Ok, looks like ther is some hope.

Last week the DOW was 9%, NASDAQ was up 10.6% and the S+P 500 was up 10.7%. For the year the DOW is now down 17.7%, NASDAQ down 9.2% and the S+P 500 is down 16.2%. The Russell 3000 and the Wilshire 5000 are also down about 16% this year.

We had a 2.1% gain last week dragged down by SPNC, OPK and CTIG.ob, and are down 16.4% for the year.

Looks like our double up on GSL is working so far–up 24% last week and our $10,000 adder to HPOL too–up 15% last week.

Last week we went 13 stocks up, 8 down and 1 even. Since inception we are now 22 stocks up, and 24 down.

Since inception 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%

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 24 stocks that we closed out in 2006, 2007, 2008 and 2009 the average gain was 24%.

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 –Suspended.
Down $.38 to $2.32.
SPNC announced earnngs in February. Q4 revenues were as expected–$26.6 million, up 11% over last year. They lost $1.1 million after $2 million in legal expense related to the “investigation”. Cash is $1.11 per share.
SPNC is suffering from the FDA, ICE raids that apparently eminated from an ex-employee whistle-blower trying to collect some money from the company. SPNC has the financial where-with-all to deal with this. Just got to wait this one out.
The company has $44 million in cash ($1.30 per share), no debt and is growing about 25% a year.
Now down 59%. HOLD.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $2.41 (was $3.02 before adding another $10,000,was $3.21 before adding another $10,000, averaged down from $3.66),
Valuation $8.09 (was $8.12, $8.64, $8.47, $8.47, $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed up $.04 at $1.11, unchanged.
Cash is $.83 per share.
Earnings out in early February. Sales down 16% to $5.2 million, but they made $.06 per share. Not bad. Stock did nothing. New valuation is $8.09 down a measley $.03 from last quarter.
Now down 54%. BUY

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up)
Valuation $11.30 (was $11.48, $11.47 $10.99, $10.28, $13.32, $12.89, $13.40)
Down .22 to $4.39.
Earnings out in early February. Sales up 16% and they made $.04 per share. Cash was $2.34 per share and our valuation fell only a tad to $11.30 a share. With all of the below going on, when does MEDW get bought out?
Cannell Capital filed a 13D in February 2008, disclosing a 12.9% ownership stake. Cannell has been pushing MEDW management to sell the company. Meanwhile, Constellation Software, a Canadian public company that has been on an acquisition binge filed a 13D in April 2008, disclosing a 6.1% ownership in MEDW (499,000 shares). Constellation has $243 million in revenues and is profitable.
On November 14th, 2008, Constellation filed a 13D/A. One of their subsidiary officers bought over 300,000 MEDW shares in October, bringing their combined owership in MEDW to 17.9%
Down 31%. BUY

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $3.74 (was $7.26 before double up),
Valuation $4.31 (was $5.88, $8.63, $9.90, $8.69, $11.51)
Up $.14 to $.43
CLZR announced “earnings” in mid-January. Bad as expected. Our valuation fell to $4.31 per share, which is still 15 times the current market price–but they are losing money at an alarming rate, and have decided not to sell the company. They still have $1.29 per share in cash, but at the current burn-rate, this will last about 1 year.
We will give this one 1 more quarter to see if the trend can reverse.
Down 89%. HOLD.

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $1.63 (Was $2.38 before adding another $20,000, $2.62 before another $10,000 and was $3.00 before double up),
Valuation $5.61 (was $6.42, $6.84, $7.58, $7.59)
Up $.07 at $.23.
MIVA announced the sale of its MIVA Media business for $11.6 million and assumption of some liabilities. They are going to focus on their ALOT business. Employee count down to 50. The MEDIA had 20-30% gross margins and likely lost money. Looks like this will reduce annual revenues to maybe $40 million with 90% gross margins. No info on the bottome line impact. With say $15-$20 million of cash (our guess) and a high margin sales base we think our valuation will be in the $3+ range.
Blinkx, a U.K. company made an all cash offer to buy MIVA in early August 2008 for $1.20. MIVA rejected the offer almost immediately saying it was too low and they think they can do better.
Blinkx later came back with a $.55 offer to buy MIVA. Not much can make a stock go up these days–even a 300% premium take-over offer.
Down 86%. HOLD

Harris Interactive. (HPOL-Recommended 5/25/2008)
Buy Price $.59 (was $1.79, $1.82 before adding $10,000 each time, $2.02 before $10,000 added and $2.15 before double up),
Valuation $4.67 (Was $4.66, $6.00, $5.96)
Up $.03 at $.23.
HPOL announced another cost reduction effort to cut $10 million of expense base. They also announced they got another 30 day waiver on their bank loans. All-in-all–good news.
Even if they have to pay back some of their outstanding debt to come to a new agreement with their bank, they appear to have enough cash to survive.
Finaciere De Sainte Marine, is a big investor in HPOL. They now own 7,779,000 shares up from 6,640,381 shares in mid-2008, or over 14% of the company.
This past quarters results were: Sales off about 20%, and they took about $66 million of write-offs. Without all these charges they essentially had a small operating profit. Not bad for this economy and the 20% sales drop off. Cash was just a tiny bit more than bank debt (+-$26 million), and they triggered a bank covenant default.
Down 67%. BUY

IPASS. (IPAS-Recommended 6/1/2008)
Buy Price-$1.90 (Was $2.07 before another $10,000 added and $2.15 before double up), Valuation $4.12 (was $4.99, $4.30, $4.09)
Up $.03 to $.96
Foxhill is buying more IPASS. Ownership now up to 6.7%. They are also nominating 3 new Board members. Shamrock owns 9.8%, Royce 5.9% and Federated, 5.5%.
Earnings out in late February. Not bad. Sales down from $49 million to $46 million. They lost about $1.1 million on a Non-GAAP basis (excluding $84 million goodwill writeoff, etc.). Projecting $42-45 million in Q1 sales and a $.04-.07 per share Non-GAAP loss. They have $1.12 a share in cash (another “free” stock) and our valuation fell to $4.12, as margins dipped a bit.
Down 50%. BUY

Healthstream Inc. (HSTM-Recommended 8/4/2008)
Buy Price-$2.40
Valuation $4.83 (Was $4.62, $4.42)
UP $.15 at $2.07.
Earnings out in late February. Nice. Sales up 13% to $13.5 million and they made $1.1 million pre-tax. Reported EPS was $.07. Our valuation rose to $4.83 per share. Not that easy to do in this economy.
Down 14%. BUY

