a year, with 75% gross margins.

BVSN fits in our valuation range and has a huge cash cushion.

BVSN trades only about 5,000 shares a day, so be careful with your buy orders.

There are about 4.5 million fully diluted shares outstanding.

About BroadVision
Driving innovation since 1993, BroadVision an innovative provider of online commerce and business social networking solutions.