We finally caught up with the DOW last week. We were up 1.9% last week and are now down 9.7% for the year-the same as the DOW. Meanwhile, the DOW was down 3.3% and the NASDAQ was down 3.0%. For the year NASDAQ is down 1.1%.
No 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:
CRNT, ATEC, AVID, DAEG and SYNC, can still be bought.
Last week we went 7 stocks up, 5 down and 2 even. Since inception we are now 68 stocks up and 21 down for a 75.3% winning percentage (80% is our target win %). Of our closed-out positions 63 have been winners and 13 have been losers for an 83% 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).
Ceregon Networks, Inc. (NASDAQ-CRNT)-Recommended 8/20/2015)
Buy Price $1.46
Closed down $.04 at $1.39
Avid Technology, Inc. (NASDAQ-AVID)-Recommended 1/20/2015)
Buy Price $10.25 (Was $14 before 8/15 double up at $8.08.
Valuation $22.24 (Was $22.59 $23.86, $28.10)
Closed up $.03 at $8.54
AVID announced Q2 2015 earnings (quarter ended June 30, 2015) on 8/10/2015.
Revenues were $110 million down from $125 million last year. They made a Non-GAAP profit of $.05 per share versus a $.15 profit last year. Our valuation moved down a bit to $22.24 from $22.59 last quarter. They upped their 2015 guidance to $74-$80 million of adjusted EBITDA from $72-$78 million. Also, while the debt for the acquisition of Orad was on the balance sheet at June 30, the revenues and profits were not. You would think that AVID lost money and lowered their guidance by 50% with the way the market reacted.
Down 17% BUY
Alphatec Holdings, Inc. (NASDAQ-ATEC)-Recommended 9/2/2014)
Buy Price $.93 ($1.56 before doubling up on 8/10/2015 at $.66)
Valuation $2.54 (Was $2.61, $3.11, $2.95, $3.00)
Closed up $.04 at $.58
ATEC announced Q2 2015 (June 30, 2015) earnings on August 4, 2015.
No one liked them as the stock plummeted more than 50%. Revenues were $46.6 million ($50.2 million in constant currency) compared to $53.2 million last year. EBITDA was down 50% from $7.7 to $3.8 million. Our valuation came in at $2.54 compared to the previous $2.61. We are cutting ATEC to a HOLD until they can reverse the negative trends in revenue, gross margin and EBITDA.
After the reaction to the earnings we bought more and suggest doubling up here as the selling seems over done. This will bring our average Buy price down to $.93.
Down 38% BUY
CafePress, Inc. Inc. (NASDAQ-PRSS)-Recommended 5/19/2014)
Buy Price $4.01 (Was $5.40 before adding $10,000 at $3.19 on 3/2/2015)
Valuation $9.09 (Was $12.50, $11.17, $12.51, $11.27)
Closed down $.10 at $4.45
PRSS announced Q2 2015 (6/30/2015) earnings on 8/14/2015.
Not bad. They continue to slim down the business to its core. They are divesting their EZ print business now also. Revenues fell to $21.8 million from $29.1 million last year, but their loss from operations declined to $1.8 million from $4.4 million last year. Adjusted EBITDA was positive $.7 million versus negative $1.8 million last year. Cash fell to $46 million ($2.64 a share from $56 million due to working capital changes and the repurchase of $2.3 million worth of stock. Our valuation was $8.95 down a tad from $9.09 last quarter.
UP 11% HOLD
Extreme Networks, Inc. Inc. (NASDAQ-UNTD)-Recommended 3/12/2014)
Buy Price $3.43 (was $3.95 before we added another $10,000)
Valuation $9.47, (Was $6.99, $9.34, $8.24, $9.68, $8.52)
Closed up $.33 at $3.13
Extreme announced Q4 2015 (June 30, 2015) on August 6, 2015.
Revenues came in at $149.9 compared to $155.3 and they made $.10 a share versus $.09 a share on a Non-GAAP basis. Our valuation came in at $9.47 a share versus $9.68 last year. Based on their guidance for next quarter we estimate our valuation at $7.45 compared to $8.24 for Q3 2014. Not heading in the right direction. This is a HOLD, hovering on a Sell. They need to cut expenses and/or sell the company.
Down 9%, HOLD
Synacor Inc. (NASDAQ-SYNC)-Recommended 12/17/2013)
Buy Price $2.56
Valuation $5.71 (Was $6.61, $5.58, $5.21, $5.44, $6.67, $6.39)’
Closed up $.04 at $1.50
SYNC announced they are buying Zimbra.