CCA Industries. (CAW-Recommended 8/4/2008)
Buy Price-$5.51 (was $6.14 before $10,000 added, $6.66 before $10,000 added, $7.00 before $10,000 added) (19% dividend yield)
Valuation $14.51 (Was $17.23, $18.36)
Up $.05 to $2.32.
CCA announced earnings in late February. Bad as expected. Sales down for Q4 from $14.3 million to $12.0 million. They lost $822,000 versus making $1.7 million last year. They spent more advertising dollars to make these sales numbers too ($2.4 million).
They declared their quarterly $.11 dividend.
Cash is $2.61 per share. CAW is now “free” also. Trading below cash value.
Down 58%. HOLD

Magic Software Enterprises. (MGIC-Recommended 8/18/2008)
Buy Price-$1.93 (was $2.08 before another $10,000 added, $2.00 before $10,000 added at $2.16)
Valuation $3.97 (was $4.18, $4.15)
Closed unchanged at $1.04
Earnings out in late February. They were good, but the markets nullified any positive action in MGIC. Our valuation fell a bit to $3.97 and cash stayed steady at $1.01 per share. Sales were only down 4% to $15.1 million and net income (before discontinued operations) tripled to $.03 per share. Not bad.
Formula Systems (NASDAQ-FORTY) holds 17,605,000 shares of MGIC or 55.4%. FORTY is a long-term investor that at some point will want to sell MGIC.
Down 46%. BUY

Angeion Corporation. (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $9.53 (was $13.30, $13.03)
Closed up $.19 at $2.50
Earnings out in late February. Sales fell from $7.5 million to $6.4 million and they lost $600,000 (actually less of a loss than last year). Cash was $2.11 per share, but our valuation fell to $9.53 (still almost 4 times the current share price).
Blueline Partners filed a 13D on ANGN on June 23, 2008. They own 216,000 shares or about 5.3% of the company. All of their purchases were well North of the current price.
Down 35%. BUY

Noah Educational. (NED-Recommended 10/5/2008)
Buy Price-$3.03(was $3.00 before $10,000 added)
Valuation $7.79 (Was $7.98, $7.18)
Closed up $.27 at $3.28
Earnings out in February. Revenue up 11% and they made $.04 per share.
Our valuation fell a tad to $7.79. Has cash of $3.58 per share–10% more than its share price. This valuation is just stupid.
Up 27% (adjusted for $.56 dividend). BUY

Datalink . (DTLK-Recommended 10/12/2008)
Buy Price-$3.02
Valuation $10.27 (Was $10.26)
Closed down $.11 at $2.50
Cash is $2.23 per share.
Earnings out in early February. Sales down about 5% at $48 million, and they made $.07 per share compared to $.11 last year. Not bad for this economy. All sounded good until they said they expect a small loss next quarter. Cash is $2.23 per share and our valuation rose to $10.27. We expect our valuation to fall if their projections are correct to maybe $8.50 per share. Still trading at less than 50% of even that reduced projected valuation.
Down 17%. HOLD

Global Shipping . (GSL-Recommended 10/12/2008)
NEW Buy Price $2.59-(Was $3.69)
Valuation NA-Dividend yield play
Closed up $.47 at $2.47
Current dividend yield–37%
Earnings out last week. Fleet utilization is 99%. Even though we don’t like the debt on this one, we are going to double up here. Dividend just too good, and it seems sustainable. Hell, even if they cut it in half it is a 23% yield. New average buy price will be $2.59.
Their average ship charter life is around 10 years and the closest-in renewal is at the end of 2012. By then, you will have collected more than the current share price in dividends.
Went ex-dividend in February–still $.23 per quarter and they restructured their bank lines to help insure they can continue the dividend.
Down 5%. BUY

SonicWALL. (SNWL-Recommended 10/20/2008)
Buy Price-$4.50
Valuation-$11.47(Was $11.09, $10.44)
Closed up $.17 at $4.42
$3.06 cash per share.
Earnings out in Mid-February. Sales were down less than 5%, but pre-tax earnings almost tripled. They expect to be profitable next quarter also. Aside from this crappy market theis should be an $8 stock right now. Our valuation rose to $11.47 a share. That is 2 straight increases in valuation. Cash is 69% of the current market cap.
Down 2%. BUY

Cynosure. (SNWL-Recommended 10/29/2008)
Buy Price-$6.84 (Was $9.10 before double-up)
Valuation-$20.79-(Was $29.49)
Closed up $.72 at $5.65
CYNO has $7.45 per share in cash.
Earnings out in Mid-February. Sales down 30% and they lost $1.9 million on a non-GAAP basis. Not bad performance given the sales drop. They ended with $95 million in cash ($7.45 a share).
Cash is now 130% of the market cap, and they seem to know how to manage their expenses in this downturn. “On sale”–FREE plus $1.80 a share in cash. As noted above.
Down 17%. BUY

Cutera. (CUTR-Recommended 10/29/2008)
Buy Price-$7.88
Valuation-$ 18.06 (Was $18.88, $21.07)
Closed up $.11 at $5.86
Earnings out in Mid-February. Sales down 32% and they essentially broke-even for the quarter. Again, not bad given the economy. Cash fell a tad to $8.35 a share, and our valuation fell to $18.06. Cash is 142% of the share price. Yes, the business is “free” and you get $2.50 per share of cash as a gift to buy it.
Down 26%. BUY

OPKO Health Inc. (OPK-Recommended 2/16/2009)
Buy Price-$1.25
Valuation-NA–Speculation
Down $.19 at $.61.
Suspension of a Phase 3 trial late last week hammered OPK. The announcement didn’t make it sound like a total failure, more like they have some more work to do and may have to restructure the trial. Always complicated with new drugs and the FDA. That is why this is a speculation.
Share price which got down to $.59 on the news, rebounded to the $.80 close.
This is still a Phillip Frost play–Key and KOS Pharmaceutical. Frost just put in $20 million to buy shares at $1.00–and keeps buying on the open market all the time.
Down 51%. HOLD

OB-abies (Bulletin Board Listed Stocks)

