Sometimes they come fast, and sometimes slow. This one was extremely fast, one week from our Buy recommendation.

PRM received a buy-out offer from TPG capital for $7.10 a share. Looks like KKR has already approved it, so it should be a done deal.

Sell at $7 or more.

Bad week for us. We were down 4.8% last week on the heels of unexplained falls in MEDW and RWWI.OB and less than stellar quarterly results from VTRO.

AVSO, SUPG, CCUR, PRM and LTUS.ob are our favorites.

The DOW was down .3% last week, NASDAQ was even and the S+P 500 was down .2%. The Russell 3000 and the Wilshire 5000 were both down about .1%.

For the year so far, we are up 2.9%. The DOW is up 8.9%, NASDAQ is up 6.6%, S+P 500 is up 6.4%, the Russell 3000 is up 6.8% and the Wilshire is up 6.4%.

Last week we went 8 stocks up, 9 down and 2 even. Since inception we are now 50 stocks up and 14 down for a 78.1% winning percentage (80% is our target win %).

Since our beginning, we have closed out the following positions:

2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
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-ANGN +26%
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)
2008-PARL +56%
2009-MBRK +67%
2009-SNWL +14%
2009-CYNO +25%
2009-DTLK +33%
2009-NED +46%
2009-CUTR +13%
2009-HSTM +67% (continued good earnings)
2009-RNWK +36%
2009-OPK +116%
2009-CLZR -32% (a loser even on a buy-out)
2009-DTLK +28% (our 5th profitable trip on this one)
2010-HPOL +110%
2010-DIVX +25%
2010-CHRD +37% Buyout (2 weeks after we recommended it)
2010-HPOL +30%
2010-MGIC +82%
2010-GSL +78%
2010-CCEL +49%
2010-HPOL +27%
2010-CAW EVEN (excluding 2.5 years of dividends)
2011-DWCH +116%
2011-IPAS +15%

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 45 stocks that we closed out since 2006 (41 were winners) the average net gain was 33%.

Primedia Inc. (NYSE-PRM)-Recommended 5/9/2011)
Buy Price-$4.49
Valuation $8.04
Closed down $.11 at $4.38
Down 2%-BUY

Rosetta Stone Inc. (NYSE-RST)-Recommended 3/3/2011)
Buy Price-$12.62
NEW Valuation $28.85 (Was $31.14)
Closed up $.73 at $14.48
Earnings out last week. Not good, but the stock rose. This is what can happen with a stock that is followed by Wall Street. Our valuation fell to $28.85. Revenue fell 10% to $57 million and they lost $9 million compared to a profit of $5 million last year. Still not a sell based on our valuation, but not going in the right direction.
Up 15%-HOLD

Harris Interactive (NASDAQ-HPOL)-Recommended 3/3/2010)
Buy Price-$.92 Valuation $2.63 (Was $2.97)
Closed at $.85, down $.01
Latest earnings were not good. Sales fell 7% and they lost $2.3 million or $.04 per share. They hired a turnaround firm to tell them how to fix the company. Probably paid a ton of money for it too. Sell the company. Could probably get $2 a share for it. Teetering on a sell here.
Our valuation fell to $2.63 per share.
Down 8%-HOLD

Concurrent Computer (NASDAQ-CCUR)-Recommended 2/4/2011)
Buy Price-$5.08
Valuation $18.54 ( was $15.99)
Closed down $.09 at $6.04
Latest earnings report was great. Sales up 26% and they made $.06 per share. They have $3.41 per share in net cash. Our valuation spiked to $18.54 per share.
In April the company announced that it would not do the stock buy back that Skellig was suggesting. We don’t like buy backs anyway. Hopefully Skellig will keep pushing management to get the share price up. Their ownership is up to 5.86%.
Up 19%-BUY

SuperGen Inc. (NASDAQ-SUPG)-Recommended 10/4/2010)
Buy Price-$2.31 (was $2.09 before adding $10,000)
Valuation $5.21 (was $4.89, $4.37, $3.48)
Closed up $.07 at $2.69
Latest earnings report was good. Sales up 19% to $17.1 million and they made $.09 a share. Our valuation moved up to $5.21 and they have $2.05 per share in cash. This looks like a steal at these price levels, but the uncertainty caused by their recently announced acquisition discussed below is keeping a cap on the stock price.
SUPR announced in April that they were buying Astex, a UK company for $55 million in cash and stock. They will pay $25 million cash upfront and the remaining $30 million in cash or stock over 30 months. The deal is expected to close in July. The big, black mark on SUPG was that their drug pipeline was weak. From what we can tell, Astex is nothing but pipeline. They do not appear to have any commercial products and no close-in products; however, they have collaboration deals with a number of drug giants and have collected substantial milestone payments from them. There are $2 BILLION of potential milestone payments down the road. The combined company will have $120 million of cash, but we suspect the profitability will be gone. There is not enough public information at this point to update our valuation for this transaction.
Up 17%-HOLD

Performance Technology (PTIX-Recommended 3/30/2010)
Buy Price-$2.70
NEW Valuation $4.99-(was $3.79, $3.87, $5.03, $5.98, $7.13)
Closed down $.17 at $2.05
Earnings out last week. Sales up 24% but they still lost $1.1 million or $.10 per share. Much better than the $1.9 million loss last year.
Cash per share fell to $1.04 from $1.73 as accounts receivables rose, but our valuation rose to $4.99 as sales rose significantly. We think we will hold on to this one a bit longer and see if they can get to a profit.
Down 24% HOLD

Extreme Networks (EXTR-Recommended 3/22/2010)
Buy Price-$3.18 (Was $3.04 before adding another $10,000)
Valuation-$5.67 (was $7.36, $7.23, $7.31, $6.82, $6.81)
Closed up $.02 at $3.20
Latest earning report was not good. Sales fell 3%, but they lost a whopping $6.8 million or $.07 per share. Cash rose to $1.60 per share. Margin fell, sales fell and they lost money, so our valuation dropped to $5.67 per share. Next quarter guidance was decent. $80-$85 million in sales and non-GAAP earnings per share of $.03-$.05. If they can hit this, we think the price will rebound back to the $4 per share level.
CFO resigned in March. Always makes stockholders jittery, but they also got a new CEO in October last year, so it is not unusual for a CFO to go, shortly after a new CEO comes in. They hired an interim CFO in March while they look for a permanent one.
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 reviews “strategic alternatives”. Pushing to sell EXTR obviously.
Still a cheap stock.
Up 1% HOLD

Broadvision (BVSN-Recommended 3/16/2010)
Buy Price-$13.50
Valuation $21.21-(was $22.95, $22.31, $21.77, $23.37, $27.15)
$13.57 per share in cash.
Closed up $.32 at $13.22.
Latest earnings report was so-so. Sales dropped from $5.9 million to $5.1 million and they lost $393,000 or $.09 per share. Cash per share was $13.57. Our valuation fell to $21.21.
Still trading below cash value. If we see any substantive results from their social networking products, $20 per share should be easy.
Down 2%. HOLD

Ninetowns Internet Technology (NINE-Recommended 1/25/2010)
Buy Price-$1.53
Valuation-$3.54 (Was $3.54, $3.19)
$2.88 per share in cash
Closed at $1.42, up $.02.
NINE announced in April they are going into the real estate business in China, by buying 141,000 sq. meters of land rights for $39 million (out of their $100 million or so). They plan to develop this land for mixed use residential and commercial. Have to wait on this one, as their current business was not doing much, but not sure we want to be in the real estate business.
Earning out in October. 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 7%. HOLD

Gravity Company Ltd. (GRVY-Recommended 1/18/2010)
Buy Price-$1.68
Valuation $5.73-(Was $4.38, $4.44, $5.15)
Closed up $.04 at $1.82.
Earnings out in November. Not bad. Cash rose to $2.33 per share and they made $.08 per share. Our valuation jumped to $5.73. Not bad at all. New game coming out in Korea this quarter (War of Gods), although Ragnarok 2 is delayed until at least Q2 2011.
Up 8%. 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)
Valuation –Speculation.
Closed up $.04 at $2.29.
Earnings out in March. Revenues about $10 million for the quarter and $27.7 for the year. They only lost $2.7 for the quarter and lost $20.5 for the year. Cash was $33.9 million before counting about $14 million of cash received in the current quarter for royalty payments, their Japan deal and sale of stock.
AEZS announced a new partnership for perifosine in Japan. They got $8 million upfront and up to another $60 million in the future. Plus AEZS gets to sell the compound to the company and gets double digit royalties. Not a bad deal.
Riding the tail of Kerx and perifosine, new orphan drug approval from the FDA and a lot of investor interest in their pipeline of cancer products.
Speculative for sure.
Up 61% 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 –$9.00
Closed up $.23 at $6.21
In latest quarterly report, Sales grew 5% to $30.4 million and they lost $154,000 (breakeven per share). They are projecting sales of $122-$127 million for the year. No clear guidance on net income though.
SPNC got an approval in Japan in April to sell their lead locking device (used for removal of pacemaker and defibrillator leads). They also announced the start of a study on PAD (peripheral arterial disease). It is expected to last about 6 months.
Hmmm, CFO and 2 other officers got “change of control” agreements in March. Hope they actually mean something!
13D filed in November 2010. Paragon Assoc. disclosed a 2 million share (6%) ownership purchased at $5.16 per share. Maybe we have a catalyst finally to push management to do something (like sell this dog).
The company has $33 million in cash ($1.01 per share), no debt and is growing about 5% a year.
Up 9%. 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 $16.07 (was $15.04, $14.23, $15.02, $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 $1.34 at $11.75
No reason we can find for the decline last week. Disappointing though.
Earnings reported in May. Good again. Sales up 8% and they made $.17 per share up from $.11 last year. Our valuation rose to $16.07 per share. They have $3.66 per share in cash.
MEDW announced what sounded like a nice military contract win in April. No details though, so hard to get too excited. Hopefully this and the acquisition will keep their sales and earnings momentum going.
MEDW announced another acquisition in March. No details of what it cost, or what it will do to earnings.
It has been 10 months since they hired their investment bankers, so it is about time for something to happen, hopefully more than the acquisition last week..
Constellation now owns 21.8%.
All we read is that medical records will be a hot area, so MEDW looks like the place to be.
Up 86%. 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),
NEW Valuation $12.42 (was $14.23, $14.76, $12.40, $12.55, $10.85, $8.25, $9.45, $28.05, $32.10, $34.20, $37.90, $37.95)
Closed down $.80 at $2.66.
Earnings last week. Sales actually were up to $8.4 million versus $8.1 million last year, but they fell from $9.6 sequentially. They lost $89,000 this quarter compared to a profit of $1.299 million last year. Dissappointing compared to the sequential gains in sales and profits of recent quarters. Should have sold this when it traded over $6. Our valuation fell to $12.42 and cash per share fell to $.73.
Down 73%. HOLD

Angeion Corporation. (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $13.60 (was $15.00, $13.06, $12.15, $11.29, $11.73, $11.47, $11.16, $9.53, $13.30, $13.03)
Closed down $.01 at $4.74
Announced a $2 million share buy-back in April. Not too exciting, but should provide some price support.
ANGN also announced a distribution contract with Premier Purchasing Partners, where Premiers 2,500 hospital customers and 73,000 other customers can buy ANGN’s products at a discount.
Earnings out in March. Not bad we thought. Sales up 7% to $7.1 million and they cut their weak quarter loss from $.20 a share to an adjusted profit of $.02 a share (excluding a severance charge for their ex-CEO). Our valuation fell to $13.60, but again this is their seasonally weak quarter, so we are not upset about it.
Up 24% BUY

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 $5.39 (was $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 $.60 unchanged.
Earnings out in March. Sales down 2% to $5.238 million, operating income was $254,000 and they made $.02 per share. Our valuation jumped back up to $5.39 on higher than expected margins.
Wake up management–you have a great little company here worth 7X what it is selling for.
Now down 63%. BUY. Still a Huge valuation gap here.