From the press release: “Zimbra connects people and information with unified collaboration software that includes email, calendaring, file sharing, activity streams, social networks and more. With technology designed for social, mobile and the cloud, Zimbra gives individuals the flexibility to work from virtually anywhere, through nearly every computer, tablet and mobile device.
Zimbra’s software is trusted globally by service providers, governments and companies, with over 200,000 accessing Zimbra in the cloud managed by our worldwide network of service providers. With customers including NTT Communications, Comcast, Dell, Rackspace, Red Hat, Mozilla, H&R Block and Vodafone, a vibrant open source community and worldwide partner network, Zimbra is the third-largest collaboration provider in the world. Zimbra’s headquarters are in Frisco, Texas, with offices in London; Tokyo; Singapore and Pune, India.
The price is $17.3 million in cash, 3 million SYNC shares and .6 million warrants and up to $2 million in earn-outs. Not much financial information disclosed about Zimbra, but it looks like they have about $20 million in sales and $2 million in EBITDA. Overall we don’t think this will affect SYNC’s current valuation very much, but maybe it will help them start growing.
SYNC announced Q2 2015 (June 30, 2015) earnings on 8/4/2015.
Revenues were $24.7 million up slightly from $24.2 million the prior year. They had a Non-GAAP loss of about $.3 million compared to a loss of $1 million last year. SYNC’s valuation fell from last quarter to $5.29, but was a tad higher than last years $5.21.
Down 41%. BUY
Dex Media Inc. (NASDAQ-DXM)-Recommended 5/10/2013)
Buy Price 6.46 ( Was $15.14 before adding $10,000 on 3/30/2015)
Valuation $21.00 (Was $31.00, $31.00, $34.00, $37.98, $34.36, $31.50, $24.25)
Closed unchanged at $.27
Q2, 2015 earnings were announced August 6, 2015.
Revenues were $387 million, down from $474 million last year and down from $406 million last quarter and adjusted EBITDA was $159 million up from $143 million last quarter and down from $176 million last year. Overall not a great quarter. For the year they are guiding to revenue of about $1.5 billion and $525 million of EBITDA. In their original projection for 2015 they were looking at revenue of $2.077 billion and EBITDA of $782 million. Clearly they are not making their projections. Net debt was $2.144 (their original projection was to end 2015 with $2.004 billion of debt—a goal they will likely make. Based on this performance we have lowered our valuation to $4.71 a share. DEXM is a HOLD
DEX announced a major restructuring on December 11, 2014. They expect to incur
$70-$100 million of expenses to achieve $150 million of ongoing expense savings with $110 million of that coming in 2015. They expect to begin deleveraging their balance sheet (meaning Net Debt to adjusted EBITDA ratio) in 2016. No question that’s what they need to do.
Down 96% HOLD
Daegis Inc. (NASDAQ-DAEG)-Recommended 11/30/2012)
Buy Price $1.09 (Was $1.20 before we doubled up)
Valuation $2.20 (Was $1.83, $2.83, $2.85, $3.39, $3.25, $3.42, $4.64, $4.86, $4.00)
Closed down $.02 at $.35
DAEG announced Q4 2015 earnings (quarter ended April 30, 2015) on 7/28/2015. Revenues were $6.1 million down from $7.4 million last year but up from $5.7 million last quarter. They lost $.03 per share on a GAAP basis compared to income of $.01 last year. On a Non-GAAP basis they lost $65,000 versus a profit of $1,087,000 last year. Our valuation rose to $2.20 up from $1.83 last quarter on lower net debt ($6.4 million), higher sales and lower losses.
With the discontinuance of their eDiscovery business, Daegis is now a pure play enterprise software company and is trading at only 20% of our valuation. We are changing to a cautious BUY.
Down 68%, BUY
Bridgeline Digital Inc. (NASDAQ-BLIN)-Recommended 8/24/2012)
Buy Price $3.95 ($ 5.85, $6.20 before 12/15/2014 and 2/14/2014 $10,000 adders)
Valuation $6.20 (Was $6.10, $5.85, $5.98 $7.55, $8.75, $8.80, $1.83, $9.15, $10.95, $11.75, $12.80, $11.20)
Closed up $.14 at $1.54
BLIN jumped to $2.10 a share on Friday on 600,000 shares trading before settling back at $1.54. Maybe something is finally going on here.
