Up again .9% last week
Our lead over the markets averages was 10-13 points depending on the index.
EXTR, BVSN, AVSO, IPAS, NINE, HPOL and LTUS.ob are our favorites.
We are up 19% so far in 2010.
The DOW was up .6%, NASDAQ was up .4% and the S+P 500 was up .6%. The Russell 3000 was up .5% and the Wilshire 5000 was up 1.3%. For the year the DOW is up 6.8%, NASDAQ is up 9.3%, the S+P 500 is up 6.1%. The Wilshire is up 7.8% and the Russell is up 6%.
Last week we went 9 stocks up, 10 down and 2 even. Since inception we are now 42 stocks up and 18 down for a 70% winning percentage (80% 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 (2 weeks after we recommended it)
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%. 8 of our current stocks are down less than 15%.
SuperGen Inc. (NASDAQ-SUPG)-Recommended 10/4/2010)
Closed up $.01 at $2.35
Cryo-Cell International Inc. (CCEL.ob-Recommended 9/20/2010)
Closed up $.25 at $1.85
Up 46% HOLD
Harris Interactive (HPOL-Recommended 8/9/2010)
Valuation $3.15 (was $2.85)
Closed down $.03 at $.87
Earnings out in August. Nothing special. Sales were flat with last year and they had $2.3 million of “adjusted” EBITDA. $168 million in sales for the year, $8.9 million of “adjusted” EBITA, debt reduced to just $1.4 million more than cash and our valuation rose to $3.15 per share. $45 million market cap for well known brand name with $168 million of sales just seems too cheap.
Down 13% HOLD
Performance Technolgy (PTIX-Recommended 3/30/2010)
Valuation $5.03-(was $5.98, $7.13)
Closed up $.16 at $2.06
Earnings out in July. Nothing to write home about. Sales were up 15% from last year to $7.4 million, but they lost $1.9 million or $.18 per share as they “invested” in sales and marketing. This, plus a bunch of new product announcements will hopefully boost sales and get some attention. Cash per share fell to $2.39, and our valuation fell to $5.03 as cash and margins fell.
Down 24% HOLD
Extreme Networks (EXTR-Recommended 3/22/2010)
Valuation-$7.32 (was $6.82, $6.81)
Closed down $.09 at $3.02
EXTR entered a settlement agreement with Ramius (Ramius owns 6.4% of EXTR. Declassify the Board, add a Ramius Director and the Ramius Director must be on any committee that reveiws “strategic alternatives”. Pushing to sell EXTR obviously.
Positve patent news in October. An appelate court upheld the validity of some EXTR patents that were being challenged. Got to have your IP in order before you can sell the company.
Interesting filing in September. The CFO got some modifications to his “Change of Control” agreement that seemed quite specific. Maybe a deal is in the works? Ramius fund filed a 13D/A on July 20th. They own 5.9% of EXTR and are starting to make some noise. Good catalyst.
Earnings out in August. Revenues up about 5% to $85 million and they made $3.4 million. Cash rose to $1.47 per share and our valuation shot up to $7.32 per share. Still a cheap stock.
Down 1% BUY
Broadvision (BVSN-Recommended 3/16/2010)
Valuation $21.77-(was $23.37, $27.15)
$13.61 per share in cash.
Closed up $.16 at $10.31.
Earnings out in August. Revenue dropped from $8.2 million to $5.7 million and they lost $2.4 million. Cash per share fell to $13.61. Our valuation dropped on the sales drop to $21.77. Trading well below cash value.
Down 24%. BUY
Ninetowns Internet Technology (NINE-Recommended 1/25/2010)
NEW Valuation-$3.54 (Was $3.54, $3.19)
$2.88 per share in cash
Closed up $.05 at $1.45.
Earning out last week. Sales were $5.67 million for the first 6 months of 2010 and they lost $1 million. Cash rose to $2.88 per share and our valuation stayed at $3.54. Only doing about $10 million a year in sales, but still trading way below (50%) cash value.
Down 5%. BUY
Gravity Company Ltd. (GRVY-Recommended 1/18/2010)
Valuation $4.38-(Was $4.44, $5.15)
Closed up $.02 at $1.60.
Earnings out in August. Not bad. Has $2.22 per share in cash and they were slightly profitable ($.02)-despite a 19% drop in sales. Our valuation fell $.06 to $4.38. Have to keep an eye on this, but GRVY is still trading at $.75 below cash value and they are keeping their noses in the black.