Rand Worldwide (RWWI.ob (Was Avatech, AVSO.ob)-Bought November 28, 2005)
Buy price $.79 (Was $.93, $.99 and $1.19 before adding $10,000-each time),
Valuation $2.40 (was $1.90, $2.26 $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 $.55, down $..17
Next earnings report Monday, May 16th, before the markets open.
Earnings out in February. Sales were $21.7 million and they made $.02 a share. Our valuation jumped back up to $2.40 a share. Trading at 28% of our valuation. Cheap.
RWWI announced a $5.6 million deal in January. Maybe new management will get the word out on Rand and at least get us over $1.
Down 31%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $1.21 (Was $.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 $.09, closed at $.08.
Earnings out in March. Sales were $4.37 million and they actually made $200,000 of net income! Our valuation spiked back up to $1.21. They also announced that they signed a contract with a customer for $6 million most of which will come in Q2. Their VOIP business did $900,000 of revenue in 2010 compared to $150,000 in 2009.
At a $3 million market cap, this is stupidly cheap. Their intellectual property is probably worth 10 times this price. They need to liquefy 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 67%. HOLD

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $1.68 (Was $1.80 before $10,000 adder, $2.16 before double-up)
Valuation-$4.11 (Was $4.84, $4.98, $4.60, $3.82, $4.00, $3.68, $3.12, $3.98, $4.44, $3.22, $2.12, $4.56, $4.16)
Closed at $.85, down $.04
This is the Rodney Dangerfield of stocks. No respect whatsoever. Now trading at close to 1 1/2 times this years earnings! Ghost stories of ALL Chinese reverse merger companies being shams continue to spook stockholders. We don’t think LTUS is one of them.
Earnings in March. Surprise, they wrote off $6.8 million of development cost on the Mongolian property. Wham! Q4 sales were up 22% to $20 million. They made $.78 per share for the year after adjusting out the Mongolia write-off. Our valuation dropped to $4.11 per share on a slight drop in sales, lower income and more shares outstanding. Still a huge valuation gap.
Looks like the Mongolian land story has shifted AGAIN. Now they intend to keep some of the land and build a distribution facility on it and trade the excess land for the new building to preserve about $6 million a year of tax benefits they are getting. The move into the Beijing building is delayed also–till sometime near the end of the year. This delay will keep 2011 sales and earning flat to slightly down.
When the Beijing building is complete, they expect to have invested a total of $48 million ($36 million already spent) and that based on current market values, the building will be worth over $100 million. This plus the Mongolian land are worth 3 times the current market cap of LTUS. Oh yeah, then there is the $.80 in annual earnings. Think this is a buy?
Down 50%. BUY

Primedia Inc. (NYSE-PRM)Valuation-$8.04
Price May 6, 2011-$4.49
Dividend Yield—6.20%

Another NY Stock Exchange listed stock for us. This makes two in a row.
Primedia’s revenues have been in a decline over the past few years. From $304 million in 2008 to $232 million in 2010. But their operating income has stayed about $40 million in 2010 and 2008. They also reduced their debt by $65 million since December 31, 2008.

While PRM’s stock price is 56% of our valuation and net-cash is negative $4.46 per share (about $207 million in total debt), their huge cash flows have allowed them to pay down the $65 million of debt over the last 2 years while also paying out about $12 million of dividends.

The “topper” on this is that in January, 2011 they announced they had engaged an investment banker to help them explore strategic alternatives. This along with changes to management severance agreements, implementing retention agreements for the same, and the fact that KKR owns more than 50% of PRM, make us expect to collect 6% dividends until this is sold-hopefully for $7 a share or more.
Average trading volume is about 69,000 shares a day.

About Primedia PRIMEDIA helps millions of consumers nationwide find apartments, houses for rent or new homes for sale through its innovative Internet, mobile and print solutions. From publishing its flagship advertising-supported Apartment Guide since 1975 to launching industry-leading online real estate destinations such as ApartmentGuide.com, NewHomeGuide.com and Rentals.com, PRIMEDIA continues to simplify the consumer home search and drive leads that result in occupancy for property management companies, landlords, new home builders and real estate professionals.

We were up 3.2% two weeks ago and were up .7% last week.
AVSO, SUPG, CCUR, and LTUS.ob are our favorites.

The DOW was down 1.3% last week, NASDAQ was down 1.6% and the S+P 500 was down 1.7%. The Russell 3000 and the Wilshire 5000 were both down about 1.9%.

For the year so far, we are up 7.7%. The DOW is up 9.2%, NASDAQ is up 6.6%, S+P 500 is up 6.6%, the Russell 3000 is up 6.9% and the Wilshire is up 6.5%.

Last week we went 8 stocks up, 8 down and 2 even. Since inception we are now 50 stocks up and 13 down for a 79.4% winning percentage (80% is our target win %).

Since our beginning, we have closed out the following positions:

2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
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-ANGN +26%
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)
2008-PARL +56%
2009-MBRK +67%
2009-SNWL +14%
2009-CYNO +25%
2009-DTLK +33%
2009-NED +46%
2009-CUTR +13%
2009-HSTM +67% (continued good earnings)
2009-RNWK +36%
2009-OPK +116%
2009-CLZR -32% (a loser even on a buy-out)
2009-DTLK +28% (our 5th profitable trip on this one)
2010-HPOL +110%
2010-DIVX +25%
2010-CHRD +37% Buyout (2 weeks after we recommended it)
2010-HPOL +30%
2010-MGIC +82%
2010-GSL +78%
2010-CCEL +49%
2010-HPOL +27%
2010-CAW EVEN (excluding 2.5 years of dividends)
2011-DWCH +116%
2011-IPAS +15%

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 45 stocks that we closed out since 2006 (41 were winners) the average net gain was 33%.

Rosetta Stone Inc. (NYSE-RST)-Recommended 3/3/2011)
Buy Price-$12.62
Valuation $31.14
Closed down $.33 at $13.75
Next earnings out Monday, May 9th after the market close
Up 9%-BUY

Harris Interactive (NASDAQ-HPOL)-Recommended 3/3/2010)
Buy Price-$.92
NEW Valuation $2.63 (Was $2.97)
Closed at $.86, down $.13
Earnings out 2 weeks ago. Not good. Sales fell 7% and they lost $2.3 million or $.04 per share. They hired a turnaround firm to tell them how to fix the company. Probably paid a ton of money for it too. Sell the company. Could probably get $2 a share for it. Teetering on a sell here.
Our valuation fell to $2.63 per share.
Down 7%-HOLD

Concurrent Computer (NASDAQ-CCUR)-Recommended 2/4/2011)
Buy Price-$5.08
NEW Valuation $18.54 ( was $15.99)
Closed up $.20 at $6.13
Earnings out last week. We thought they were great. Sales up 26% and they made $.06 per share. They have $3.41 per share in net cash. Our valuation spiked to $18.54 per share.
In April the company announced that it would not do the stock buy back that Skellig was suggesting. We don’t like buy backs anyway. Hopefully Skellig will keep pushing management to get the share price up. Their ownership is up to 5.86%.
Up 21%-BUY

SuperGen Inc. (NASDAQ-SUPG)-Recommended 10/4/2010)
Buy Price-$2.31 (was $2.09 before adding $10,000)
NEW Valuation $5.21 (was $4.89, $4.37, $3.48)
Closed down $.09 at $2.62
Earnings out last week. They were good. Sales up 19% to $17.1 million and they made $.09 a share. Our valuation moved up to $5.21 and they have $2.05 per share in cash. This looks like a steal at these price levels, but the uncertainty caused by their recently announced acquisition discussed below is keeping a cap on the stock price.
SUPR announced in April that they were buying Astex, a UK company for $55 million in cash and stock. They will pay $25 million cash upfront and the remaining $30 million in cash or stock over 30 months. The deal is expected to close in July. The big, black mark on SUPG was that their drug pipeline was weak. From what we can tell, Astex is nothing but pipeline. They do not appear to have any commercial products and no close-in products; however, they have collaboration deals with a number of drug giants and have collected substantial milestone payments from them. There are $2 BILLION of potential milestone payments down the road. The combined company will have $120 million of cash, but we suspect the profitability will be gone. There is not enough public information at this point to update our valuation for this transaction.
Up 14%-HOLD

Performance Technology (PTIX-Recommended 3/30/2010)
Buy Price-$2.70
Valuation $3.79-(was $3.87, $5.03, $5.98, $7.13)
Closed up $.10 at $2.22
Last earnings report in March. Sales were down 18% from last year to $6.8 million, and they lost $2.8 million after adjusting out some one-time write-offs. Cash per share fell to $1.73, and our valuation fell to $3.79 as cash, sales and margins fell. They did say that Q1 2011 sales would be up 35-45% over Q4 and exceed any quarter in 2009 or 2010. We think we will hold on to this one a bit longer and see if they can get to a profit.
Down 18% HOLD

Extreme Networks (EXTR-Recommended 3/22/2010)
Buy Price-$3.18 (Was $3.04 before adding another $10,000)
NEW Valuation-$5.67 (was $7.36, $7.23, $7.31, $6.82, $6.81)
Closed up $.05 at $3.18
Earnings 2 weeks ago. Not good. Sales fell 3%, but they lost a whopping $6.8 million or $.07 per share. Cash rose to $1.60 per share. Margin fell, sales fell and they lost money, so our valuation dropped to $5.67 per share. Next quarter guidance was decent. $80-$85 million in sales and non-GAAP earnings per share of $.03-$.05. If they can hit this, we think the price will rebound back to the $4 per share level.
CFO resigned in March. Always makes stockholders jittery, but they also got a new CEO in October last year, so it is not unusual for a CFO to go, shortly after a new CEO comes in. They hired an interim CFO in March while they look for a permanent one.
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 reviews “strategic alternatives”. Pushing to sell EXTR obviously.
Still a cheap stock.
Up .1% HOLD

Broadvision (BVSN-Recommended 3/16/2010)
Buy Price-$13.50
NEW Valuation $21.21-(was $22.95, $22.31, $21.77, $23.37, $27.15)
$13.57 per share in cash.
Closed down $.35 at $12.90.
Earnings 2 weeks ago. Sales dropped from $5.9 million to $5.1 million and they lost $393,000 or $.09 per share. Cash per share was $13.57. Our valuation fell to $21.21.
Still trading below cash value. If we see any substantive results from their social networking products, $20 per share should be easy.
Down 4%. HOLD

Ninetowns Internet Technology (NINE-Recommended 1/25/2010)
Buy Price-$1.53
Valuation-$3.54 (Was $3.54, $3.19)
$2.88 per share in cash
Closed at $1.40, up $.03.
NINE announced in April they are going into the real estate business in China, by buying 141,000 sq. meters of land rights for $39 million (out of their $100 million or so). They plan to develop this land for mixed use residential and commercial. Have to wait on this one, as their current business was not doing much, but not sure we want to be in the real estate business.
Earning out in October. 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 9%. HOLD

Gravity Company Ltd. (GRVY-Recommended 1/18/2010)
Buy Price-$1.68
Valuation $5.73-(Was $4.38, $4.44, $5.15)
Closed up $.02 at $1.78.
Earnings out in November. Not bad. Cash rose to $2.33 per share and they made $.08 per share. Our valuation jumped to $5.73. Not bad at all. New game coming out in Korea this quarter (War of Gods), although Ragnarok 2 is delayed until at least Q2 2011.
Up 6%. 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)
Valuation –Speculation.
Closed down $.11 at $2.25.
Earnings out in March. Revenues about $10 million for the quarter and $27.7 for the year. They only lost $2.7 for the quarter and lost $20.5 for the year. Cash was $33.9 million before counting about $14 million of cash received in the current quarter for royalty payments, their Japan deal and sale of stock.
AEZS announced a new partnership for perifosine in Japan. They got $8 million upfront and up to another $60 million in the future. Plus AEZS gets to sell the compound to the company and gets double digit royalties. Not a bad deal.
Riding the tail of Kerx and perifosine, new orphan drug approval from the FDA and a lot of investor interest in their pipeline of cancer products.
Speculative for sure.
Up 58% 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 –$9.00
Closed up $.29 at $5.98
Earnings out 2 weeks ago. Sales grew 5% to $30.4 million and they lost $154,000 (breakeven per share). They are projecting sales of $122-$127 million for the year. No clear guidance on net income though.
SPNC got an approval in Japan in April to sell their lead locking device (used for removal of pacemaker and defibrillator leads). They also announced the start of a study on PAD (peripheral arterial disease). It is expected to last about 6 months.
Hmmm, CFO and 2 other officers got “change of control” agreements in March. Hope they actually mean something!
13D filed in November 2010. Paragon Assoc. disclosed a 2 million share (6%) ownership purchased at $5.16 per share. Maybe we have a catalyst finally to push management to do something (like sell this dog).
The company has $33 million in cash ($1.01 per share), no debt and is growing about 5% a year.
Up 5%. HOLD.

