Cheap Stocks 10/9/2015 Update

We were up 5.4% last week on the take-over of Daegis. and are now down .5% for the year. Meanwhile, the DOW was up 3.7% and the NASDAQ was up 2.6%. For the year the DOW is down 4.1% and NASDAQ is now up 2.0%.

No earnings last week. But Daegis was taken over (taken under actually).

Some of our stocks are just stupid cheap—compared to their net cash on hand divided by their stock price.

Check this list:

CCUR 43%
SYNC 58%
CTIG 38%
PRSS 62%

MTSL, CKP, CRNT, ATEC, AVID and SYNC, can still be bought.

Last week we went 11 stocks up, 2 down and 2 unchanged. Since inception we are now 71 stocks up and 20 down for a 79% winning percentage (80% is our target win %).  Of our closed-out positions 64 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).

MER Telemanagement Systems. (NASDAQ-MTSL)-Recommended 9/22/2015)

Buy Price $1.25

Valuation $3.56

Closed down $..06 at $1.23

Down 2%

BUY

Checkpoint Systems Inc. (NYSE-CKP)-Recommended 9/16/2015)

Buy Price $7.79

Valuation $18.28

Closed up $.72 at $7.76

Down 1%

BUY

Ceregon Networks, Inc. (NASDAQ-CRNT)-Recommended 8/20/2015)

Buy Price $1.46

Valuation $4.84

Closed up $.13 at $1.65

UP 13%

BUY

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 $.77 at $8.56

AVID announced Q2 2015 earnings (quarter ended June 30, 2015) on 8/10/2015.

http://finance.yahoo.com/news/avid-announces-financial-results-second-203852725.html

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 $.03 at $.34

We are adding another $10,000 to our position here. The new average buy price will be $.59. We just don’t see why this is trading at these levels.

ATEC announced Q2 2015 (June 30, 2015) earnings on August 4, 2015.

http://finance.yahoo.com/news/alphatec-holdings-announces-second-quarter-200500460.html

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.

Down 63% 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 $.09 at $4.29

PRSS announced Q2 2015 (6/30/2015) earnings on 8/14/2015.

http://finance.yahoo.com/news/cafepress-reports-results-second-quarter-201500378.html

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 7% 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 $.16 at $3.63

Q1 2016 (9/30/2015) earnings due out Thursday, October 29th after the market close.

Extreme announced Q4 2015 (June 30, 2015) on August 6, 2015.

http://finance.yahoo.com/news/extreme-networks-reports-fourth-quarter-110000404.html

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.

UP 6%, 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 $.07 at $1.45

SYNC has closed the acquisition of Zimbra.

SYNC announced Q2 2015 (June 30, 2015) earnings on 8/4/2015.

http://finance.yahoo.com/news/synacor-gains-ebitda-momentum-revenue-200100723.html

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 43%. 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 up $.03 at $.19

DEX and it’s creditors are in the skirmish stage of their war to restructure their crushing debt load. The good news is that DEX started early. They decided not to pay an interest payment that was due September 30 (which they announced) and now the creditors want to talk.

Q2, 2015 earnings were announced August 6, 2015.

http://finance.yahoo.com/news/dex-media-announces-second-quarter-110000263.html

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 97% HOLD

Daegis Inc. (NASDAQ-DAEG)-Recommended 11/30/2012)

Buy Price $1.09 (Was $1.20 before we doubled up)

Valuation $1.75 (Was $2.20, $1.83, $2.83, $2.85, $3.39, $3.25, $3.42, $4.64, $4.86, $4.00)

Closed up $.41 at $81

Daegis got a buy-out offer of $.82 a share on Thursday. While it made for a nice week, we still lost 24% on this pick.

SOLD

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 unchanged at $1.22

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

http://finance.yahoo.com/news/bridgeline-digital-announces-financial-results-120000429.html

Down 69%, 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 up $.11 at $3.65

Q3 2015 earnings due out Thursday, October 29, 2015 after the market close.

TSYS announced Q2 2015 (March 31, 2015) earnings on 7/30/2015.

http://finance.yahoo.com/news/telecommunication-systems-reports-second-quarter-200500282.html

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.

We are now waiting on the outcome of their “strategic alternatives” investigation with Lazard. This is still a HOLD.

UP 166%, 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 up $.25 at $6.46 (including $1.20 of dividends)

Pays $.48 annual dividend.

.

Q4 2015 (6/30/2015) earnings were released on 8/25/2015.

http://finance.yahoo.com/news/concurrent-reports-fourth-quarter-fiscal-200100937.html

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 41%, 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 $3.77 up $.01.

Park City Capital filed an amendment to their Form 13D in from December 2014 in September 2015, urging ARI to sell the company now and that private equity firms are paying big premiums for companies like ARI. They are still touting a valuation of $8 a share over the next 24 months

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.

http://finance.yahoo.com/news/ari-network-services-inc-announces-200100623.html

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 $.39 closed at $.39

CTIG announced Q2 2015 (June 30, 2015) earnings on 8/14/2015.

http://finance.yahoo.com/news/cti-group-reports-2015-second-212621737.html

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 44%. HOLD

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