We had a .3% loss last week and are now up 5.8% for the year. The DOW up .3% and is now up 6.4% on the year and NASDAQ was up 1.2% and now stands at up 12.3% for the year.
PRSS and CTIG earnings last week.
Some of our stocks are just stupid cheap—compared to their net cash on hand divided by their stock price.
Check this list:
| UNTD | 42% |
| CCUR | 36% |
| SIGM | 56% |
| MRVC | 23% |
| SYNC | 48% |
| CTIG | 58% |
ATEC, PRSS, CAFE, MRVC, DAEG, SYNC, SIGM, CCUR, BLIN, EXTR, DXM and UNTD can still be bought.
Last week we went 4 stocks up and 10 down. Since inception we are now 67 stocks up and 20 down for a 77% winning percentage (80% is our target win %). Of our closed-out positions 60 have been winners and 13 have been losers for an 82% win percentage and a 35% average net gain per position.
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).
Alphatec Holdings, Inc. (NASDAQ-ATEC)-Recommended 9/2/2014)
Buy Price $1.56
Valuation $2.95 (Was, $3.00)
Closed up $.01 at $1.40
ATEC announced Q3 2014 (September 30, 2014) earnings on October 30, 2014. Revenues were $51 million compared to $50.2 million last year. Non-GAAP, EPS was a loss of $.01 compared to a profit of $.01 last year. More significantly, EBITDA was up 22% from $6.7 to $8.2 million. Our valuation came in at $2.95 compared to the previous $3.00. ATEC is trading at 47% of our valuation.
Down 10% BUY
CafePress, Inc. Inc. (NASDAQ-PRSS)-Recommended 5/19/2014)
Buy Price $5.40
NEW Valuation $11.17 (Was $12.51, $11.27)
Closed down $.63 at $2.30
PRSS announced Q3 2014 (September 30, 2014) earnings on November 13th, 2014. Revenues were $48.6 million, down slightly from $50.4 million last year. They lost $2.8 million versus a $1.0 million loss last year. Our new valuation was $11.17 down from $12.51 last quarter. PRSS is trading at 21% of our valuation. This is obviously a work-in-progress for a while. We are betting that the new (old) management can right the ship and get revenues and earnings growing again. Only mention of “strategic alternatives” was that they apparently inked a deal to sell InvitationBox” but with no other details. Shares closed at $2.97 on 11/13. This is still a BUY.
Lloyd Miller filed a Form 13G on October 24, 2014 disclosing a 5.1% (887,000 shares) stake in PRSS..
Down 57% BUY
Extreme Networks, Inc. Inc. (NASDAQ-UNTD)-Recommended 3/12/2014)
Buy Price $3.43 (was $3.95 before we added another $10,000)
Valuation $8.24, (Was $9.68, $8.52)
Closed down $.03 at $3.75
EXTR announced Q1 2015 (September 30, 2014) earnings on October 29, 2014. Revenues were $137.1 million, Non-GAAP EPS was a loss of $.01. Net cash was $2.92 per share. Overall an OK quarter. Our valuation came in a little better than expected after their preannounced revenue miss for the quarter, at $8.24. Guidance for next quarter is revenue of about $140 to $150 million and Non-GAAP EPS of $.03 to $.07 a share.
The CEO bought 10,000 shares on 8/29 at $5.33 a share.
UP 9% BUY
United Online Inc. (NASDAQ-UNTD)-Recommended 3/12/2014)
Buy Price $10.28
Valuation $33.50 (Was $35.84, $32.35, $27.86)
Closed down $.25 at $12.75
UNTD announced Q3 2014 (September 30, 2014) earnings on 11/4/2014. Revenues were $52.9 million compared to $56.2 million last year. Adjusted OIBDA (the term they use-Operating income before depreciation and amortization) was $10.2 million compared to $10 million last year. Cash rose to $5.38 a share. Our valuation fell a bit to $33.50—still well above the current trading price. They are projecting $215-218 million in revenue for the year and $32-$35 million in OIBDA for the year.
UNTD is trading at about 38% of our valuation and cash is 42% of the market cap ($5.38 a share versus $4.98 a share last quarter.
Up 24% BUY
Synacor Inc. (NASDAQ-SYNC)-Recommended 12/17/2013)
Buy Price $2.56
Valuation $5.58 (Was $5.21, $5.44, $6.67, $6.39)’
Closed down $.12 at $1.65
SYNC announced Q3 2014 (September 30, 2014) earnings on October 30, 2014. Revenues were $26.2 million down slightly from $26.5 million the prior year. They had a Non-GAAP loss of about $1.4 million compared to a loss of $.4 million last year. SYNC’s valuation rose from last quarter to $5.58, but was still lower than last years $6.01.
JEC and Ratio Capital seem to have been quiet lately.