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up)
NEW Valuation $16.07 (was $15.04, $14.23, $15.02, $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 up $.14 at $13.09
Earnings last week. Good again. Sales up 8% and they made $.17 per share up from $.11 last year. Our valuation rose to $16.07 per share. They have $3.66 per share in cash.
MEDW announced what sounded like a nice military contract win in April. No details though, so hard to get too excited. Hopefully this and the acquisition will keep their sales and earnings momentum going.
MEDW announced another acquisition in March. No details of what it cost, or what it will do to earnings.
It has been 10 months since they hired their investment bankers, so it is about time for something to happen, hopefully more than the acquisition last week..
Constellation now owns 21.8%.
All we read is that medical records will be a hot area, so MEDW looks like the place to be.
Up 107%. 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 $14.23 (was $14.76, $12.40, $12.55, $10.85, $8.25, $9.45, $28.05, $32.10, $34.20, $37.90, $37.95)
Closed down $.05 at $3.46.
Earnings in March. As predicted they did $9.6 million in revenue and made $.11 a share from continuing operations. Our valuation fell to $14.37 and cash per share was $.88.
Down 58%. HOLD

Angeion Corporation. (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $13.60 (was $15.00, $13.06, $12.15, $11.29, $11.73, $11.47, $11.16, $9.53, $13.30, $13.03)
Closed down $.06 at $4.75
Announced a $2 million share buy-back in April. Not too exciting, but should provide some price support.
ANGN also announced a distribution contract with Premier Purchasing Partners, where Premiers 2,500 hospital customers and 73,000 other customers can buy ANGN’s products at a discount.
Earnings out in March. Not bad we thought. Sales up 7% to $7.1 million and they cut their weak quarter loss from $.20 a share to an adjusted profit of $.02 a share (excluding a severance charge for their ex-CEO). Our valuation fell to $13.60, but again this is their seasonally weak quarter, so we are not upset about it.
Up 24% BUY

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 $5.39 (was $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 $.60 up $.05.
Earnings out in March. Sales down 2% to $5.238 million, operating income was $254,000 and they made $.02 per share. Our valuation jumped back up to $5.39 on higher than expected margins.
Wake up management–you have a great little company here worth 7X what it is selling for.
Now down 63%. BUY. Still a Huge valuation gap here.

Rand Worldwide (RWWI.ob (Was Avatech, AVSO.ob)-Bought November 28, 2005)
Buy price $.79 (Was $.93, $.99 and $1.19 before adding $10,000-each time),
Valuation $2.40 (was $1.90, $2.26 $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 $.72, up $.07.
Earnings out in February. Sales were $21.7 million and they made $.02 a share. Our valuation jumped back up to $2.40 a share. Trading at 28% of our valuation. Cheap.
RWWI announced a $5.6 million deal in January. Maybe new management will get the word out on Rand and at least get us over $1.
Down 9%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $1.21 (Was $.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 $.09, closed at $.08.
Earnings out in March. Sales were $4.37 million and they actually made $200,000 of net income! Our valuation spiked back up to $1.21. They also announced that they signed a contract with a customer for $6 million most of which will come in Q2. Their VOIP business did $900,000 of revenue in 2010 compared to $150,000 in 2009.
At a $3 million market cap, this is stupidly cheap. Their intellectual property is probably worth 10 times this price. They need to liquefy 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 67%. HOLD

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $1.68 (Was $1.80 before $10,000 adder, $2.16 before double-up)
Valuation-$4.11 (Was $4.84, $4.98, $4.60, $3.82, $4.00, $3.68, $3.12, $3.98, $4.44, $3.22, $2.12, $4.56, $4.16)
Closed at $.89, down $.01
This is the Rodney Dangerfield of stocks. No respect whatsoever. Now trading at close to 1 1/2 times this years earnings! Ghost stories of ALL Chinese reverse merger companies being shams continue to spook stockholders. We don’t think LTUS is one of them.
Earnings in March. Surprise, they wrote off $6.8 million of development cost on the Mongolian property. Wham! Q4 sales were up 22% to $20 million. They made $.78 per share for the year after adjusting out the Mongolia write-off. Our valuation dropped to $4.11 per share on a slight drop in sales, lower income and more shares outstanding. Still a huge valuation gap.
Looks like the Mongolian land story has shifted AGAIN. Now they intend to keep some of the land and build a distribution facility on it and trade the excess land for the new building to preserve about $6 million a year of tax benefits they are getting. The move into the Beijing building is delayed also–till sometime near the end of the year. This delay will keep 2011 sales and earning flat to slightly down.
When the Beijing building is complete, they expect to have invested a total of $48 million ($36 million already spent) and that based on current market values, the building will be worth over $100 million. This plus the Mongolian land are worth 3 times the current market cap of LTUS. Oh yeah, then there is the $.80 in annual earnings. Think this is a buy?
Down 47%. BUY

I will be traveling.

SPNC had a decent report this week.

EXTR’s earnings report was about as expected.

BVSN was also as expected.

HPOL had a lousey quarter and we expect to see a price hit. This needs to be sold. Good brand name (in the public anyway). Bollore–where are you? $1.50 buys this.

Finally an up week with a 2.9% gain. We were in danger of going negative for the year. No bad news for us last week and LTUS finally seems to have pulled out of its nose dive with a 29% gain last week.

AVSO, SUPG, EXTR, and LTUS.ob are our favorites.

The DOW was up 1.3% last week, NASDAQ was up 2% and the S+P 500 was up 1.3%. The Russell 3000 and the Wilshire 5000 were both up about 1.4%.

For the year so far, we are up 3.8%. The DOW is up 8%, NASDAQ is up 6.3%, S+P 500 is up 6.3%, the Russell 3000 is up 6.8% and the Wilshire is up 6.5%.

Last week we went 8 stocks up, 8 down and 2 even. Since inception we are now 49 stocks up and 14 down for a 78% winning percentage (80% is our target win %).

Since our beginning, we have closed out the following positions:

2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
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-ANGN +26%
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)
2008-PARL +56%
2009-MBRK +67%
2009-SNWL +14%
2009-CYNO +25%
2009-DTLK +33%
2009-NED +46%
2009-CUTR +13%
2009-HSTM +67% (continued good earnings)
2009-RNWK +36%
2009-OPK +116%
2009-CLZR -32% (a loser even on a buy-out)
2009-DTLK +28% (our 5th profitable trip on this one)
2010-HPOL +110%
2010-DIVX +25%
2010-CHRD +37% Buyout (2 weeks after we recommended it)
2010-HPOL +30%
2010-MGIC +82%
2010-GSL +78%
2010-CCEL +49%
2010-HPOL +27%
2010-CAW EVEN (excluding 2.5 years of dividends)
2011-DWCH +116%
2011-IPAS +15%

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 45 stocks that we closed out since 2006 (41 were winners) the average net gain was 33%.

Rosetta Stone Inc. (NYSE-RST)-Recommended 3/3/2011)
Buy Price-$12.62
Valuation $31.14
Closed up $.34 at $13.69
Next earnings out Monday, May 9th after the market close
Up 9%-BUY

Harris Interactive (NASDAQ-HPOL)-Recommended 3/3/2010)
Buy Price-$.92
Valuation $2.97
Closed at $1.13, up $.08
Next earnings out April 28th after the market close.
Up 23%-HOLD

Concurrent Computer (NASDAQ-CCUR)-Recommended 2/4/2011)
Buy Price-$5.08
Valuation $15.99
Closed up $.15 at $6.01
Next earnings out Tuesday, May 3rd after the market close.
In April the ompany announced that it would not do the stock buy back that Skellig was suggesting. We don’t like buy backs anyway. Hopefully Skellig will keep pushing management to get the share price up.
Skellig Capital Management filed a 13D/A in March suggesting that CCUR use their excess cash to do a share buy back. They used examples in the filing of $6.60 and $6.90 a share. They also bought a few more shares of CCUR. Their ownership is up to 5.86%.
Up 18%-BUY

SuperGen Inc. (NASDAQ-SUPG)-Recommended 10/4/2010)
Buy Price-$2.31 (was $2.09 before adding $10,000)
Valuation $4.89 (was $4.37, $3.48)
Closed up $.04 at $2.64
Next earnings due out Wednesday, April 27th after the market close.
SUPR announced in April that they were buying Astex, a UK company for $55 million in cash and stock. They will pay $25 million cash upfront and the remaining $30 million in cash or stock over 30 months. The deal is expected to close in July. The big, black mark on SUPG was that their drug pipeline was weak. From what we can tell, Astex is nothing but pipeline. They do not appear to have any commercial products and no close-in products, however, they have collaboration deals with a number of drug giants and have collected substantial milestone payments from them. There are $2 BILLION of potential milestone payments down the road. The combined company will have $120 million of cash, but we suspect the profitability will be gone. There is not enough public information at this point to update our valuation.
Upgraded to BUY by The Street.com recently.
Up 15%-BUY

Performance Technolgy (PTIX-Recommended 3/30/2010)
Buy Price-$2.70
Valuation $3.79-(was $3.87, $5.03, $5.98, $7.13)
Closed down $.20 at $1.96
Last earnings report in March.Sales were down 18% from last year to $6.8 million, and they lost $2.8 million after adjusting out some one-time write-offs. Cash per share fell to $1.73, and our valuation fell to $3.79 as cash, sales and margins fell. They did say that Q1 2011 sales would be up 35-45% over Q4 and exceed any quarter in 2009 or 2010. We think we will hold on to this one a bit longer and see if they can get to a profit.
Down 27% HOLD

Extreme Networks (EXTR-Recommended 3/22/2010)
Buy Price-$3.18 (Was $3.04 before adding another $10,000)
Valuation-$7.36 (was $7.23, $7.31, $6.82, $6.81)
Closed down $.01 at $2.99
EXTR announced a miss on this quarters revenue. Will be $75-$77 million versus the expected $82-$85 million. Pushed out sales and competition. We think they will breakeven or made a few bucks on operations. The valuation on EXTR is still compelling.
CFO resigned in March. Always makes stockholders jittery, but they also got a new CEO in October last year, so it is not unusual for a CFO to go, shortly after a new CEO comes in. They hired an interim CFO in March while they look for a permanent one.
Earnings out in February. Sales up 7% to $85 million and they made $.10 per share ($.06 if you exclude a favorable litigation settlement) versus a loss last year of $.02 per share. Cash per share rose $.08 to 1.55 and our valuation rose to $7.36. Next quarter guidance was $82-$85 million in sales and earnings of $.05-$.08 per share before a $.04/$.05 write off off some assets.
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 reviews “strategic alternatives”. Pushing to sell EXTR obviously.
Still a cheap stock.
Down 6% HOLD