As proven by OPTIO, patience is necessary with these stocks, especially in this Bear 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),
aluation $5.19 (was $5.66, $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $.65, down $.05.
Earnings out in March. Not bad. Sales down about 6% from $3.4 to $3.2 million and they made $273,000 pre-tax income. Our valuation remained over $5 per share at $5.19.
Wake up management–you have a great little company here worth 5X what it is selling for.
Now down 60%. BUY. Still a Huge valuation gap here.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.79 (Was $.93, $.99 and $1.19 before adding $10,000-each time),
Valuation $2.78 (was $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 $.49, down $.01.
Earnings out in February. Sales down 27%, and they lost $.03 per share.
Our valuation fell to $2.78 from $3.30. Still, they are not hemoragging cash and the current share price is less than 20% of our valuation.
Down 38%. HOLD.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $1.40 (Was $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price down $.03 at $.06. Closed at $.06.
Their VOIP business continues to struggle and lose money–$604,000 in the last quarter–but they did have some revenues–$38,000!
They might have to sell or shut this VOIP business down in our opinion. Just losing too much money, and eroding shareholder value.
Still an “undercover” company and stock.
Down 78%. HOLD

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up)
Valuation-$2.22 (Was $1.61, $2.28, $2.08)
Closed at $.17, down $.02
For the 9 months of 2008, EPS is $.13 per share. So looks like we are selling at about 1X earnings. Lotus announced in February that it bought the land use rights in Mongolia for $26 million, subject to contruction approvals etc. If the project is not approved, they get the money back. They said they paid for this out of internally generated funds. Pretty impressive. 3 years and $58 million to go to build this plant. They are also looking to sell or rent up to 80% of the land to other pharma companies to create a pharma industrial park.
This may work out ok. Unusual legal structure, $58 million construction project all hang over this company. Stock market stinks, Chinese stocks maybe even worse than most.
Down 80%. BUY

This is getting ridiculous.

Last week the DOW was down 6.1%, NASDAQ was down 6.1% and the S+P 500 was down 7%. For the year the DOW is now down 24.5%, NASDAQ down 18% and the S+P 500 is down 24.3%. The Russell 3000 and the Wilshire 5000 are also down about 24% this year.

We had a 2.4% loss last week and are down 19% for the year.

No one is buying anything. We are doubling up on GSL. Doesn’t look like they are cutting their dividend anytime soon and the 46% yield looks too good.

Last week we went 6 stocks up, 15 down and 1 even. Since inception we are now 22 stocks up, and 24 down.

Since inception 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%

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 24 stocks that we closed out in 2006, 2007, 2008 and 2009 the average gain was 24%.

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 –Suspended.
Uo $.45 to $2.70.
SPNC announced earnngs in February. Q4 revenues were as expected–$26.6 million, up 11% over last year. They lost $1.1 million after $2 million in legal expense related to the “investigation”. Cash is $1.11 per share.
SPNC is suffering from the FDA, ICE raids that apparently eminated from an ex-employee whistle-blower trying to collect some money from the company. SPNC has the financial where-with-all to deal with this. Just got to wait this one out.
The company has $44 million in cash ($1.30 per share), no debt and is growing about 25% a year.
Now down 52%. HOLD.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $2.41 (was $3.02 before adding another $10,000,was $3.21 before adding another $10,000, averaged down from $3.66),
Valuation $8.09 (was $8.12, $8.64, $8.47, $8.47, $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed down $.07 at $1.09, unchanged.
Cash is $.83 per share.
Earnings out in early February. Sales down 16% to $5.2 million, but they made $.06 per share. Not bad. Stock did nothing. New valuation is $8.09 down a measley $.03 from last quarter.
Now down 56%. BUY

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up)
Valuation $11.30 (was $11.48, $11.47 $10.99, $10.28, $13.32, $12.89, $13.40)
Up .43 to $4.61.
Earnings out in early February. Sales up 16% and they made $.04 per share. Cash was $2.34 per share and our valuation fell only a tad to $11.30 a share. With all of the below going on, when does MEDW get bought out?
Cannell Capital filed a 13D in February 2008, disclosing a 12.9% ownership stake. Cannell has been pushing MEDW management to sell the company. Meanwhile, Constellation Software, a Canadian public company that has been on an acquisition binge filed a 13D in April 2008, disclosing a 6.1% ownership in MEDW (499,000 shares). Constellation has $243 million in revenues and is profitable.
On November 14th, 2008, Constellation filed a 13D/A. One of their subsidiary officers bought over 300,000 MEDW shares in October, bringing their combined owership in MEDW to 17.9%
Down 27%. BUY

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $3.74 (was $7.26 before double up),
Valuation $4.31 (was $5.88, $8.63, $9.90, $8.69, $11.51)
Down $.06 to $.29
CLZR announced “earnings” in mid-January. Bad as expected. Our valuation fell to $4.31 per share, which is still 15 times the current market price–but they are losing money at an alarming rate, and have decided not to sell the company. They still have $1.29 per share in cash, but at the current burn-rate, this will last about 1 year.
We will give this one 1 more quarter to see if the trend can reverse.
Down 92%. HOLD.

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $1.63 (Was $2.38 before adding another $20,000, $2.62 before another $10,000 and was $3.00 before double up),
Valuation $5.61 (was $6.42, $6.84, $7.58, $7.59)
Up $.05 at $.16.
Blinkx, a U.K. company made an all cash offer to buy MIVA in early August 2008 for $1.20. MIVA rejected the offer almost immediately saying it was too low and they think they can do better.
Blinkx later came back with a $.55 offer to buy MIVA. Not much can make a stock go up these days–even a 300% premium take-over offer.
Down 90%. HOLD

Harris Interactive. (HPOL-Recommended 5/25/2008)
NEW Buy Price $.59 (was $1.79, $1.82 before adding $10,000 each time, $2.02 before $10,000 added and $2.15 before double up),
Valuation $4.67 (Was $4.66, $6.00, $5.96)
Down $.20 at $.20.
We are adding another $10,000 here. Even if they have to pay back some of their outstanding debt to come to a new agreement with their bank, they appear to have enough cash to survive. At this price, we think it is worth risking some capital. New Buy-Price will drop to $.69 a share.
Finaciere De Sainte Marine, is a big investor in HPOL. They now own 7,779,000 shares up from 6,640,381 shares in mid-2008, or over 14% of the company.
This past quarters results were: Sales off about 20%, and they took about $66 million of write-offs. Without all these charges they essentially had a small operating profit. Not bad for this economy and the 20% sales drop off. Cash was just a tiny bit more than bank debt (+-$26 million), and they triggered a bank covenant default. They expect to get an amended facility in place shortly, and we expect they will. Our valuation actual rose a penny to $4.67.
Down 89%. BUY

