CSI Update August 2018-Free Blog

Of our closed out positions on the Blog, since inception, we have had 71 winners, 19 losers for a 79% win-rate with an average gain of 35.7%.

We will continue to update on the remaining stock positions individually until they are all sold.

In August:

I closed out PRSS and took the 68% loss. They will either go out of business or get taken private. They seem to be headed for going out of business.

AVID reported Q2, 2018 earnings. They were ok, just not very exciting. Revenue was down a bit to $98.6 million from $102.4 and adjusted EBITDA was $5.3 million down from $8.9 million last year. They say they are going to cut expenses by $20 million over the next year. FY 2018 guidance was revenue of $410-$420 million and adjusted EBITDA of $40 to $46 million. My valuation fell to $14.64 from $14.98. What the market doesn’t give AVID credit for is that about $57 million of the $98 million of revenue in the quarter is recurring revenue. Just using a conservative 3X multiple of recurring revenue, AVID’S valuation is over $12 a share.

SYNC announced Q2, 2018 earnings. Revenues increased 15% to $35.9 million and they made $1.2 million of Adjusted EBITDA compared to $.2 million last year. They had $15 million in cash (no debt other than capital leases). They continue reducing expenses and now expect to get an additional $4 million of saving over the next year or so. Recurring revenue was $11 million, or about $44 million a year. This alone is worth more than the market cap of $70 million or so.  AT+T related revenue was $10 million for the quarter. Q3 guidance is revenue of $37-$39 million and Adjusted EBITDA of $1.5 to $2 million. For the year they are still at revenues of $150-$155 million and adjusted EBITDA of $7 to $10 million.

ATEC reported Q2 earnings. They were about the same, although a little bit better than last quarter. U.S. revenues came in at $20.4 million, down from last years $21.9 million but up from last quarters, $19.2 million. They still lost a ton of money, about $5.5 million on a Non-GAAP basis. My valuation rose to $3.37 from $3.11. With revenues of $43.3 million for the six months ended June 30, they are still projecting $95 million of revenues in the second half. If they can do this, they should get pretty close to breakeven and the stock should go up. We will see.

August 2018 Legacy Positions:

 

                  Share      Current      Lifetime      Current      Price to     Prior

 Stock         Cost          Price          Gain            Value         Value       Value

SYNC           $2.56        $1.92           (25%)            $5.75         34%         $5.25

ATEC            $7.06         $3.51          (59%)             $3.37         87%          $3.11

AVID            $8.35         $5.61          (29%)            $14.64         37%        $14.98

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