Broadvision (BVSN-Recommended 3/16/2010)
Buy Price-$13.50
Valuation $22.95-(was $22.31, $21.77, $23.37, $27.15)
$13.87 per share in cash.
Closed down $.40 at $12.62.
Next earnings due out April 28th before the market close.
Earnings out in January. Revenue was $5.1 million and they made $.01 per share. Cash per share fell a tad to $13.60. Our valuation inched up to $22.95.
Down 7%. HOLD

Ninetowns Internet Technology (NINE-Recommended 1/25/2010)
Buy Price-$1.53
Valuation-$3.54 (Was $3.54, $3.19)
$2.88 per share in cash
Closed at $1.40, down $.01.
NINE announced in April they are going into the real estate business in China, by buying 141,000 sq. meters of land rights for $39 million (out of their $100 million or so). They plan to develop this land for mixed use residential and commercial. Have to wait on this one, as their current business was not doing much, but not sure we want to be in the real estate business.
Earning out in October. 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 9%. HOLD

Gravity Company Ltd. (GRVY-Recommended 1/18/2010)
Buy Price-$1.68
Valuation $5.73-(Was $4.38, $4.44, $5.15)
Closed up $.05 at $1.80.
Earnings out in November. Not bad. Cash rose to $2.33 per share and they made $.08 per share. Our valuation jumped to $5.73. Not bad at all. New game coming out in Korea this quarter (War of Gods), although Ragnarok 2 is delayed until at least Q2 2011.
Up 7%. 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)
Valuation –Speculation.
Closed up $.22 at $2.16.
Earnings out in March. Revenues about $10 million for the quarter and $27.7 for the year. They only lost $2.7 for the quarter and lost $20.5 for the year. Cash was $33.9 million before counting about $14 million of cash received in the current quarter for royalty payments, their Japan deal and sale of stock.
AEZS announced a new partnership for perifosine in Japan. They got $8 million upfront and up to another $60 million in the future. Plus AEZS gets to sell the compound to the company and gets double digit royalties. Not a bad deal.
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.
Up 52% 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 –$10.00
Closed down $.06 at $4.87.
Next earnings out Wednesday, April 27th before the market opens.
SPNC got an approval in Japan in April to sell their lead locking device (used for removal of pacemaker and defibrillator leads). They also announced the start of a study on PAD (pheripheral arterial disease). It is expected to last about 6 months.
Hmmm, CFO and 2 other officers got “change of control” agreements in March. Hope they actually mean something!
SPNC announced earnings in February. Nothing to write home about. Sales decreased 1% to $29.3 million. At least they were able to earn a profit of $.02 a share-even after their million dollar charge for EG. I think the only way we are going to make money on this one is if they are sold. Otherwise they just can’t perform and I think the stock will go nowhere.
Good news. Geisemheimer is off the Board! Now just a consultant through June.
13D filed in November 2010. Paragon Assoc. disclosed a 2 million share (6%) ownership purchased at $5.16 per share. Maybe we have a catalyst finally to push management to do something (like sell this dog).
The company has $33 million in cash ($.99 per share), no debt and is growing about 5% a year. Teetering on a SELL here. Management is just terrible.
Down 14%. 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 $15.04 (was $14.23, $15.02, $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 up $.47 at $12.25
MEDW announced what sounded like a nice military contract win in April. No details though, so hard to get too excited. Hopefuly this and the acquisition will keep their sales and earnings momentum going.
MEDW announced another acquisition in March. No details of what it cost, or what it will do to earnings.
Constellation continues to sell a few thousand shares here and there. Interesting move. Not sure if it is meant to goad MEDW management into doing something like selling the company to Constellation or someone else. The dollars involved in this sales is peanuts. It has been 9 months since they hired their investment bankers, so it is about time for something to happen, hopefully more than the acquisition last week.
Earnings out in February. Good again. Sales up 22% to $13.2 million and they made $.21 per share versus $.10 last year. Our valuation rose to $15.04–the highest ever.
MEDW re-engaged William Blair to look at “strategic alternatives”. Got to have an I Banker to sell your company.
Constellation now owns 21.8%.
All we read is that medical records will be a hot area, so MEDW looks like the place to be.
Up 93%. 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 $14.23 (was $14.76, $12.40, $12.55, $10.85, $8.25, $9.45, $28.05, $32.10, $34.20, $37.90, $37.95)
Closed down $.06 at $3.41.
Earnings in March. As predicted they did $9.6 million in revenue and made $.11 a share from continuing operations. Our valuation fell to $14.37 and cash per share was $.88.
Down 58%. HOLD

Angeion Corporation. (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $13.60 (was $15.00, $13.06, $12.15, $11.29, $11.73, $11.47, $11.16, $9.53, $13.30, $13.03)
Closed down $.01 at $4.80
Announced a $2 million share buy-back in April. Not too exciting, but should provide some price support.
ANGN also announced a distribution contract with Premier Purchasing Partners, where Premiers 2,500 hospital customers and 73,000 other customers can buy ANGN’s products at a discount.
Earnings out in March. Not bad we thought. Sales up 7% to $7.1 million and they cut their weak quarter loss from $.20 a share to an adjusted profit of $.02 a share (excluding a severance charge for their ex-CEO). Our valuation fell to $13.60, but again this is their seasonally weak quarter, so we are not upset about it.
Up 26% BUY

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 $5.39 (was $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 $.55 unchanged.
Earnings out in March. Sales down 2% to $5.238 million, operating income was $254,000 and they made $.02 per share. Our valuation jumped back up to $5.39 on higher than expected margins.
Wake up management–you have a great little company here worth 7X what it is selling for.
Now down 66%. BUY. Still a Huge valuation gap here.

Rand Worldwide (RWWI.ob (Was Avatech, AVSO.ob)-Bought November 28, 2005)
Buy price $.79 (Was $.93, $.99 and $1.19 before adding $10,000-each time),
Valuation $2.40 (was $1.90, $2.26 $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 $.65, down $.04.
Earnings out in February. Sales were $21.7 million and they made $.02 a share. Our valuation jumped back up to $2.40 a share. Trading at 28% of our valuation. Cheap.
RWWI announced a $5.6 million deal in January. Maybe new management will get the word out on Rand and at least get us over $1.
Down 18%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $1.21 (Was $.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 $.09, closed at $.08.
Earnings out in March. Sales were $4.37 million and they actually made $200,000 of net income! Our valuation spiked back up to $1.21. They also announced that they signed a contract with a customer for $6 million most of which will come in Q2. Their VOIP business did $900,000 of revenue in 2010 compared to $150,000 in 2009.
At a $3 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 67%. HOLD

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $1.68 (Was $1.80 before $10,000 adder, $2.16 before double-up)
Valuation-$4.11 (Was $4.84, $4.98, $4.60, $3.82, $4.00, $3.68, $3.12, $3.98, $4.44, $3.22, $2.12, $4.56, $4.16)
Closed at $.98, up $.22
Finally an up week!!!
This is the Rodney Dangerfield of stocks. No respect whatsoever. Now trading at close to 1 1/2 times this years earnings! Ghost stories of ALL Chinese reverse merger companies being shams continue to spook stockholders. We don’t think LTUS is one of them.
Earnings in March. Surprize, they wrote off $6.8 million of developement cost on the Mongolian property. Wham! Q4 sales were up 22% to $20 million. They made $.78 per share for the year after adjusting out the Mongolia write-off. Our valuation dropped to $4.11 per share on a slight drop in sales, lower income and more shares outstanding. Still a huge valuation gap.
Looks like the Mongolian land story has shifted AGAIN. Now they intend to keep some of the land and build a distribution facility on it and trade the excess land for the new building to preserve about $6 million of tax benefits they are getting. The move into the Bejing building is delayed also–till sometime near the end of the year. This delay will keep 2011 sales and earning flat to slighly down.
When the Bejing building is complete, they expect to have invested a total of $48 million ($36 million already spent) and that based on current market values, the building will be worth over $100 million. This plus the Mongolian land are worth 3 times the current market cap of LTUS. Oh yeah, then there is the $.80 in annual earnings. Think this is a buy?
The stock split 2 for 1 in December. All of our numbers have been adjusted to reflect this split.
Down 41%. BUY

Another bad week for us last week, down 2.4%. LTUS keeps dragging us down with another double digit decline (11%) and Extreme dropped 11% on a pre-announced revenue miss.

AVSO, SUPG, EXTR, and LTUS.ob are our favorites.

The DOW was down .3% last week, NASDAQ was down .6% and the S+P 500 was down .6%. The Russell 3000 and the Wilshire 5000 were both down about .6%.

For the year so far, we are up .9%. The DOW is up 6.6%, NASDAQ is up 4.2%, S+P 500 is up 4.9%, the Russell 3000 is up 5.4% and the Wilshire is up 5.1%.

Last week we went 3 stocks up, 12 down and 3 even. Since inception we are now 49 stocks up and 14 down for a 78% winning percentage (80% is our target win %).

Since our beginning, we have closed out the following positions:

2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
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-ANGN +26%
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)
2008-PARL +56%
2009-MBRK +67%
2009-SNWL +14%
2009-CYNO +25%
2009-DTLK +33%
2009-NED +46%
2009-CUTR +13%
2009-HSTM +67% (continued good earnings)
2009-RNWK +36%
2009-OPK +116%
2009-CLZR -32% (a loser even on a buy-out)
2009-DTLK +28% (our 5th profitable trip on this one)
2010-HPOL +110%
2010-DIVX +25%
2010-CHRD +37% Buyout (2 weeks after we recommended it)
2010-HPOL +30%
2010-MGIC +82%
2010-GSL +78%
2010-CCEL +49%
2010-HPOL +27%
2010-CAW EVEN (excluding 2.5 years of dividends)
2011-DWCH +116%
2011-IPAS +15%

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 45 stocks that we closed out since 2006 (41 were winners) the average net gain was 33%.