IPASS. (IPAS-Recommended 6/1/2008)
Buy Price-$1.90 (Was $2.07 before another $10,000 added and $2.15 before double up), Valuation $4.12 (was $4.99, $4.30, $4.09)
Up $.01 to $.93
Foxhill is buying more IPASS. Ownership now up to 6.7%. They are also nominating 3 new Board members. Shamrock owns 9.8%, Royce 5.9% and Federated, 5.5%.
Earnings out in late February. Not bad. Sales down from $49 million to $46 million. They lost about $1.1 million on a Non-GAAP basis (excluding $84 million goodwill writeoff, etc.). Projecting $42-45 million in Q1 sales and a $.04-.07 per share Non-GAAP loss. They have $1.12 a share in cash (another “free” stock) and our valuation fell to $4.12, as margins dipped a bit.
Down 51%. BUY

Healthstream Inc. (HSTM-Recommended 8/4/2008)
Buy Price-$2.40
Valuation $4.83 (Was $4.62, $4.42)
Down $.06 at $1.92.
Earnings out in late February. Nice. Sales up 13% to $13.5 million and they made $1.1 million pre-tax. Reported EPS was $.07. Our valuation rose to $4.83 per share. Not that easy to do in this economy.
Down 20%. BUY

CCA Industries. (CAW-Recommended 8/4/2008)
Buy Price-$5.51 (was $6.14 before $10,000 added, $6.66 before $10,000 added, $7.00 before $10,000 added) (16.3% dividend yield)
NEW Valuation $14.51 (Was $17.23, $18.36)
Down $.43 to $2.27.
CCA announced earnings in late February. Bad as expected. Sales down for Q4 from $14.3 million to $12.0 million. They lost $822,000 versus making $1.7 million last year. They spent more advertising dollars to make these sales numbers too ($2.4 million).
They declared their quarterly $.11 dividend.
Our new valuation is $14.51 a share. Cash is $2.61 per share. CAW is now “free” also. Trading below cash value.
Down 59%. HOLD

Magic Software Enterprises. (MGIC-Recommended 8/18/2008)
Buy Price-$1.93 (was $2.08 before another $10,000 added, $2.00 before $10,000 added at $2.16)
Valuation $3.97 (was $4.18, $4.15)
Closed down $.10 at $1.04
Earnings out in late February. They were good, but the markets nullified any positive action in MGIC. Our valuation fell a bit to $3.97 and cash stayed steady at $1.01 per share. Sales were only down 4% to $15.1 million and net income (before discontinued operations) tripled to $.03 per share. Not bad.
Formula Systems (NASDAQ-FORTY) holds 17,605,000 shares of MGIC or 55.4%. FORTY is a long-term investor that at some point will want to sell MGIC.
Down 46%. BUY

Angeion Corporation. (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $9.53 (was $13.30, $13.03)
Closed down $.02 at $2.31
Earnings out in late February. Sales fell from $7.5 million to $6.4 million and they lost $600,000 (actually less of a loss than last year). Cash was $2.11 per share, but our valuation fell to $9.53 (still almost 4 times the current share price).
Blueline Partners filed a 13D on ANGN on June 23, 2008. They own 216,000 shares or about 5.3% of the company. All of their purchases were well North of the current price.
Down 40%. BUY

Noah Educational. (NED-Recommended 10/5/2008)
Buy Price-$3.03(was $3.00 before $10,000 added)
Valuation $7.79 (Was $7.98, $7.18)
Closed down $.04 at $3.01
Earnings out in February. Revenue up 11% and they made $.04 per share.
Our valuation fell a tad to $7.79. Has cash of $3.58 per share–20% more than its share price. This valuation is just stupid.
Up 18% (adjusted for $.56 dividend). BUY

Datalink . (DTLK-Recommended 10/12/2008)
Buy Price-$3.02
Valuation $10.27 (Was $10.26)
Closed down $.34 at $2.61
Cash is $2.23 per share.
Earnings out in early February. Sales down about 5% at $48 million, and they made $.07 per share compared to $.11 last year. Not bad for this economy. All sounded good until they said they expect a small loss next quarter. Cash is $2.23 per share and our valuation rose to $10.27. We expect our valuation to fall if their projections are correct to maybe $8.50 per share. Still trading at less than 50% of even that reduced projected valuation.
Down 14%. HOLD

Global Shipping . (GSL-Recommended 10/12/2008)
NEW Buy Price $2.59-(Was $3.69)
Valuation NA-Dividend yield play
Closed down $.13 at $2.00
Current dividend yield–46%
Earnings out last week. Fleet utilization is 99%. Even though we don’t like the debt on this one, we are going to double up here. Dividend just too good, and it seems sustainable. Hell, even if they cut it in half it is a 23% yield. New average buy price will be $2.59.
Their average ship charter life is around 10 years and the closest-in renewal is at the end of 2012. By then, you will have collected more than the current share price in dividends.
Went ex-dividend in February–still $.23 per quarter and they restructured their bank lines to help insure they can continue the dividend.
Down 46%. BUY

SonicWALL. (SNWL-Recommended 10/20/2008)
Buy Price-$4.50
Valuation-$11.47(Was $11.09, $10.44)
Closed down $.17 at $4.25
$3.06 cash per share.
Earnings out in Mid-February. Sales were down less than 5%, but pre-tax earnings almost tripled. They expect to be profitable next quarter also. Aside from this crappy market theis should be an $8 stock right now. Our valuation rose to $11.47 a share. That is 2 straight increases in valuation. Cash is 69% of the current market cap.
Down 6%. BUY

Cynosure. (SNWL-Recommended 10/29/2008)
Buy Price-$6.84 (Was $9.10 before double-up)
Valuation-$20.79-(Was $29.49)
Closed down $.55 at $4.93
CYNO has $7.45 per share in cash.
Earnings out in Mid-February. Sales down 30% and they lost $1.9 million on a non-GAAP basis. Not bad performance given the sales drop. They ended with $95 million in cash ($7.45 a share). Our valuation fell to $20.79 per share.
Cash is now 150% of the market cap, and they seem to know how to manage their expenses in this downturn. “On sale”–FREE plus $2.50 a share in cash. As noted above.
Down 28%. BUY

Cutera. (CUTR-Recommended 10/29/2008)
Buy Price-$7.88
Valuation-$ 18.06 (Was $18.88, $21.07)
Closed down $.62 at $5.75
Earnings out in Mid-February. Sales down 32% and they essentially broke-even for the quarter. Again, not bad given the economy. Cash fell a tad to $8.35 a share, and our valuation fell to $18.06. Cash is 145% of the share price. Yes, the business is “free” and you get $2.50 per share of cash as a gift to buy it.
Down 27%. BUY