BLIN announced Q3 2015 earnings (quarter ended June 30, 2015) on 8/14/2015. Revenues were $4.9 million down from $6.2 million last year but up from $4.8 million last quarter. They lost $.20 per share on a Non-GAAP basis compared to $.24 last year. Our valuation rose to $6.20 up from $6.10 last quarter on better margins. Overall, while margins and EBITDA (adjusted) improved it was pretty much a nothing quarter. Have to wait longer here as they eke out an existence and hopefully get this little boat moving in the right direction. HOLD
Down 61%, HOLD
Telecommunications Systems Inc. (NASDAQ-TSYS)-Recommended 6/14/2012)
Buy Price- $1.37
Valuation $5.78 (Was $5.43, $6.55, $6.88, $6.12, $5.99, $5.32, $6.81, $6.28, $4.89, $6.02, $6.72, $5.49)
Closed down $.20 at $3.26
All of the take over speculation premium is now back out of the stock.
TSYS announced Q2 2015 (March 31, 2015) earnings on 7/30/2015.
Revenues were $87.9 million, up from $81.9 million last year and adjusted EPS was $.05 compared to $.04 last year. Overall an OK quarter-again. Our valuation was $5.78 down from $6.12 last year and up from $5.43 last quarter. TSYS is trading at 64% of our valuation.
We are now waiting on the outcome of their “strategic alternatives” investigation with Lazard. This is still a HOLD.
UP 138%, HOLD
Concurrent Computer (NASDAQ-CCUR)-Recommended 2/4/2011)
Buy Price-$4.58 (Was $5.08 before $.50 special dividend)
Valuation $11.49 (was $16.38, $13.07, $14.80, $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 down $.12 at $6.64 (including $1.20 of dividends)
Pays $.48 annual dividend.
Q4 2015 (6/30/2015) earnings were released on 8/25/2015.
Disappointing. Revenues fell to $13.8 million from $17.8 million last year and they lost $993,000 pre-tax compared to a profit of $2,032,000 last year. They blamed consolidation in the service provider sector for the sales decline and indicated it won’t get better in 2015. It is obvious that CCUR should not be a stand alone company. We think it is time to get this sold.
Our valuation plummeted to $11.49 from $16.38 last quarter. Cash per share fell to $2.80 , still over 50% of the market cap. We will keep a HOLD on CCUR until we see what the new CEO can do and they get revenue growth back. We continue to collect the 10% dividend.
UP 45%, HOLD
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 $6.66 (was $6.47, $5.96, $6.02, $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 $3.75 up $.21.
Wynnefield continued their selling puting a cap on ARI’s stock price. They now own 693,000 shares down from 992,000. They are now at 4.1%.
Q3 2015 were announced on June 11, 2015. Pretty good. Revenues were $10.3 million, up 26% from last year and they made $.02 a share compared to $.01 last year. Our valuation rose to $6.66 a share.
In addition to the 1.5 million share offering Wynnefield Capital has been selling shares-about 250,000 from 3/31/2015 to 5/12/2015 at prices from $3.20 to $3.38. They still have 992,000 shares or 6.9% of ARI. Assuming they are getting out, this will keep pressure on the price for a while.
ARI announced on May 7, 2015 that they had priced a 1.53 million share offering for expected net proceeds of about $4.7 million which they will use to pay off the $1.75 of debt they incurred on their recent acquisition of TASCO and for future acquisitions.
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 133%, HOLD, Still a large valuation gap here and the Company is executing well.
CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $1.12 (Was $1.21, $1.39, $1.34, $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 $.30 closed at $.25
CTIG announced Q2 2015 (June 30, 2015) earnings on 8/14/2015.
Revenues came in at $3.7 million versus $4.1 million last year. They lost $323,000 compared to a loss of $296,000 last year.
Our valuation fell a bit to $1.12 a share, down from $1.21 last quarter and $1.22 last year. We will continue to HOLD CTIG.
Commenting on the results, Fred Hanuschek, CTI Group’s CEO and President, stated, “Although our first half results were not as strong as we had hoped, we are encouraged by the number of opportunities that we are actively pursuing and believe these opportunities should lead to better second half results
Still way undervalued, but no light as to when or how this will ever be properly valued.
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 11%. HOLD
Hi, I’ve been wanting to mention that since your initiation of Ceregon, the symbol has been incorrect. Unless I’m mistaken, it should be CRNT. Also, the valuation line [Valuation $22.24 (Was $22.59 $23.86, $28.10)] is exactly the same as Avid below it. Doing a DCF recently, I arrived at a value of ~$11. I am curious to hear yours. Thanks.
Thanks for the note. Copy/paste doesn’t work sometimes 🙂
My valuation is $4.84. Likely much lower than yours as my valuation is what I think it is worth today–without taking into account future cash flows or earnings. Still, CRNT is trading at a huge discount–if they can keep the turnaround going.
Thank you for your CRNT valuation and reply. Also, I appreciate your taking the correction suggestion in the spirit in which it was intended.