Rosetta Stone Inc. (NYSE-RST)-Recommended 3/3/2011)
Buy Price-$12.62
Valuation $31.14
Closed down $.70 at $13.35
Up 6%-BUY

Harris Interactive (NASDAQ-HPOL)-Recommended 3/3/2010)
Buy Price-$.92
Valuation $2.97
Closed at $1.05, unchanged
Next earnings out April 28th after the market close.
Up 14%-HOLD

Concurrent Computer (NASDAQ-CCUR)-Recommended 2/4/2011)
Buy Price-$5.08
Valuation $15.99
Closed down $.16 at $5.86
In April the ompany announed that it would not do the stock buy back that Skellig was suggesting. We don’t like buy backs anyway. Hopefully Skellig will keep pushing management to get the share price up.
Skellig Capital Management filed a 13D/A in March suggesting that CCUR use their excess cash to do a share buy back. They used examples in the filing of $6.60 and $6.90 a share. They also bought a few more shares of CCUR. Their ownership is up to 5.86%.
Up 15%-BUY

SuperGen Inc. (NASDAQ-SUPG)-Recommended 10/4/2010)
Buy Price-$2.31 (was $2.09 before adding $10,000)
Valuation $4.89 (was $4.37, $3.48)
Closed down $.23 at $2.60
SUPR announced in April that they were buying Astex, a UK company for $55 million in cash and stock. They will pay $25 million cash upfront and the remaining $30 million in cash or stock over 30 months. The deal is expected to close in July. The big, black mark on SUPG was that their drug pipeline was weak. From what we can tell, Astex is nothing but pipeline. They do not appear to have any commercial products and no close-in products, however, they have collaboration deals with a number of drug giants and have collected substantial milestone payments from them. There are $2 BILLION of potential milestone payments down the road. The combined company will have $120 million of cash, but we suspect the profitability will be gone. There is not enough public information at this point to update our valuation.
Upgraded to BUY by The Street.com recently.
Up 13%-BUY

Performance Technolgy (PTIX-Recommended 3/30/2010)
Buy Price-$2.70
Valuation $3.79-(was $3.87, $5.03, $5.98, $7.13)
Closed up $.07 at $2.16
Last earnings report in March.Sales were down 18% from last year to $6.8 million, and they lost $2.8 million after adjusting out some one-time write-offs. Cash per share fell to $1.73, and our valuation fell to $3.79 as cash, sales and margins fell. They did say that Q1 2011 sales would be up 35-45% over Q4 and exceed any quarter in 2009 or 2010. We think we will hold on to this one a bit longer and see if they can get to a profit.
Down 20% HOLD

Extreme Networks (EXTR-Recommended 3/22/2010)
Buy Price-$3.18 (Was $3.04 before adding another $10,000)
Valuation-$7.36 (was $7.23, $7.31, $6.82, $6.81)
Closed down $.39 at $3.00
Now EXTR announced a miss on this quarters revenue. Will be $75-$77 million versus the expected $82-$85 million. Pushed out sales and competition. We think they will breakeven or made a few bucks on operations. The valuation on EXTR is still compelling.
CFO resigned in March. Always makes stockholders jittery, but they also got a new CEO in October last year, so it is not unusual for a CFO to go, shortly after a new CEO comes in. They hired an interim CFO in March while they look for a permanent one.
Earnings out in February. Sales up 7% to $85 million and they made $.10 per share ($.06 if you exclude a favorable litigation settlement) versus a loss last year of $.02 per share. Cash per share rose $.08 to 1.55 and our valuation rose to $7.36. Next quarter guidance was $82-$85 million in sales and earnings of $.05-$.08 per share before a $.04/$.05 write off off some assets.
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 reviews “strategic alternatives”. Pushing to sell EXTR obviously.
Still a cheap stock.
Down 6% HOLD

Broadvision (BVSN-Recommended 3/16/2010)
Buy Price-$13.50
Valuation $22.95-(was $22.31, $21.77, $23.37, $27.15)
$13.87 per share in cash.
Closed down $.80 at $13.02.
Next earnings due out April 28th before the market close.
Earnings out in January. Revenue was $5.1 million and they made $.01 per share. Cash per share fell a tad to $13.60. Our valuation inched up to $22.95.
Down 4%. HOLD

Ninetowns Internet Technology (NINE-Recommended 1/25/2010)
Buy Price-$1.53
Valuation-$3.54 (Was $3.54, $3.19)
$2.88 per share in cash
Closed at $1.41, down $.09.
NINE announced in April they are going into the real estate business in China, by buying 141,000 sq. meters of land rights for $39 million (out of their $100 million or so). They plan to develop this land for mixed use residential and commercial. Have to wait on this one, as their current business was not doing much, but not sure we want to be in the real estate business.
Earning out in October. 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 8%. HOLD

Gravity Company Ltd. (GRVY-Recommended 1/18/2010)
Buy Price-$1.68
Valuation $5.73-(Was $4.38, $4.44, $5.15)
Closed down $.07 at $1.75.
Earnings out in November. Not bad. Cash rose to $2.33 per share and they made $.08 per share. Our valuation jumped to $5.73. Not bad at all. New game coming out in Korea this quarter (War of Gods), although Ragnarok 2 is delayed until at least Q2 2011.
Up 4%. 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)
Valuation –Speculation.
Closed up $.06 at $1.94.
Earnings out in March. Revenues about $10 million for the quarter and $27.7 for the year. They only lost $2.7 for the quarter and lost $20.5 for the year. Cash was $33.9 million before counting about $14 million of cash received in the current quarter for royalty payments, their Japan deal and sale of stock.
AEZS announced a new partnership for perifosine in Japan. They got $8 million upfront and up to another $60 million in the future. Plus AEZS gets to sell the compound to the company and gets double digit royalties. Not a bad deal.
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.
Up 36% 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 –$10.00
Closed down $.02 at $4.93.
SPNC got an approval in Japan in April to sell their lead locking device (used for removal of pacemaker and defibrillator leads). They also announced the start of a study on PAD (pheripheral arterial disease). It is expected to last about 6 months.
Hmmm, CFO and 2 other officers got “change of control” agreements in March. Hope they actually mean something!
SPNC announced earnings in February. Nothing to write home about. Sales decreased 1% to $29.3 million. At least they were able to earn a profit of $.02 a share-even after their million dollar charge for EG. I think the only way we are going to make money on this one is if they are sold. Otherwise they just can’t perform and I think the stock will go nowhere.
Good news. Geisemheimer is off the Board! Now just a consultant through June.
13D filed in November 2010. Paragon Assoc. disclosed a 2 million share (6%) ownership purchased at $5.16 per share. Maybe we have a catalyst finally to push management to do something (like sell this dog).
The company has $33 million in cash ($.99 per share), no debt and is growing about 5% a year. Teetering on a SELL here. Management is just terrible.
Down 13%. 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 $15.04 (was $14.23, $15.02, $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 unchanged at $11.78
MEDW announced what sounded like a nice military contract win last week. No details though, so hard to get too excited. Hopefuly this and the acquisition will keep their sales and earnings momentum going.
MEDW announced another acquisition in March. No details of what it cost, or what it will do to earnings.
Constellation continues to sell a few thousand shares here and there. Interesting move. Not sure if it is meant to goad MEDW management into doing something like selling the company to Constellation or someone else. The dollars involved in this sales is peanuts. It has been 9 months since they hired their investment bankers, so it is about time for something to happen, hopefully more than the acquisition last week.
Earnings out in February. Good again. Sales up 22% to $13.2 million and they made $.21 per share versus $.10 last year. Our valuation rose to $15.04–the highest ever.
MEDW re-engaged William Blair to look at “strategic alternatives”. Got to have an I Banker to sell your company.
Constellation now owns 21.8%.
All we read is that medical records will be a hot area, so MEDW looks like the place to be.
Up 86%. 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 $14.23 (was $14.76, $12.40, $12.55, $10.85, $8.25, $9.45, $28.05, $32.10, $34.20, $37.90, $37.95)
Closed down $.09 at $3.47.
Earnings in March. As predicted they did $9.6 million in revenue and made $.11 a share from continuing operations. Our valuation fell to $14.37 and cash per share was $.88.
Down 58%. HOLD

Angeion Corporation. (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $13.60 (was $15.00, $13.06, $12.15, $11.29, $11.73, $11.47, $11.16, $9.53, $13.30, $13.03)
Closed up $.04 at $4.81
Announced a $2 million share buy-back last week. Not too exciting, but should provide some price support.
ANGN also announced a distribution contract with Premier Purchasing Partners, where Premiers 2,500 hospital customers and 73,000 other customers can buy ANGN’s products at a discount.
Earnings out in March. Not bad we thought. Sales up 7% to $7.1 million and they cut their weak quarter loss from $.20 a share to an adjusted profit of $.02 a share (excluding a severance charge for their ex-CEO). Our valuation fell to $13.60, but again this is their seasonally weak quarter, so we are not upset about it.
Up 26% BUY

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 $5.39 (was $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 $.55 down $.05.
Earnings out in March. Sales down 2% to $5.238 million, operating income was $254,000 and they made $.02 per share. Our valuation jumped back up to $5.39 on higher than expected margins.
Wake up management–you have a great little company here worth 7X what it is selling for.
Now down 66%. BUY. Still a Huge valuation gap here.

Rand Worldwide (RWWI.ob (Was Avatech, AVSO.ob)-Bought November 28, 2005)
Buy price $.79 (Was $.93, $.99 and $1.19 before adding $10,000-each time),
Valuation $2.40 (was $1.90, $2.26 $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 $.69, down $.01.
Earnings out in February. Sales were $21.7 million and they made $.02 a share. Our valuation jumped back up to $2.40 a share. Trading at 28% of our valuation. Cheap.
RWWI announced a $5.6 million deal in January. Maybe new management will get the word out on Rand and at least get us over $1.
Down 13%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $1.21 (Was $.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 $.09, closed at $.08.
Earnings out in March. Sales were $4.37 million and they actually made $200,000 of net income! Our valuation spiked back up to $1.21. They also announced that they signed a contract with a customer for $6 million most of which will come in Q2. Their VOIP business did $900,000 of revenue in 2010 compared to $150,000 in 2009.
At a $3 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 67%. HOLD

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $1.68 (Was $1.80 before $10,000 adder, $2.16 before double-up)
Valuation-$4.11 (Was $4.84, $4.98, $4.60, $3.82, $4.00, $3.68, $3.12, $3.98, $4.44, $3.22, $2.12, $4.56, $4.16)
Closed at $.76, down $.09
This is the Rodney Dangerfield of stocks. No respect whatsoever. Now trading at close to one times this years earnings! Ghost stories of ALL Chinese reverse merger companies being shams continue to spook stockholders. We don’t think LTUS is one of them.
Earnings in March. Surprize, they wrote off $6.8 million of developement cost on the Mongolian property. Wham! Q4 sales were up 22% to $20 million. They made $.78 per share for the year after adjusting out the Mongolia write-off. Our valuation dropped to $4.11 per share on a slight drop in sales, lower income and more shares outstanding. Still a huge valuation gap.
Looks like the Mongolian land story has shifted again. Now they intend to keep some of the land and build a distribution facility on it and sell the rest for $50-$80 million-or enter into a developement deal to preserve about $6 million of tax benefits they are getting. The move into the Bejing building is delayed also–till sometime near the end of the year. This delay will keep 2011 sales and earning flat to slighly down. None of this impressed investors, and with a few other Chinese reverse merger stocks imploding due to CFO and auditor resignations here we are at $1.05 per share-25% of our valuation and less than a 1.5 PE. LTUS filed their 10k last week, with no auditor resignations! That alone should pust the stock back over $2.
When the Bejing building is complete, they expect to have invested a total of $48 million ($36 million already spent) and that based on current market values, the building will be worth over $100 million. This plus the Mongolian land are worth 3 times the current market cap of LTUS. Oh yeah, then there is the $.80 in annual earnings. Think this is a buy?
The stock split 2 for 1 in December. All of our numbers have been adjusted to reflect this split.
Down 55%. BUY

Bad week for us last week, down 3.3%. LTUS keeps dragging us down with another double digit decline (19%) and SuperGen dropped 10% on what we think is good news-long term.

AVSO, SUPG, EXTR, and LTUS.ob are our favorites.

The DOW was even last week, NASDAQ was down .3% and the S+P 500 was down .3%. The Russell 3000 and the Wilshire 5000 were both down about .4%.

For the year so far, we are up 3.3%. The DOW is up 6.9%, NASDAQ is up 4.8%, S+P 500 is up 5.6%, the Russell 3000 is up 6.0% and the Wilshire is up 5.8%.

Last week we went 6 stocks up, 10 down and 2 even. Since inception we are now 51 stocks up and 12 down for a 81% winning percentage (80% is our target win %).

Since our beginning, we have closed out the following positions:

2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
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-ANGN +26%
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)
2008-PARL +56%
2009-MBRK +67%
2009-SNWL +14%
2009-CYNO +25%
2009-DTLK +33%
2009-NED +46%
2009-CUTR +13%
2009-HSTM +67% (continued good earnings)
2009-RNWK +36%
2009-OPK +116%
2009-CLZR -32% (a loser even on a buy-out)
2009-DTLK +28% (our 5th profitable trip on this one)
2010-HPOL +110%
2010-DIVX +25%
2010-CHRD +37% Buyout (2 weeks after we recommended it)
2010-HPOL +30%
2010-MGIC +82%
2010-GSL +78%
2010-CCEL +49%
2010-HPOL +27%
2010-CAW EVEN (excluding 2.5 years of dividends)
2011-DWCH +116%
2011-IPAS +15%

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 45 stocks that we closed out since 2006 (41 were winners) the average net gain was 33%.