OPKO Health Inc. (OPK-Recommended 2/16/2009)
Buy Price-$1.25
Valuation-NA–Speculation
Down $.33 at $.80.
Suspension of a Phase 3 trial late last week hammered OPK. The announcement didn’t make it sound like a total failure, more like they have some more work to do and may have to restructure the trial. Always complicated with new drugs and the FDA. That is why this is a speculation.
Share price which got down to $.59 on the news, rebounded to the $.80 close.
This is still a Phillip Frost play–Key and KOS Pharmaceutical. Frost just put in $20 million to buy shares at $1.00–and keeps buying on the open market all the time.
Down 36%. HOLD

OB-abies (Bulletin Board Listed Stocks)

As proven by OPTIO, patience is necessary with these stocks, especially in this Bear 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),
NEW Valuation $5.19 (was $5.66, $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $.70, unchanged.
Earnings out last week. Not bad. Sales down about 6% from $3.4 to $3.2 million and they made $273,000 pre-tax income. Our valuation remained over $5 per share at $5.19.
Wake up management–you have a great little company here worth 5X what it is selling for.
Now down 57%. BUY. Still a Huge valuation gap here.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.79 (Was $.93, $.99 and $1.19 before adding $10,000-each time),
Valuation $2.78 (was $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 $.50, up $.05.
Earnings out in February. Sales down 27%, and they lost $.03 per share.
Our valuation fell to $2.78 from $3.30. Still, they are not hemoragging cash and the current share price is less than 20% of our valuation.
Down 37%. HOLD.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $1.40 (Was $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price up $.02 at $.09. Closed at $.08.
Their VOIP business continues to struggle and lose money–$604,000 in the last quarter–but they did have some revenues–$38,000!
They might have to sell or shut this VOIP business down in our opinion. Just losing too much money, and eroding shareholder value.
Still an “undercover” company and stock.
Down 67%. HOLD

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up)
Valuation-$2.22 (Was $1.61, $2.28, $2.08)
Closed at $.19, down $.02
For the 9 months of 2008, EPS is $.13 per share. So looks like we are selling at about 1X earnings. Lotus announced in February that it bought the land use rights in Mongolia for $26 million, subject to contruction approvals etc. If the project is not approved, they get the money back. They said they paid for this out of internally generated funds. Pretty impressive. 3 years and $58 million to go to build this plant. They are also looking to sell or rent up to 80% of the land to other pharma companies to create a pharma industrial park.
This may work out ok. Unusual legal structure, $58 million construction project all hang over this company. Stock market stinks, Chinese stocks maybe even worse than most.
Down 77%. BUY

More of the same.

Last week the DOW was down 4.1%, NASDAQ was down 4.4% and the S+P 500 was down 4.5%. For the year the DOW is now down 19.5%, NASDAQ down 12.6% and the S+P 500 is down 18.6%. The Russell 3000 and the Wilshire 5000 are also down about 18% this year.

We had a 5.0% loss last week and are down 16.7% for the year.

No one is buying anything. We recommend adding another $10,000 on CYNO as it is selling well below cash value and not hemmoragging losses (cash).

Last week we went 6 stocks up, 14 down and 2 even. Since inception we are now 22 stocks up, and 24 down.

Since inception 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%

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 24 stocks that we closed out in 2006, 2007, 2008 and 2009 the average gain was 24%.

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 –Suspended.
Down $.45 to $2.25.
SPNC announced earnngs in February. Q4 revenues were as expected–$26.6 million, up 11% over last year. They lost $1.1 million after $2 million in legal expense related to the “investigation”. Cash is $1.11 per share.
SPNC is suffering from the FDA, ICE raids that apparently eminated from an ex-employee whistle-blower trying to collect some money from the company. SPNC has the financial where-with-all to deal with this. Just got to wait this one out.
The company has $44 million in cash ($1.30 per share), no debt and is growing about 25% a year.
Now down 60%. HOLD.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $2.41 (was $3.02 before adding another $10,000,was $3.21 before adding another $10,000, averaged down from $3.66),
Valuation $8.09 (was $8.12, $8.64, $8.47, $8.47, $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $1.16, unchanged.
Cash is $.83 per share.
Earnings out in early February. Sales down 16% to $5.2 million, but they made $.06 per share. Not bad. Stock did nothing. New valuation is $8.09 down a measley $.03 from last quarter.
Now down 52%. BUY

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up)
Valuation $11.30 (was $11.48, $11.47 $10.99, $10.28, $13.32, $12.89, $13.40)
Down .22 to $4.18.
Earnings out in early February. Sales up 16% and they made $.04 per share. Cash was $2.34 per share and our valuation fell only a tad to $11.30 a share. With all of the below going on, when does MEDW get bought out?
Cannell Capital filed a 13D in February 2008, disclosing a 12.9% ownership stake. Cannell has been pushing MEDW management to sell the company. Meanwhile, Constellation Software, a Canadian public company that has been on an acquisition binge filed a 13D in April 2008, disclosing a 6.1% ownership in MEDW (499,000 shares). Constellation has $243 million in revenues and is profitable.
On November 14th, 2008, Constellation filed a 13D/A. One of their subsidiary officers bought over 300,000 MEDW shares in October, bringing their combined owership in MEDW to 17.9%
Down 34%. BUY

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $3.74 (was $7.26 before double up),
Valuation $4.31 (was $5.88, $8.63, $9.90, $8.69, $11.51)
Even $.35
CLZR announced “earnings” in mid-January. Bad as expected. Our valuation fell to $4.31 per share, which is still 10 times the current market price–but they are losing money at an alarming rate, and have decided not to sell the company. They still have $1.29 per share in cash, but at the current burn-rate, this will last about 1 year.
We will give this one 1 more quarter to see if the trend can reverse.
Down 91%. HOLD.