Down 5%. 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 down $.01 at $1.27.
Earnings out in August. Revenues were $5.6 million and they lost about $4.5 million or $.06 per share. Hey, at least they have real product revenues. The pipeline is what it is all about. With the recent capital raise, cash was about $45 million and they say their burn rate is about $6 million a quarter, so they have about 2 years to make this a $10 stock!
Fonds de solidarite des travailleurs du Quebec filed a 13G in mid-June disclosing they had reduced their holding down to 2.6% and Société Générale de Financement du Québec filed a 13D diclosing that they have been steadily reducing their holding from over 10% to under 5%. This dumping by these Canadian funds has been weighing on the market. We need some good news, or these guys to finish selling for the stock to go up.
Riding the tail of Kerx and perifosine, new orphan drug apporval from the FDA and a lot of investor interest in their pipeline of cancer products.
Speculative for sure.
Down 11% 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 $.16 at $4.98.
Good news this month. The Board Chairman and CEO announced his retirement at the end og October. This is the “steward” that oversaw the “palace coup” attempt, inventory snafu’s, recalls, lack of earnings and the huge FDA/ICE raid and taken huge option grants along the way. Poor judge of CEO character and strategy that has resulted in SPNC trading at less than 1/2 its value–for years. He will stay on the Board–hopefully for only a little while.
Earnings out in July. Sales up 3% and they actually made a profit! Not enough to round up to a penny a share though. The market yawned. No one follows this stock. Only a buy-out will make us money on this one.
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%.
The company has $30 million in cash ($.90 per share), no debt and is growing about 10% a year.
Down 12%. 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 $7.20 (was $7.17, $5.86 $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 $.03 at $2.93
Earnings out in August. Not bad again. Sales down 4% to $4.6 million and they made $.04 per share. They have $1.00 per share in cash. Our valuation rose a tad to $7.20.
Still trading at only 32% 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 22%. 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 $15.02 (was $14.35, $12.13, $12.57, $12.29, $11.90, $11.30, $11.48, $11.47 $10.99, $10.28, $13.32, $12.89, $13.40)
Closed down $.05 at $10.41
Earnings out in September. Sales up 25% to $13.3 million and they made $.12 per share up 71% from last year. Cash was $2.92 per share and our valuation rose to $15.02.
Constellation bought more shares (about 130,000 at over $9 per share) and MEDW announced they had re-engaged William Blair to look at “strategic alternatives”. Got to have an I Banker to sell your company.
Constellation now owns 22.8%. 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 64%. HOLD
Vertro. (VTRO (was-MIVA)-Recommended 10/21/2007)
Buy Price $8.15 (Was $11.90 before adding another $20,000, $13.10 before another $10,000 and was $15.00 before double up),
Valuation $12.40 (was $12.55, $10.85, $8.25, $9.45, $28.05, $32.10, $34.20, $37.90, $37.95)
Closed up $.07 at $2.97.
VTRO announced their search, toolbar and unigue user stats for Q3 in early October. All up hugely from last year and up nicely from Q2. Maybe we will see some decent EPS this quarter.
13G filed on September 24th. Red Oak Partners now owns 5.2% of VTRO. Always nice to see someone else taking a good sized position in one of our stocks.
1 for 5 reverse split effected in August, so all numbers have been adjusted for this.
Earnings out in August. Sales were $8.1 million, slightly higher than Q1 and they were slightly profitable. Cash rose to $6.1 million ($.85 per share). Our valuation fell $.15 to $12.40.
We have no hope that we will ever make money on this one, nor are we sure they will survive at all.
Down 65%. 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 $2.95 (was $3.22, $3.34, $4.17, $4.73, $4.75, $4.12, $4.99, $4.30, $4.09)
Closed down $.02 at $1.20
Earnings out in August. Sales were down again to $39.1 million, and they lost $.02 a share. Cash was $.52 per share down from $.61. Our valuation fell a bit to $3.22. Still, IPAS has plenty of cash, and is trading at only 40% of our valuation.
Foxhill ownership is 6.9% and Millenium owns 10.4%.
Down 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) (5% dividend yield)
Valuation $12.87 (Was $17.45 $15.95, $13.80, $18.89, $17.09, $17.05, $14.51, $17.23, $18.36)
Closed down $.62 at $4.64.
CAW reacted to their prior week earnings report. Dividend yield is now 6% and they have $2.50 a share in cash.