Rosetta Stone Inc. (NYSE-RST)-Recommended 3/3/2011)
Buy Price-$12.62
Valuation $31.14
Closed up $.63 at $14.05
Up 11%-BUY

Harris Interactive (NASDAQ-HPOL)-Recommended 3/3/2010)
Buy Price-$.92
Valuation $2.97
Closed at $1.05, up $.08
Up 14%-HOLD

Concurrent Computer (NASDAQ-CCUR)-Recommended 2/4/2011)
Buy Price-$5.08
Valuation $15.99
Closed down $.04 at $6.02
Last week the ompany announed that it would not do the stock buy back that Skellig was suggesting. We don’t like buy backs anyway. Hopefully Skellig will keep pushing management to get the share price up.
Skellig Capital Management filed a 13D/A in March suggesting that CCUR use their excess cash to do a share buy back. They used examples in the filing of $6.60 and $6.90 a share. They also bought a few more shares of CCUR. Their ownership is up to 5.86%.
Up 19%-BUY

SuperGen Inc. (NASDAQ-SUPG)-Recommended 10/4/2010)
Buy Price-$2.31 (was $2.09 before adding $10,000)
Valuation $4.89 (was $4.37, $3.48)
Closed down $.33 at $2.83
SUPR announced last week that they were buying Astex, a UK company for $55 million in cash and stock. They will pay $25 million cash upfront and the remaining $30 million in cash or stock over 30 months. The deal is expected to close in July. The big, black mark on SUPG was that their drug pipeline was weak. From what we can tell, Astex is nothing but pipeline. They do not appear to have any commercial products and no close-in products, however, they have collaboration deals with a number of drug giants and have collected substantial milestone payments from them. There are $2 BILLION of potential milestone payments down the road. The combined company will have $120 million of cash, but we suspect the profitability will be gone. There is not enough public information at this point to update our valuation.
Upgraded to BUY by The Street.com recently.
Up 22%-BUY

Performance Technolgy (PTIX-Recommended 3/30/2010)
Buy Price-$2.70
Valuation $3.79-(was $3.87, $5.03, $5.98, $7.13)
Closed down $.04 at $2.09
Last earnings report in March.Sales were down 18% from last year to $6.8 million, and they lost $2.8 million after adjusting out some one-time write-offs. Cash per share fell to $1.73, and our valuation fell to $3.79 as cash, sales and margins fell. They did say that Q1 2011 sales would be up 35-45% over Q4 and exceed any quarter in 2009 or 2010. We think we will hold on to this one a bit longer and see if they can get to a profit.
Down 23% HOLD

Extreme Networks (EXTR-Recommended 3/22/2010)
Buy Price-$3.18 (Was $3.04 before adding another $10,000)
Valuation-$7.36 (was $7.23, $7.31, $6.82, $6.81)
Closed down $.02 at $3.39
CFO resigned in March. Always makes stockholders jittery, but they also got a new CEO in October last year, so it is not unusual for a CFO to go, shortly after a new CEO comes in. They hired an interim CFO in March while they look for a permanent one.
Earnings out in February. Sales up 7% to $85 million and they made $.10 per share ($.06 if you exclude a favorable litigation settlement) versus a loss last year of $.02 per share. Cash per share rose $.08 to 1.55 and our valuation rose to $7.36. Next quarter guidance was $82-$85 million in sales and earnings of $.05-$.08 per share before a $.04/$.05 write off off some assets.
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 reviews “strategic alternatives”. Pushing to sell EXTR obviously.
Still a cheap stock.
Up 7% HOLD

Broadvision (BVSN-Recommended 3/16/2010)
Buy Price-$13.50
Valuation $22.95-(was $22.31, $21.77, $23.37, $27.15)
$13.87 per share in cash.
Closed down $.63 at $13.82.
Earnings out in January. Revenue was $5.1 million and they made $.01 per share. Cash per share fell a tad to $13.60. Our valuation inched up to $22.95.
Up 2%. HOLD

Ninetowns Internet Technology (NINE-Recommended 1/25/2010)
Buy Price-$1.53
Valuation-$3.54 (Was $3.54, $3.19)
$2.88 per share in cash
Closed at $1.50, up $.10.
NINE announced last week they are going into the real estate business in China, by buying 141,000 sq. meters of land rights for $39 million (out of their $100 million or so). They plan to develop this land for mixed use residential and commercial. Have to wait on this one, as their grocery business was not doing much, but not sure we want to be in the real estate business.
Earning out in October. 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 2%. HOLD

Gravity Company Ltd. (GRVY-Recommended 1/18/2010)
Buy Price-$1.68
Valuation $5.73-(Was $4.38, $4.44, $5.15)
Closed down $.17 at $1.82.
Earnings out in November. Not bad. Cash rose to $2.33 per share and they made $.08 per share. Our valuation jumped to $5.73. Not bad at all. New game coming out in Korea this quarter (War of Gods), although Ragnarok 2 is delayed until at least Q2 2011.
Up 8%. 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)
Valuation –Speculation.
Closed down $.08 at $1.88.
Earnings out in March. Revenues about $10 million for the quarter and $27.7 for the year. They only lost $2.7 for the quarter and lost $20.5 for the year. Cash was $33.9 million before counting about $14 million of cash received in the current quarter for royalty payments, their Japan deal and sale of stock.
AEZS announced a new partnership for perifosine in Japan. They got $8 million upfront and up to another $60 million in the future. Plus AEZS gets to sell the compound to the company and gets double digit royalties. Not a bad deal.
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.
Up 32% 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 –$10.00
Closed up $.06 at $4.95.
SPNC got an approval in Japan last week to sell their lead locking device (used for removal of pacemaker and defibrillator leads). They also announced the start of a study on PAD (pheripheral arterial disease). It is expected to last about 6 months.
Hmmm, CFO and 2 other officers got “change of control” agreements in March. Hope they actually mean something!
SPNC announced earnings in February. Nothing to write home about. Sales decreased 1% to $29.3 million. At least they were able to earn a profit of $.02 a share-even after their million dollar charge for EG. I think the only way we are going to make money on this one is if they are sold. Otherwise they just can’t perform and I think the stock will go nowhere.
Good news. Geisemheimer is off the Board! Now just a consultant through June.
13D filed in November 2010. Paragon Assoc. disclosed a 2 million share (6%) ownership purchased at $5.16 per share. Maybe we have a catalyst finally to push management to do something (like sell this dog).
The company has $33 million in cash ($.99 per share), no debt and is growing about 5% a year. Teetering on a SELL here. Management is just terrible.
Down 13%. 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 $15.04 (was $14.23, $15.02, $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 $.62 at $11.78
MEDW announced another acquisition in March. No details of what it cost, or what it will do to earnings.
Constellation continues to sell a few thousand shares here and there. Interesting move. Not sure if it is meant to goad MEDW management into doing something like selling the company to Constellation or someone else. The dollars involved in this sales is peanuts. It has been 9 months since they hired their investment bankers, so it is about time for something to happen, hopefully more than the acquisition last week.
Earnings out in February. Good again. Sales up 22% to $13.2 million and they made $.21 per share versus $.10 last year. Our valuation rose to $15.04–the highest ever.
MEDW re-engaged William Blair to look at “strategic alternatives”. Got to have an I Banker to sell your company.
Constellation now owns 21.8%.
All we read is that medical records will be a hot area, so MEDW looks like the place to be.
Up 86%. 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 $14.23 (was $14.76, $12.40, $12.55, $10.85, $8.25, $9.45, $28.05, $32.10, $34.20, $37.90, $37.95)
Closed up $.02 at $3.56.
Earnings in March. As predicted they did $9.6 million in revenue and made $.11 a share from continuing operations. Our valuation fell to $14.37 and cash per share was $.88.
Down 56%. HOLD

Angeion Corporation. (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $13.60 (was $15.00, $13.06, $12.15, $11.29, $11.73, $11.47, $11.16, $9.53, $13.30, $13.03)
Closed down $.13 at $4.77
Earnings out in March. Not bad we thought. Sales up 7% to $7.1 million and they cut their weak quarter loss from $.20 a share to an adjusted profit of $.02 a share (excluding a severance charge for their ex-CEO). Our valuation fell to $13.60, but again this is their seasonally weak quarter, so we are not upset about it.
Up 25% BUY

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 $5.39 (was $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 $.60 up $.03.
Earnings out in March. Sales down 2% to $5.238 million, operating income was $254,000 and they made $.02 per share. Our valuation jumped back up to $5.39 on higher than expected margins.
Wake up management–you have a great little company here worth 7X what it is selling for.
Now down 63%. BUY. Still a Huge valuation gap here.

Rand Worldwide (RWWI.ob (Was Avatech, AVSO.ob)-Bought November 28, 2005)
Buy price $.79 (Was $.93, $.99 and $1.19 before adding $10,000-each time),
Valuation $2.40 (was $1.90, $2.26 $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.
Earnings out in February. Sales were $21.7 million and they made $.02 a share. Our valuation jumped back up to $2.40 a share. Trading at 28% of our valuation. Cheap.
RWWI announced a $5.6 million deal in January. Maybe new management will get the word out on Rand and at least get us over $1.
Down 12%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $1.21 (Was $.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 $.09, closed at $.08.
Earnings out in March. Sales were $4.37 million and they actually made $200,000 of net income! Our valuation spiked back up to $1.21. They also announced that they signed a contract with a customer for $6 million most of which will come in Q2. Their VOIP business did $900,000 of revenue in 2010 compared to $150,000 in 2009.
At a $3 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 67%. HOLD

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $1.68 (Was $1.80 before $10,000 adder, $2.16 before double-up)
Valuation-$4.11 (Was $4.84, $4.98, $4.60, $3.82, $4.00, $3.68, $3.12, $3.98, $4.44, $3.22, $2.12, $4.56, $4.16)
Closed at $.85, down $.20
This is the Rodney Dangerfield of stocks. No respect whatsoever. Now trading at close to one times this years earnings! Ghost stories of ALL Chinese reverse merger companies being shams continue to spook stockholders. We don’t think LTUS is one of them.
Earnings in March. Surprize, they wrote off $6.8 million of developement cost on the Mongolian property. Wham! Q4 sales were up 22% to $20 million. They made $.78 per share for the year after adjusting out the Mongolia write-off. Our valuation dropped to $4.11 per share on a slight drop in sales, lower income and more shares outstanding. Still a huge valuation gap.
Looks like the Mongolian land story has shifted again. Now they intend to keep some of the land and build a distribution facility on it and sell the rest for $50-$80 million-or enter into a developement deal to preserve about $6 million of tax benefits they are getting. The move into the Bejing building is delayed also–till sometime near the end of the year. This delay will keep 2011 sales and earning flat to slighly down. None of this impressed investors, and with a few other Chinese reverse merger stocks imploding due to CFO and auditor resignations here we are at $1.05 per share-25% of our valuation and less than a 1.5 PE. LTUS filed their 10k last week, with no auditor resignations! That alone should pust the stock back over $2.
When the Bejing building is complete, they expect to have invested a total of $48 million ($36 million already spent) and that based on current market values, the building will be worth over $100 million. This plus the Mongolian land are worth 3 times the current market cap of LTUS. Oh yeah, then there is the $.80 in annual earnings. Think this is a buy?
The stock split 2 for 1 in December. All of our numbers have been adjusted to reflect this split.
Down 50%. BUY

We lagged the market last week, but still posted a .7% gain despite a 31% loss in LTUS (see update below).

