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-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)
2009-HSTM +67% (continued good earnings)
2009-CLZR -32% (a loser even on a buy-out)
2009-DTLK +28% (our 5th profitable trip on this one)
2010-CHRD +37% Buyout
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)
Closed down $.10 at $2.94
Broadvision (BVSN-Recommended 3/16/2010)
$13.94 per share in cash, profitable.
Closed down $.15 at $13.50.
Ninetowns Internet Technology (NINE-Recommended 1/25/2010)
$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)
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)
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