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $1.63 (Was $2.38 before adding another $20,000, $2.62 before another $10,000 and was $3.00 before double up),
Valuation $5.61 (was $6.42, $6.84, $7.58, $7.59)
Down $.01 at $.11.
Blinkx, a U.K. company made an all cash offer to buy MIVA in early August 2008 for $1.20. MIVA rejected the offer almost immediately saying it was too low and they think they can do better.
Blinkx later came back with a $.55 offer to buy MIVA. Not much can make a stock go up these days–even a 300% premium take-over offer.
Down 93%. HOLD

Harris Interactive. (HPOL-Recommended 5/25/2008)
Buy Price $1.79 (was $1.82 before adding $10,000, $2.02 before $10,000 added and $2.15 before double up),
Valuation $4.67 (Was $4.66, $6.00, $5.96)
Down $.10 at $.40.
Finaciere De Sainte Marine, is a big investor in HPOL. They now own 7,779,000 shares up from 6,640,381 shares in mid-2008, or over 14% of the company.
This past quarters results were: Sales off about 20%, and they took about $66 million of write-offs. Without all these charges they essentially had a small operating profit. Not bad for this economy and the 20% sales drop off. Cash was just a tiny bit more than bank debt (+-$26 million), and they triggered a bank covenant default. They expect to get an amended facility in place shortly, and we expect they will. Our valuation actual rose a penny to $4.67.
Down 91%. BUY

IPASS. (IPAS-Recommended 6/1/2008)
Buy Price-$1.90 (Was $2.07 before another $10,000 added and $2.15 before double up), NEW Valuation $4.12 (was $4.99, $4.30, $4.09)
Down $.13 to $.92
Earnings out last week. Not bad. Sales down from $49 million to $46 million. They lost about $1.1 million on a Non-GAAP basis (excluding $84 million goodwill writeoff, etc.). Projecting $42-45 million in Q1 sales and a $.04-.07 per share Non-GAAP loss. They have $1.12 a share in cash (another “free” stock) and our valuation fell to $4.12, as margins dipped a bit.
Foxhill owns 6.2% of IPASS. WC Capital has been raising their stake in IPASS and now owns 5.7%, Federated Investors has about 5.5% and Royce has 5.9%
Down 52%. BUY

Healthstream Inc. (HSTM-Recommended 8/4/2008)
Buy Price-$2.40
NEW Valuation $4.83 (Was $4.62, $4.42)
Up $.28 at $1.98.
Earnings out last week. Nice. Sales up 13% to $13.5 million and they made $1.1 million pre-tax. Reported EPS was $.07. Our valuation rose to $4.83 per share. Not that easy to do in this economy.
Down 18%. BUY

CCA Industries. (CAW-Recommended 8/4/2008)
Buy Price-$5.51 (was $6.14 before $10,000 added, $6.66 before $10,000 added, $7.00 before $10,000 added) (16.3% dividend yield)
Valuation $17.23 (Was $18.36)
Down $.20 to $2.70.
CCA announced earnings last week. Bad as expected. Sales down for Q4 from $14.3 million to $12.0 million. They lost $822,000 versus making $1.7 million last year. They spent more advertising dollars to make these sales numbers too ($2.4 million).
They declared their quarterly $.11 dividend.
We will update our valuation after they file their 10K and we can see their balance sheet and P+L details.
Down 51%. HOLD

Magic Software Enterprises. (MGIC-Recommended 8/18/2008)
Buy Price-$1.93 (was $2.08 before another $10,000 added, $2.00 before $10,000 added at $2.16)
Valuation $3.97 (was $4.18, $4.15)
Closed down $.15 at $1.14
Earnings out in late February. They were good, but the markets nullified any positive action in MGIC. Our valuation fell a bit to $3.97 and cash stayed steady at $1.01 per share. Sales were only down 4% to $15.1 million and net income (before discontinued operations) tripled to $.03 per share. Not bad.
Formula Systems (NASDAQ-FORTY) holds 17,605,000 shares of MGIC or 55.4%. FORTY is a long-term investor that at some point will want to sell MGIC.
Down 41%. BUY

Angeion Corporation. (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
NEW Valuation $9.53 (was $13.30, $13.03)
Closed down $.07 at $2.33
Earnings out last week. Sales fell from $7.5 million to $6.4 million and they lost $600,000 (actually less of a loss than last year). Cash was $2.11 per share, but our valuation fell to $9.53 (still almost 4 times the current share price).
Blueline Partners filed a 13D on ANGN on June 23, 2008. They own 216,000 shares or about 5.3% of the company. All of their purchases were well North of the current price.
Down 39%. BUY

Noah Educational. (NED-Recommended 10/5/2008)
Buy Price-$3.03(was $3.00 before $10,000 added)
Valuation $7.79 (Was $7.98, $7.18)
Closed up $.05 at $3.05
Earnings out in February. Revenue up 11% and they made $.04 per share.
Our valuation fell a tad to $7.79. Has cash of $3.58 per share–20% more than its share price. This valuation is just stupid.
Up 19% (adjusted for $.56 dividend). BUY

Datalink . (DTLK-Recommended 10/12/2008)
Buy Price-$3.02
Valuation $10.27 (Was $10.26)
Closed up $.45 at $2.95
Cash is $2.23 per share.
Earnings out in early February. Sales down about 5% at $48 million, and they made $.07 per share compared to $.11 last year. Not bad for this economy. All sounded good until they said they expect a small loss next quarter. Cash is $2.23 per share and our valuation rose to $10.27. We expect our valuation to fall if their projections are correct to maybe $8.50 per share. Still trading at less than 50% of even that reduced projected valuation.
Down 2%. HOLD

Global Shipping . (GSL-Recommended 10/12/2008)
Buy Price-$3.69
Valuation NA-Dividend yield play
Closed down $.03 at $2.13
Current dividend yield–43%
Fleet utilization is still 98%. Their average ship charter life is around 10 years and the closest-in renewal is at the end of 2012. By then, you will have collected more than the current share price in dividends.
Went ex-dividend in February–still $.23 per quarter and they restructured their bank lines to help insure they can continue the dividend.
Down 42%. BUY

SonicWALL. (SNWL-Recommended 10/20/2008)
Buy Price-$4.50
Valuation-$11.47(Was $11.09, $10.44)
Closed up $.20 at $4.42
$3.06 now cash per share.
Earnings out in Mid-February. Sales were down less than 5%, but pre-tax earnings almost tripled. They expect to be profitable next quarter also. Aside from this crappy market theis should be an $8 stock right now. Our valuation rose to $11.47 a share. That is 2 straight increases in valuation. Cash is 69% of the current market cap.
Down 2%. BUY

Cynosure. (SNWL-Recommended 10/29/2008)
Buy Price-$9.10
Valuation-$20.79-(Was $29.49)
Closed down $1.36 at $5.48
CYNO has $7.45 per share in cash.
Earnings out in Mid-February. Sales down 30% and they lost $1.9 million on a non-GAAP basis. Not bad performance given the sales drop. They ended with $95 million in cash ($7.45 a share). Our valuation fell to $20.79 per share.
Cash is now 136% of the market cap, and they seem to know how to manage their expenses in this downturn. “On sale”–FREE. As noted above. With our “double-up” new average buy-price will be $6.84.
Down 40%. BUY