AVSO, SUPG, EXTR, and LTUS.ob are our favorites.

The DOW was up 1.3% last week, NASDAQ was up 1.7% and the S+P 500 was up 1.%4. The Russell 3000 and the Wilshire 5000 were both up about 1.6%.

For the year so far, we are up 6.6%. The DOW is up 6.9%, NASDAQ is up 5.2%, S+P 500 is up 6%, Russell 3000 up 6.5% and the Wilshire is up 6.2%.

Last week we went 11 stocks up, 5 down and 2 even. Since inception we are now 51 stocks up and 12 down for a 81% winning percentage (80% is our target win %).

Since our beginning, we have closed out the following positions:

2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
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-ANGN +26%
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)
2008-PARL +56%
2009-MBRK +67%
2009-SNWL +14%
2009-CYNO +25%
2009-DTLK +33%
2009-NED +46%
2009-CUTR +13%
2009-HSTM +67% (continued good earnings)
2009-RNWK +36%
2009-OPK +116%
2009-CLZR -32% (a loser even on a buy-out)
2009-DTLK +28% (our 5th profitable trip on this one)
2010-HPOL +110%
2010-DIVX +25%
2010-CHRD +37% Buyout (2 weeks after we recommended it)
2010-HPOL +30%
2010-MGIC +82%
2010-GSL +78%
2010-CCEL +49%
2010-HPOL +27%
2010-CAW EVEN (excluding 2.5 years of dividends)
2011-DWCH +116%
2011-IPAS +15%

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 45 stocks that we closed out since 2006 (41 were winners) the average net gain was 33%.

Rosetta Stone Inc. (NYSE-RST)-Recommended 3/3/2011)
Buy Price-$12.62
Valuation $31.14
Closed up $.29 at $13.42
Up 6%-BUY

Harris Interactive (NASDAQ-HPOL)-Recommended 3/3/2010)
Buy Price-$.92
Valuation $2.97
Closed at $.97, unchanged
Up 5%-BUY

Concurrent Computer (NASDAQ-CCUR)-Recommended 2/4/2011)
Buy Price-$5.08
Valuation $15.99
Closed down $.39 at $6.06
Skellig Capital Management filed a 13D/A in March pushing CCUR to use their excess cash to do a share buy back. They used examples in the filing of $6.60 and $6.90 a share. They also bought a few more shares of CCUR. Their ownership is up to 5.86%.
Up 19%-HOLD

SuperGen Inc. (NASDAQ-SUPG)-Recommended 10/4/2010)
Buy Price-$2.31 (was $2.09 before adding $10,000)
Valuation $4.89 (was $4.37, $3.48)
Closed up $.31 at $3.16
Upgraded to BUY by The Street.com recently.
Up 37%-HOLD

Performance Technolgy (PTIX-Recommended 3/30/2010)
Buy Price-$2.70
NEW Valuation $3.79-(was $3.87, $5.03, $5.98, $7.13)
Closed up $.12 at $2.13
Earnings out last week.
Not as bad as we expected.
Sales were down 18% from last year to $6.8 million, and they lost $2.8 million after adjusting out some one-time write-offs. Cash per share fell to $1.73, and our valuation fell to $3.79 as cash, sales and margins fell. They did say that Q1 2011 sales would be up 35-45% over Q4 and exceed any quarter in 2009 or 2010. We think we will hold on to this one a bit longer and see if they can get to a profit.
Down 21% HOLD

Extreme Networks (EXTR-Recommended 3/22/2010)
Buy Price-$3.18 (Was $3.04 before adding another $10,000)
Valuation-$7.36 (was $7.23, $7.31, $6.82, $6.81)
Closed down $.10 at $3.41
CFO resigned in March. Always makes stockholders jittery, but they also got a new CEO in October last year, so it is not unusual for a CFO to go, shortly after a new CEO comes in. They hired an interim CFO last week while they look for a permanent one.
Earnings out in February. Sales up 7% to $85 million and they made $.10 per share ($.06 if you exclude a favorable litigation settlement) versus a loss last year of $.02 per share. Cash per share rose $.08 to 1.55 and our valuation rose to $7.36. Next quarter guidance was $82-$85 million in sales and earnings of $.05-$.08 per share before a $.04/$.05 write off off some assets.
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 reviews “strategic alternatives”. Pushing to sell EXTR obviously.
Still a cheap stock.
Up 7% HOLD

Broadvision (BVSN-Recommended 3/16/2010)
Buy Price-$13.50
Valuation $22.95-(was $22.31, $21.77, $23.37, $27.15)
$13.87 per share in cash.
Closed down $.03 at $14.45.
Earnings out in January. Revenue was $5.1 million and they made $.01 per share. Cash per share fell a tad to $13.60. Our valuation inched up to $22.95.
Up 7%. HOLD

Ninetowns Internet Technology (NINE-Recommended 1/25/2010)
Buy Price-$1.53
Valuation-$3.54 (Was $3.54, $3.19)
$2.88 per share in cash
Closed at $1.40, unchanged.
Earning out in October. 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 9%. BUY

Gravity Company Ltd. (GRVY-Recommended 1/18/2010)
Buy Price-$1.68
Valuation $5.73-(Was $4.38, $4.44, $5.15)
Closed up $.01 at $1.99.
Earnings out in November. Not bad. Cash rose to $2.33 per share and they made $.08 per share. Our valuation jumped to $5.73. Not bad at all. New game coming out in Korea this quarter (War of Gods), although Ragnarok 2 is delayed until at least Q2 2011.
Up 19%. 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)
Valuation –Speculation.
Closed up $.17 at $1.96.
Earnings out in March. Revenues about $10 million for the quarter and $27.7 for the year. They only lost $2.7 for the quarter and lost $20.5 for the year. Cash was $33.9 million before counting about $14 million of cash received in the current quarter for royalty payments, their Japan deal and sale of stock.
AEZS announced a new partnership for perifosine in Japan. They got $8 million upfront and up to another $60 million in the future. Plus AEZS gets to sell the compound to the company and gets double digit royalties. Not a bad deal.
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.
Up 38% 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 –$10.00
Closed up $.45 at $4.89.
Hmmm, CFO and 2 other officers got “change of control” agreements in March. Hope they actually mean something!
SPNC announced earnings in February. Nothing to write home about. Sales decreased 1% to $29.3 million. At least they were able to earn a profit of $.02 a share-even after their million dollar charge for EG. I think the only way we are going to make money on this one is if they are sold. Otherwise they just can’t perform and I think the stock will go nowhere.
Good news. Geisemheimer is off the Board! Now just a consultant through June.
13D filed in November 2010. Paragon Assoc. disclosed a 2 million share (6%) ownership purchased at $5.16 per share. Maybe we have a catalyst finally to push management to do something (like sell this dog).
The company has $33 million in cash ($.99 per share), no debt and is growing about 5% a year. Teetering on a SELL here. Management is just terrible.
Down 14%. 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 $15.04 (was $14.23, $15.02, $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 up $.32 at $12.40
MEDW announced another acquisition last week. No details of what it cost, or what it will do to earnings.
Constellation continues to sell a few thousand shares here and there. Interesting move. Not sure if it is meant to goad MEDW management into doing something like selling the company to Constellation or someone else. The dollars involved in this sales is peanuts. It has been 9 months since they hired their investment bankers, so it is about time for something to happen, hopefully more than the acquisition last week.
Earnings out in February. Good again. Sales up 22% to $13.2 million and they made $.21 per share versus $.10 last year. Our valuation rose to $15.04–the highest ever.
MEDW re-engaged William Blair to look at “strategic alternatives”. Got to have an I Banker to sell your company.
Constellation now owns 21.8%. 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 96%. 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 $14.23 (was $14.76, $12.40, $12.55, $10.85, $8.25, $9.45, $28.05, $32.10, $34.20, $37.90, $37.95)
Closed up $.01 at $3.54.
Earnings in March. As predicted they did $9.6 million in revenue and made $.11 a share from continuing operations. Our valuation fell to $14.37 and cash per share was $.88.
Down 57%. HOLD

Angeion Corporation. (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $13.60 (was $15.00, $13.06, $12.15, $11.29, $11.73, $11.47, $11.16, $9.53, $13.30, $13.03)
Closed up $.10 at $4.90
Earnings out in March. Not bad we thought. Sales up 7% to $7.1 million and they cut their weak quarter loss from $.20 a share to an adjusted profit of $.02 a share (excluding a severance charge for their ex-CEO). Our valuation fell to $13.60, but again this is their seasonally weak quarter, so we are not upset about it.
Up 28% BUY

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 $5.39 (was $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 $.57 down $.01.
Earnings out in March. Sales down 2% to $5.238 million, operating income was $254,000 and they made $.02 per share. Our valuation jumped back up to $5.39 on higher than expected margins.
Wake up management–you have a great little company here worth 7X what it is selling for.
Now down 65%. BUY. Still a Huge valuation gap here.

Rand Worldwide (RWWI.ob (Was Avatech, AVSO.ob)-Bought November 28, 2005)
Buy price $.79 (Was $.93, $.99 and $1.19 before adding $10,000-each time),
Valuation $2.40 (was $1.90, $2.26 $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, up $.10.
Earnings out in February. Sales were $21.7 million and they made $.02 a share. Our valuation jumped back up to $2.40 a share. Trading at 28% of our valuation. Cheap.
RWWI announced a $5.6 million deal in January. Maybe new management will get the word out on Rand and at least get us over $1.
Down 12%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
NEW Valuation $1.21 (Was $.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 $.09, closed at $.08.
Earnings out last week. Sales were $4.37 million and they actually made $200,000 of net income! Our valuation spiked back up to $1.21. They also announced that they signed a contract with a customer for $6 million most of which will come in Q2. Their VOIP business did $900,000 of revenue in 2010 compared to $150,000 in 2009.
At a $3 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 67%. HOLD

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $1.68 (Was $1.80 before $10,000 adder, $2.16 before double-up)
NEW Valuation-$4.11 (Was $4.84, $4.98, $4.60, $3.82, $4.00, $3.68, $3.12, $3.98, $4.44, $3.22, $2.12, $4.56, $4.16)
Closed at $1.05, down $.48
This is the Rodney Dangerfield of stocks. No respect whatsoever. Now trading at less than 2X this years earnings! Ghost stories of ALL Chinese reverse merger companies being shams continue to spook stockholders. We don’t think LTUS is one of them.
Earnings last week. Surprize, they wrote off $6.8 million of developement cost on the Mongolian property. Wham! Q4 sales were up 22% to $20 million. They made $.78 per share for the year after adjusting out the Mongolia write-off. Our valuation dropped to $4.11 per share on a slight drop in sales, lower income and more shares outstanding. Still a huge valuation gap.
Looks like the Mongolian land story has shifted again. Now they intend to keep some of the land and build a distribution facility on it and sell the rest for $50-$80 million-or enter into a developement deal to preserve about $6 million of tax benefits they are getting. The move into the Bejing building is delayed also–till sometime near the end of the year. This delay will keep 2011 sales and earning flat to slighly down. None of this impressed investors, and with a few other Chinese reverse merger stocks imploding due to CFO and auditor resignations here we are at $1.05 per share-25% of our valuation and less than a 1.5 PE. LTUS filed their 10k last week, with no auditor resignations! That alone should pust the stock back over $2.
When the Bejing building is complete, they expect to have invested a total of $48 million ($36 million already spent) and that based on current market values, the building will be worth over $100 million. This plus the Mongolian land are worth 3 times the current market cap of LTUS. Oh yeah, then there is the $.80 in annual earnings. Think this is a buy?
The stock split 2 for 1 in December. All of our numbers have been adjusted to reflect this split.
Down 38%. BUY

Most of the averages were up 3% or so last week. We were down .1%. Our “OB’s” fell with the exception of Lotus which killed the week.