Down 36%. BUY
Dex Media Inc. (NASDAQ-DXM)-Recommended 5/10/2013)
Buy Price $15.14
Valuation $31.00 (Was $34.00, $37.98, $34.36, $31.50, $24.25)
Closed down $.58 at $8.48
DXM announced Q3 2014 (September 30, 2014) earnings on 11/4/2014. Revenues were $452 million, down from $474 million last quarter and adjusted EBITDA was $167 million down from 174 million last quarter. Overall an OK quarter. Our valuation fell a bit to $31 down from $34 last quarter. They have paid off $319 million of net debt over the last twelve months and total net debt stands at $2.3 billion.
Looking back to 2012 at their projections before the merger it looks like they will miss their 2014 projections for revenue and adjusted EBITDA by 10-15%, but will beat their projected debt reduction target by over $100 million. The faster they get rid of the huge debt, the better as it is the primary risk factor affecting the stock price in our opinion.
DXM is trading at about 27% of our valuation, but due to the high debt level and small number of shares outstanding, relatively small changes in DXM’s results can cause large swings in our valuation.
Down 44% BUY
Daegis Inc. (NASDAQ-DAEG)-Recommended 11/30/2012)
Buy Price $1.09 (Was $1.20 before we doubled up)
Valuation $2.85 (Was $3.39, $3.25, $3.42, $4.64, $4.86, $4.00)
Closed down $.05 at $.60
First quarter (7/31/2014) earnings announced on August 26th.
Revenues were $6.7 million down from $8 million last year and $7.2 million last quarter. They lost $.02 per share on a GAAP basis. On a Non-GAAP basis they made $.01 a share versus $.03 last year. Our valuation fell to $2.85 up from $3.39 last quarter. Net debt came down to $7.6 million from $11 million a year ago and their credit agreement was extended out to June 2017. This is a drop-off from last quarter, but they are still making money and paying off debt. It will be a longer wait to see some action here.
Norm Pessin filed a 13D on November 27, 2013 disclosing a 6.2% stake and upped it to 12.2% in December 2013. Good news that someone else sees the value here. DAEG is trading at about 21% of our valuation.
Down 45%, BUY
Bridgeline Digital Inc. (NASDAQ-BLIN)-Recommended 8/24/2012)
Buy Price $1.17 ($1.24 before 2/14/2014 $10,000 adder)
Valuation $1.75 (Was $1.76, $1.83, $1.61, $2.19, $2.35, $2.56, $2.24)
Closed up $.01 at $.65
Earnings for Q3 announced August 14th. Slow improvement. Revenues were $6.2 million up 11% from $5.6 million last year and $5.3 million last quarter. They lost $1.3 million versus $1.6 million last year. They are projecting they will finish the year at $24 million in revenue which would mean another $6 million quarter for Q4. Their backlog rose to almost $26 million (up $6 million from last quarter) and recurring revenues grew 50% to $1.8 million. We continue to think that their recurring revenue stream of $7.2 million a year (based on this quarter) is worth more than the current market cap on BLIN.
Our valuation was $1.75, flat with last quarters $1.76. BLIN is trading at about 37% of our valuation.
Down 48%, BUY
Telecommunications Systems Inc. (NASDAQ-TSYS)-Recommended 6/14/2012)
Buy Price- $1.37
Valuation $6.88 (Was $6.12, $5.99, $5.32, $6.81, $6.28, $4.89, $6.02, $6.72, $5.49)
Closed down $.04 at $2.85
TSYS announced Q3 2014 (September 30, 2014) earnings on October 30, 2014. Revenues were $95.3 million down a tad from $96 million last year and adjusted EPS was $.05 the same as last year. Overall, a decent quarter. Our valuation came in at $6.88 up from $6.81 last year and $6.12 last quarter.
We will continue to hold TSYS despite our over 100% gain. Maybe this will turn into another MITL and be trading at $10+ in the next year.
TSYS is trading at about 42% of our valuation. .
UP 108%, HOLD
MRV Communications (Pink Sheets-MRVC.pk)-Recommended 10//10/2011
Valuation $25.52 (Was $24.58, $23.19, $25.50, $28.98, $24.01 $23.06, $27.15, $31.80, $34.60, $28.60, $41.20, $43.20 (after $9.50, $6.00 and $1.40 special dividends), $52.40, $55.80)
Buy Price October 7, 2011- $8.50 ($25.40 before special dividends)
Closed at $11.22 down $.25
MRVC announced Q3 2014 (September 30, 2014) earnings on 11/5/2014. Revenues were $43.2 million, up 12% from $38.4 million last year. They lost $1.04 million versus a $.146 million loss last year. Cash per share rose to $2.63 from $2.20 last quarter Our valuation was $25.52 up from $24.58 last quarter. MRVC is trading at 44% of our valuation.