Cutera. (CUTR-Recommended 10/29/2008)
Buy Price-$7.88
Valuation-$ 18.06 (Was $18.88, $21.07)
Closed down $.01 at $6.37
Earnings out in Mid-February. Sales down 32% and they essentially broke-even for the quarter. Again, not bad given the economy. Cash fell a tad to $8.35 a share, and our valuation fell to $18.06. Cash is 131% of the share price. Yes, the business is “free” and you get $2.00 per share of cash as a gift to buy it.
Down 19%. BUY

OPKO Health Inc. (OPK-Recommended 2/16/2009)
Buy Price-$1.25
Valuation-NA–Speculation
Up $.03 at $1.13.
Down right out of the box. This is still a Phillip Frost play–Key and KOS Pharmaceutical. Frost just put in $20 million to buy shares at $1.00–and keeps buying on the open market all the time.
Down 10%. BUY

OB-abies (Bulletin Board Listed Stocks)

As proven by OPTIO, patience is necessary with these stocks, especially in this Bear 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 $5.66 (was $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $.70, down $.15.
Wake up management–you have a great little company here worth 5X what it is selling for.
Now down 57%. BUY. Still a Huge valuation gap here.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.79 (Was $.93, $.99 and $1.19 before adding $10,000-each time),
Valuation $2.78 (was $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 $.45, down $.05.
Earnings out in February. Sales down 27%, and they lost $.03 per share.
Our valuation fell to $2.78 from $3.30. Still, they are not hemoragging cash and the current share price is less than 20% of our valuation.
Down 43%. HOLD.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $1.40 (Was $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price down $.01 at $.07. Closed at $.07.
Their VOIP business continues to struggle and lose money–$604,000 in the last quarter–but they did have some revenues–$38,000!
They might have to sell or shut this VOIP business down in our opinion. Just losing too much money, and eroding shareholder value.
Still an “undercover” company and stock.
Down 74%. HOLD

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up)
Valuation-$2.22 (Was $1.61, $2.28, $2.08)
Closed at $.21, up $.02
For the 9 months of 2008, EPS is $.13 per share. So looks like we are selling at about 1X earnings. Lotus announced in February that it bought the land use rights in Mongolia for $26 million, subject to contruction approvals etc. If the project is not approved, they get the money back. They said they paid for this out of internally generated funds. Pretty impressive. 3 years and $58 million to go to build this plant. They are also looking to sell or rent up to 80% of the land to other pharma companies to create a pharma industrial park.
This may work out ok. Unusual legal structure, $58 million construction project all hang over this company. Stock market stinks, Chinese stocks maybe even worse than most.
Down 75%. BUY

The carnage continues. Fear abounds on all fronts. Even good earnings news only helps a little, most of the time just slowing the decline of a stock.

Last week the DOW was down a whopping 6.2%, NASDAQ was down 6.1% and the S+P 500 was down 6.9%. For the year the DOW is now down 16.2%, NASDAQ down 8.6% and the S+P 500 is down 14.8%. The Russell 3000 and the Wilshire 5000 are also down about 14% this year.

We had a 6.3% loss last week and are down 11.6% for the year.

Last week we went 4 stocks up, 17 down and 1 even. Since inception we are now 22 stocks up, and 24 down.

Since inception 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%

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 24 stocks that we closed out in 2006, 2007, 2008 and 2009 the average gain was 24%.

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 –Suspended.
Down $.27 to $2.98.
SPNC announced earnngs last week. Q4 revenues were as expected–$26.6 million, up 11% over last year. They lost $1.1 million after $2 million in legal expense related to the “investigation”. Cash is $1.11 per share.
SPNC is suffering from the FDA, ICE raids that apparently eminated from an ex-employee whistle-blower trying to collect some money from the company. SPNC has the financial where-with-all to deal with this. Just got to wait this one out.
The company has $44 million in cash ($1.30 per share), no debt and is growing about 25% a year.
Now down 48%. HOLD.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $2.41 (was $3.02 before adding another $10,000,was $3.21 before adding another $10,000, averaged down from $3.66),
Valuation $8.09 (was $8.12, $8.64, $8.47, $8.47, $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $1.16, down $.14.
Cash is $.83 per share.
Earnings out in early February. Sales down 16% to $5.2 million, but they made $.06 per share. Not bad. Stock did nothing. New valuation is $8.09 down a measley $.03 from last quarter.
Now down 52%. BUY

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up)
Valuation $11.30 (was $11.48, $11.47 $10.99, $10.28, $13.32, $12.89, $13.40)
Even at $4.40.
Cannell Capital filed a 13D in February 2008, disclosing a 12.9% ownership stake. Cannell has been pushing MEDW management to sell the company. Meanwhile, Constellation Software, a Canadian public company that has been on an acquisition binge filed a 13D in April 2008, disclosing a 6.1% ownership in MEDW (499,000 shares). Constellation has $243 million in revenues and is profitable.
On November 14th, 2008, Constellation filed a 13D/A. One of their subsidiary officers bought over 300,000 MEDW shares in October, bringing their combined owership in MEDW to 17.9%
Looks like something is going to happen here–but when?
Down 31%. BUY

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $3.74 (was $7.26 before double up),
Valuation $4.31 (was $5.88, $8.63, $9.90, $8.69, $11.51)
Down $.03 to $.35
CLZR announced “earnings” in mid-January. Bad as expected. Our valuation fell to $4.31 per share, which is still 10 times the current market price–but they are losing money at an alarming rate, and have decided not to sell the company. They still have $1.29 per share in cash, but at the current burn-rate, this will last about 1 year.
We will give this one 1 more quarter to see if the trend can reverse.
Down 91%. HOLD.

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $1.63 (Was $2.38 before adding another $20,000, $2.62 before another $10,000 and was $3.00 before double up),
Valuation $5.61 (was $6.42, $6.84, $7.58, $7.59)
Down $.02 at $.12.
Blinkx, a U.K. company made an all cash offer to buy MIVA in early August 2008 for $1.20. MIVA rejected the offer almost immediately saying it was too low and they think they can do better.
Blinkx later came back with a $.55 offer to buy MIVA. Not much can make a stock go up these days–even a 300% premium take-over offer.
Down 93%. HOLD

Harris Interactive. (HPOL-Recommended 5/25/2008)
Buy Price $1.79 (was $1.82 before adding $10,000, $2.02 before $10,000 added and $2.15 before double up),
Valuation $4.67 (Was $4.66, $6.00, $5.96)
Down $.02 at $.50.
Finaciere De Sainte Marine, is a big investor in HPOL. They now own 7,779,000 shares up from 6,640,381 shares in mid-2008, or over 14% of the company.
This past quarters results were: Sales off about 20%, and they took about $66 million of write-offs. Without all these charges they essentially had a small operating profit. Not bad for this economy and the 20% sales drop off. Cash was just a tiny bit more than bank debt (+-$26 million), and they triggered a bank covenant default. They expect to get an amended facility in place shortly, and we expect they will. Our valuation actual rose a penny to $4.67.
Down 72%. BUY