AVSO, SUPG, EXTR, and LTUS.ob are our favorites.

The DOW was up 3% last week, NASDAQ was up 3.8% and the S+P 500 was up 2.7%. The Russell 3000 and the Wilshire 5000 were both up about 2.8%.

For the year so far, we are up 5.9%. The DOW is up 5.6%, NASDAQ is up 3.4%, S+P 500 is up 4.5%, Russell 3000 up 4.7% and the Wilshire is up 4.5%.

Last week we went 11 stocks up and 7 down. Since inception we are now 51 stocks up and 12 down for a 81% winning percentage (80% is our target win %).

Since our beginning, we have closed out the following positions:

2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
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-ANGN +26%
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)
2008-PARL +56%
2009-MBRK +67%
2009-SNWL +14%
2009-CYNO +25%
2009-DTLK +33%
2009-NED +46%
2009-CUTR +13%
2009-HSTM +67% (continued good earnings)
2009-RNWK +36%
2009-OPK +116%
2009-CLZR -32% (a loser even on a buy-out)
2009-DTLK +28% (our 5th profitable trip on this one)
2010-HPOL +110%
2010-DIVX +25%
2010-CHRD +37% Buyout (2 weeks after we recommended it)
2010-HPOL +30%
2010-MGIC +82%
2010-GSL +78%
2010-CCEL +49%
2010-HPOL +27%
2010-CAW EVEN (excluding 2.5 years of dividends)
2011-DWCH +116%
2011-IPAS +15%

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 45 stocks that we closed out since 2006 (41 were winners) the average net gain was 33%.

Rosetta Stone Inc. (NYSE-RST)-Recommended 3/3/2011)
Buy Price-$12.62
Valuation $31.14
Closed down $.06 at $13.13
Up 4%-BUY

Harris Interactive (NASDAQ-HPOL)-Recommended 3/3/2010)
Buy Price-$.92
Valuation $2.97
Closed down $.05 at $.97
Up 5%-BUY

Concurrent Computer (NASDAQ-CCUR)-Recommended 2/4/2011)
Buy Price-$5.08
Valuation $15.99
Closed up $.20 at $6.45
Skellig Capital Management filed a 13D/A in March pushing CCUR to use their excess cash to do a share buy back. They used examples in the filing of $6.60 and $6.90 a share. They also bought a few more shares of CCUR. Their ownership is up to 5.86%.
Up 27%-HOLD

SuperGen Inc. (NASDAQ-SUPG)-Recommended 10/4/2010)
Buy Price-$2.09
Valuation $4.89 (was $4.37, $3.48)
Closed up $.28 at $2.85
Upgraded to BUY by The Street.com recently.
Up 36%-HOLD

Performance Technolgy (PTIX-Recommended 3/30/2010)
Buy Price-$2.70
Valuation $3.87-(was $5.03, $5.98, $7.13)
Closed up $.13 at $2.01
Earnings due out March 30th after the market close.
Last earnings out in November. Not good. Sales were down 20% from last year to $6.3 million, and they lost $2.9 million or $.26 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 $2.09, and our valuation fell to $3.87 as cash, sales and margins fell. Still trading below cash value, but that cash is dwindling.
Down 26% HOLD–close to a sell.

Extreme Networks (EXTR-Recommended 3/22/2010)
Buy Price-$3.04
Valuation-$7.36 (was $7.23, $7.31, $6.82, $6.81)
Closed up $.18 at $3.51
CFO resigned in March. Always makes stockholders jittery, but they also got a new CEO in October last year, so it is not unusual for a CFO to go, shortly after a new CEO comes in. They hired an interim CFO last week while they look for a permanent one.
Earnings out in February. Sales up 7% to $85 million and they made $.10 per share ($.06 if you exclude a favorable litigation settlement) versus a loss last year of $.02 per share. Cash per share rose $.08 to 1.55 and our valuation rose to $7.36. Next quarter guidance was $82-$85 million in sales and earnings of $.05-$.08 per share before a $.04/$.05 write off off some assets.
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 reviews “strategic alternatives”. Pushing to sell EXTR obviously.
Still a cheap stock.
Up 16% HOLD

Broadvision (BVSN-Recommended 3/16/2010)
Buy Price-$13.50
Valuation $22.95-(was $22.31, $21.77, $23.37, $27.15)
$13.87 per share in cash.
Closed up $.33 at $14.48.
Earnings out in January. Revenue was $5.1 million and they made $.01 per share. Cash per share fell a tad to $13.60. Our valuation inched up to $22.95.
Up 7%. HOLD

Ninetowns Internet Technology (NINE-Recommended 1/25/2010)
Buy Price-$1.53
Valuation-$3.54 (Was $3.54, $3.19)
$2.88 per share in cash
Closed up $.04 at $1.40.
Earning out in October. 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 9%. BUY

Gravity Company Ltd. (GRVY-Recommended 1/18/2010)
Buy Price-$1.68
Valuation $5.73-(Was $4.38, $4.44, $5.15)
Closed up $.05 at $1.98.
Earnings out in November. Not bad. Cash rose to $2.33 per share and they made $.08 per share. Our valuation jumped to $5.73. Not bad at all. New game coming out in Korea this quarter (War of Gods), although Ragnarok 2 is delayed until at least Q2 2011.
Up 18%. 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)
Valuation –Speculation.
Closed up $.03 at $1.79.
Earnings out last week. Revenues about $10 million for the quarter and $27.7 for the year. They only lost $2.7 for the quarter and lost $20.5 for the year. Cash was $33.9 million before counting about $14 million of cash received in the current quarter for royalty payments, their Japan deal and sale of stock.
AEZS announced a new partnership for perifosine in Japan. They got $8 million upfront and up to another $60 million in the future. Plus AEZS gets to sell the compound to the company and gets double digit royalties. Not a bad deal.
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.
Up 26% 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 –$10.00
Closed down $.02 at $4.44.
Hmmm, CFO and 2 other officers got “change of control” agreements in March. Hope they actually mean something!
SPNC announced earnings in February. Nothing to write home about. Sales decreased 1% to $29.3 million. At least they were able to earn a profit of $.02 a share-even after their million dollar charge for EG. I think the only way we are going to make money on this one is if they are sold. Otherwise they just can’t perform and I think the stock will go nowhere.
Good news. Geisemheimer is off the Board! Now just a consultant through June.
13D filed in November 2010. Paragon Assoc. disclosed a 2 million share (6%) ownership purchased at $5.16 per share. Maybe we have a catalyst finally to push management to do something (like sell this dog).
The company has $33 million in cash ($.99 per share), no debt and is growing about 5% a year. Teetering on a SELL here. Management is just terrible.
Down 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 $15.04 (was $14.23, $15.02, $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 $.55 at $12.08
Constellation continues to sell a few thousand shares here and there. Interesting move. Not sure if it is meant to goad MEDW management into doing something like selling the company to Constellation or someone else. The dollars involved in this sales is peanuts. It has been 9 months since they hired their investment bankers, so it is about time for something to happen.
Earnings out in February. Good again. Sales up 22% to $13.2 million and they made $.21 per share versus $.10 last year. Our valuation rose to $15.04–the highest ever.
MEDW re-engaged William Blair to look at “strategic alternatives”. Got to have an I Banker to sell your company.
Constellation now owns 21.8%. 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 91%. 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 $14.23 (was $12.40, $12.55, $10.85, $8.25, $9.45, $28.05, $32.10, $34.20, $37.90, $37.95)
Closed up $.03 at $3.53.
Earnings in March. As predicted they did $9.6 million in revenue and made $.11 a share from continuing operations. Our valuation fell to $14.37 and cash per share was $.88.
Down 57%. HOLD

Angeion Corporation. (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
NEW Valuation $13.60 (was $15.00, $13.06, $12.15, $11.29, $11.73, $11.47, $11.16, $9.53, $13.30, $13.03)
Closed up $.05 at $4.80
Earnings out in March. Not bad we thought. Sales up 7% to $7.1 million and they cut their weak quarter loss from $.20 a share to an adjusted profit of $.02 a share (excluding a severance charge for their ex-CEO). Our valuation fell to $13.60, but again this is their seasonally weak quarter, so we are not upset about it.
Up 26% BUY

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 $5.39 (was $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 $.58 down $.17.
Earnings out in March. Sales down 2% to $5.238 million, operating income was $254,000 and they made $.02 per share. Our valuation jumped back up to $5.39 on higher than expected margins.
Wake up management–you have a great little company here worth 7X what it is selling for.
Now down 64%. BUY. Still a Huge valuation gap here.

Rand Worldwide (RWWI.ob (Was Avatech, AVSO.ob)-Bought November 28, 2005)
Buy price $.79 (Was $.93, $.99 and $1.19 before adding $10,000-each time),
Valuation $2.40 (was $1.90, $2.26 $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 $.60, down $.05.
Earnings out in February. Sales were $21.7 million and they made $.02 a share. Our valuation jumped back up to $2.40 a share. Trading at 28% of our valuation. Cheap.
RWWI announced a $5.6 million deal in January. Maybe new management will get the word out on Rand and at least get us over $1.
Down 24%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $.71 (Was $.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 $.07, closed at $.06.
CTI announced in January that it paid off it’s bank debt with a replacement loan from Fairford-its largest shareholder. Hmmm, not a positive for sure. We still think this is worth a lot more in a sale than it is trading at. Have to keep an eye on this.
Earnings out in November. Sales were down only 6% from $3.6 million last year to $3.3 million, and they lost about $700,000. Their VOIP business continues to drain the company. Sales were a whopping $170,000 and it lost $600,000 excluding depreciation. Our valuation fell a bit to $.71.
At a $3 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 74%. HOLD

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $1.68 (Was $1.80 before $10,000 adder, $2.16 before double-up)
Valuation-$4.84 (Was $4.98, $4.60, $3.82, $4.00, $3.68, $3.12, $3.98, $4.44, $3.22, $2.12, $4.56, $4.16)
Closed at $1.52, up $.17
This is the Rodney Dangerfield of stocks. No respect whatsoever. Now trading at less than 2X this years earnings! Ghost stories of ALL Chinese reverse merger companies being shams continue to spook stockholders. We don’t think LTUS is one of them.
Looks like the Mongolian land story has shifted again. Now they intend to keep some of the land and build a distribution facility on it and sell the rest for $50-$80 million. No matter to us, either number is more than their entire market cap right now, and TTM earnings are $.78 per share.
LTUS announced in February that they are expanding their Beijing factory by adding 2 more floors for a total of 11 floors, and that it is still expected to be completed by the end of this June. When the building is complete, they expect to have invested a total of $48 million ($36 million already spent) and that based on current market values, the building will be worth over $100 million. This plus the Mongolian land are worth 3 times the current market cap of LTUS. Oh yeah, then there is the $.80 in annual earnings. Think this is a buy?
The stock split 2 for 1 in December. All of our numbers have been adjusted to reflect this split.
They have $40 million invested in the Mongolian land. If they can just break even, they will solve their perceived liquidity problem and they have 2/3’s of their market cap in cash.
Earnings out in November. Sales up 28% and they made $6.7 million or $.24 per share. 9 month earnings are now $18 million or $.66 per share.
We are trading at just more than 2 times earnings and the company is growing-not contracting. China stocks are out of favor for sure.
They are projecting sales of $74 million and about $.80 of earnings. We expect they will beat these numbers. We bought 50,000 more shares in August personally, another 13,000 in October and another 5,000 in December and another 5,000 in January. Their new Bejing buiding is about 65% complete, and they extended their operating contract for another 20 years.
Down 10%. BUY