Karen Singer filed a 13G in May 2014 disclosing a 5.3% stake. Singer was a 13D filer before and helped instigate all the special dividends. Good to see them with a healthy stake again.
Lloyd Miller disclosed a 6.9% stake in February 2012.
UP 31% BUY
Sigma Designs Inc. (NASDAQ-SIGM)-Recommended 7/11/2011)
Buy Price-$8.49
Valuation $9.60 (Was $8.24, $9.16, $12.30, $11.86, $8.24, $13.05, $10.67, $8.41 $12.10, $13.40, $16.02)
Closed up $.24 at $4.32
Earnings announced for Q2 FY2015 on September 10th. Going in the right direction for a change. Although revenue was down from last year at $42.8 million compared to $53.8 million it was up from the $36.9 million last quarter. Non-GAAP loses was also cut to $2 million from $5 million last quarter. Net cash rose a bit to $2.41 per share and our valuation bounced back up to $9.60. There was no forward guidance given.
Ariel Investments filed a 13G on January 10, 2014 disclosing a 10.1% stake in Sigma.
The CEO bought 343,000 shares back from Potomac Capital in December 2013 leaving Potomac with only 465,000 shares of SIGM. The interesting part was that the CEO paid $5.50 a share or about $1 over its trading price at the time. Either a great expression of confidence in SIGM or a small price to pay to get rid of an activist investor.
Down 49%, BUY
Concurrent Computer (NASDAQ-CCUR)-Recommended 2/4/2011)
Buy Price-$4.58 (Was $5.08 before $.50 special dividend)
Valuation $14.80 (was $17.72, $15.01, $15.10, $14.55, $14.77, $16.26, $16.20, $15.37, $13.53, $15.85, $14.13, $11.38, $14.04, $18.54, $15.99)
Closed up $.07 at $8.01 (including dividends)
Pays $.48 annual dividend.
CCUR announced Q1 2015 (September 30, 2014) earnings on October 29, 2014. Revenues were $17.5 million, up from $17.2 million last year and EPS was $.04 down from $.08 last year. Net cash was $2.92 per share. Our valuation was $14.80 up from $14.55 last year (down from last quarter) after we have collected $.48 worth of dividend payments.
CCUR is trading at about 48% of our valuation and cash is about 41% of the market cap. We have collected $.96 in dividends so far (excluding the $.50 special dividend which reduced our basis).
UP 75%, BUY
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 $6.02 (was $5.67, $5.57, $5.70, $6.71, $6.41, $6.14, $5.97, $6.21, $6.13, $5.82, $5.81, $5.72, $5.65, $5.39, $4.86, $5.60, $5.73, $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 at $3.50, up $.26
ARI announced Q4 2014 (July 31, 2014) earnings on October 29, 2014. Revenues were $8.5 million up slightly from $8.4 million the prior year. EPS was a profit of $.01 compared to a loss of $.02 last year. ARI’s valuation continued to creep up—to $6.02. Over 90% of their revenues are recurring revenues.
ARI announced another acquisition in October. This one provides software, websites and digital marketing services designed exclusively for dealers, wholesalers, retreaders and manufacturers within the automotive tire and wheel vertical. They have about 600 customers. This deal will add approximately $6 million a year in revenue and positive EBITDA to ARI results. The purchase cost $9.1 million of which $4.2 million was in cash, a $3 million seller note and $1.9 million in stock and a potential earn-out. At 1.5 times sales, this was a reasonable price in our opinion. This should give them about a 15% boost in sales for FY 2015 (started August 1, 2014). They are doing a good job positioning the company to be acquired. Hopefully this will soon happen with a $5+ price like we got for XRS in September 2014.
UP 117%, HOLD, Still a large valuation gap here.
CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
NEW Valuation $1.34 (Was $1.22, $.99, $1.02, $1.05, $1.07, $1.14, $1.17, $1.34, $1.34, $1.37, $1.36, $1.23, $.91, $1.21, $.71, $.83, $.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 $.33 closed at $.30
Q3 earnings announced after the close on Friday when no one was looking. Results were actually good, so why are they hiding it? Another insider take-over bid coming? Revenues were up 14% to $4.1 million from $3.6 million last year and they lost $154,000 versus a loss of $384,000 last year. Adding back non-cash charges for amortization they made $273,000 pre-tax versus $129,000 last year. Cash increased from last quarter to $5.5 million from $5.3 million. They now have $.19 per share in cash. Our valuation rose to $1.34 per share, the highest in 2 years, CTIG is trading at 25% of our valuation.
John Birbeck announced his departure in October 2014. He was one of the group trying to take CTIG private for $.40 a share. Birbeck will remain a Director of the company. He owns about 7% of CTIG (about 2.3 million shares).
They need to get an investment banker and sell the company. Probably get at least $.75 a share for it from someone.
UP 20%. HOLD
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