Earnings out in October. Sales fell 18% to $12,596,000 and they lost $598,000).
Our valuation plunged to $12.87 as sales and gross margins fell and they lost money. Cash is $2.50 a share–48% of the market price.
They also declared a $.07 dividend. With the fat cash cushion, the dividend and the fact that it is still trading at less than 50% of our valuation, we are content to hold onto CAW for a while more.
Down 16%. HOLD
Angeion Corporation. (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $13.06 (was $12.15, $11.29, $11.73, $11.47, $11.16, $9.53, $13.30, $13.03)
Closed down $.07 at $4.25
Earnings out in August. Not bad. Sales up 14% and they made $.03 per share. Cash was $2.59 per share and our valuation rose to $13.06.
Angeion announced a settlement in August with BlueLine partners. The BlueLine representative will stay on the Board of Directors and they will add 3 new directors. Doen’t seem like much, but it is a catalyst.
Zacks actually recommended ANGN in early March with a short term price target of $6.
Blueline Partners filed a 13D on ANGN on June 23, 2008. They own about 6.3% of the company. All of their purchases were well North of the current price. Renaissance also owns 5.5%
Up 11% 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 $.49 at $3.60
Current dividend yield–suspended
GSL is up 160% this year.
No news on the CGM equity raise but the stock kept climbing.
Earnings out in August. More of the same-good. Ship utilization was 100%, and they made about $.14 per share on a “normalized” basis (excluding “mark-to-market” accounting on interest rate hedges). They generated $16 million of cash in the quarter.
CGM made $864 million in the first half of 2010. Quite a turnaround.
Container rates are rising and CGM appears to be getting its feet back under them.
CGM has been 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. GSL 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.
Their average ship charter life is around 10 years and the closest-in renewal is at the end of 2012.
Up 69%. 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 $5.73 (was $5.54, $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 down $.06 at $.45.
Earnings out in June. Sales up 29% to $5.4 million, 79% gross margins and they made $26,000 for the quarter. Our valuation moved back up to $5.73 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 72%. 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),
NEW Valuation $2.26 (was $3.07, $3.03, $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 $.70, unchanged.
There seems to be some accumulation going on here. Still relatively small volume, but up substantially from where it was.
Earnings out in October. Not very meaningful until we see the “new company” results, but our valaution got hammered down to $2.26 per share. Didn’t lose any money but margins dropped from the last two quarters. The June quarter seems to be their weakest quarter. Still trading at about 1/3 of our valuation.
AVSO announced in August that they in effect sold themselves to Rand International a private company in the same business area. Not many details made available and no financial information given on Rand except that the combined company has about $82 million in sales over the last 12 months. AVSO shareholders now own about 33% of the new company (thus, they were really bought by Rand). At the current price and with about 51 million shares now outstanding the market cap is only about $38 million. Hopefully they will get some liquidity in these shares and get the price up to at least 1 times sales–soon. We assume the dissident shareholder group went along with this.
Down 12%. BUY.
CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $.83 (Was $.88 $.96, $.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 $.09, closed at $.09.
Earnings out in August. Sales were down from $4.1 million last year to $3.6 million, and they lost about $433,000. Their VOIP business continues to drain the company. Sales were a whopping $200,000 and it lost $500,000 excluding depreciation. Our valuation fell a bit to $.83.
At a $2 million market cap, this is stupidly cheap. Their itellectual property is probably worth 10 times this price. They need to liquify this value somehow.
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 63%. HOLD
Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up)
Valuation-$2.49 (Was $2.15, $1.91, $2.00, $1.84, $1.56, $1.99, $2.22, $1.61, $1.06, $2.28, $2.08)
Closed at $1.17, up $.03.
Whipsaw last week. The stock plunged back under $1 based on a letter from a fired Director claiming all sorts of vague things–like no one would respond to his e-mails. On Friday LTUS announced they are working on getting on NASDAQ. We expect a reverse split–maybe 5 to 1. This will result in EPS of $2+ in 2010.
We are trading at about 3 times earnings and the company is growing-not contracting. China stocks are out of favor for sure.
Earnings announced in August. Sales were up 40% and they made $.12 per share, up from $.10 last year. They are projecting sales of $74 million and about $.40 of earnings. We expect they will beat these numbers. We bought 50,000 more shares in August personally and another 10,000 in October. Their new buiding is about 65% complete, and they extended their operating contract for another 20 years. It looks like they are getting ready to get off the bulletin board pretty soon.
Up 30%. BUY