IPASS. (IPAS-Recommended 6/1/2008)
Buy Price-$1.90 (Was $2.07 before another $10,000 added and $2.15 before double up), Valuation $4.99 (was $4.30, $4.09)
Down $.01 to $1.05.
Foxhill owns 3,844,000 shares or 6.1% of IPASS.
With $1.10 per share in cash, we feel that this has little additional downside.
Earnings due out Monday, February 23rd after the market close.
Down 45%. BUY

Healthstream Inc. (HSTM-Recommended 8/4/2008)
Buy Price-$2.40
Valuation $4.62 (Was $4.42)
Down $.34 at $1.70.
Down 29%. BUY

CCA Industries. (CAW-Recommended 8/4/2008)
Buy Price-$5.51 (was $6.14 before $10,000 added, $6.66 before $10,000 added, $7.00 before $10,000 added) (15.8% dividend yield)
Valuation $17.23 (Was $18.36)
Down $.15 to $2.90.
CCA announced in mid-January that they lost $6 million in annual sales to Walmart, as Walmart will no longer carry some of their products. This is about 10% of CCA’s annual sales. When are we going to get some good news? They still have almost $2.60 in cash, and the dividend yield is now over 15%.
Down 47%. HOLD

Magic Software Enterprises. (MGIC-Recommended 8/18/2008)
Buy Price-$1.93 (was $2.08 before another $10,000 added, $2.00 before $10,000 added at $2.16)
NEW Valuation $3.97 (was $4.18, $4.15)
Closed down $.09 at $1.29
Earnings out last week. They were good, but the markets nullified any positive action in MGIC. Our valuation fell a bit to $3.97 and cash stayed steady at $1.01 per share. Sales were only down 4% to $15.1 million and net income (before discontinued operations) tripled to $.03 per share. Not bad.
Formula Systems (NASDAQ-FORTY) holds 17,605,000 shares of MGIC or 55.4%. FORTY is a long-term investor that at some point will want to sell MGIC.
Down 33%. BUY

Angeion Corporation. (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $13.30 (was $13.03)
Closed down $.46 at $2.40
Has $2.19 per share in cash.
Blueline Partners filed a 13D on ANGN on June 23, 2008. They own 216,000 shares or about 5.3% of the company. All of their purchases were well North of the current price.
Down 37%. BUY

Noah Educational. (NED-Recommended 10/5/2008)
Buy Price-$3.03(was $3.00 before $10,000 added)
NEW Valuation $7.79 (Was $7.98, $7.18)
Closed up $.16 at $3.00
Earnings out last week. Revenue up 11% and they made $.04 per share.
Our valuation fell a tad to $7.79. Has cash of $3.58 per share–20% more than its share price. This valuation is just stupid.
Up 18% (adjusted for $.56 dividend). BUY

Datalink . (DTLK-Recommended 10/12/2008)
Buy Price-$3.02
Valuation $10.27 (Was $10.26)
Closed down $.45 at $2.52
Cash is $2.23 per share.
Earnings out in early February. Sales down about 5% at $48 million, and they made $.07 per share compared to $.11 last year. Not bad for this economy. All sounded good until they said they expect a small loss next quarter. Cash is $2.23 per share and our valuation rose to $10.27. We expect our valuation to fall if their projections are correct to maybe $8.50 per share. Still trading at less than 50% of even that reduced projected valuation.
Down 17%. HOLD

Global Shipping . (GSL-Recommended 10/12/2008)
Buy Price-$3.69
Valuation NA-Dividend yield play
Closed down $1.32 at $2.16
Current dividend yield–43%
Fleet utilization is still 98%. Their average ship charter life is around 10 years and the closest-in renewal is at the end of 2012. By then, you will have collected more than the current share price in dividends.
Went ex-dividend last week–still $.23 per quarter and they restructured their bank lines to help insure they can continue the dividend.
No news to account for the huge drop last week.
Down 42%. BUY

SonicWALL. (SNWL-Recommended 10/20/2008)
Buy Price-$4.50
Valuation-$11.47(Was $11.09, $10.44)
Closed up $.32 at $4.22
$3.06 now cash per share.
Earnings out in Mid-February. Sales were down less than 5%, but pre-tax earnings almost tripled. They expect to be profitable next quarter also. Aside from this crappy market theis should be an $8 stock right now. Our valuation rose to $11.47 a share. That is 2 straight increases in valuation. Cash is 73% of the current market cap.
Down 6%. BUY

Cynosure. (SNWL-Recommended 10/29/2008)
Buy Price-$9.10
Valuation-$20.79-(Was $29.49)
Closed down $1.33 at $6.84
CYNO has $7.45 per share in cash.
Earnings out in Mid-February. Sales down 30% and they lost $1.9 million on a non-GAAP basis. Not bad performance given the sales drop. They ended with $95 million in cash ($7.45 a share). Our valuation fell to $20.79 per share.
Cash is now 109% of the market cap, and they seem to know how to manage their expenses in this downturn.
Down 25%. BUY

Cutera. (CUTR-Recommended 10/29/2008)
Buy Price-$7.88
Valuation-$ 18.06 (Was $18.88, $21.07)
Closed down $.47 at $6.38
Earnings out in Mid-February. Sales down 32% and they essentially broke-even for the quarter. Again, not bad given the economy. Cash fell a tad to $8.35 a share, and our valuation fell to $18.06. Cash is 131% of the share price. Yes, the business is “free” and you get $2.00 per share of cash as a gift to buy it.
Down 19%. BUY

OPKO Health Inc. (OPK-Recommended 2/16/2009)
Buy Price-$1.25
Valuation-NA–Speculation
Down $.15 at $1.10.
Down right out of the box. This is still a Phillip Frost play–Key and KOS Pharmaceutical.
Down 12%. BUY

OB-abies (Bulletin Board Listed Stocks)

As proven by OPTIO, patience is necessary with these stocks, especially in this Bear 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 $5.66 (was $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $.85, up $.05.
Wake up management–you have a great little company here worth 5X what it is selling for.
Now down 47%. BUY. Still a Huge valuation gap here.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.79 (Was $.93, $.99 and $1.19 before adding $10,000-each time),
NEW Valuation $2.78 (was $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 $.50, down $.04.
Earnings out last week. Sales down 27%, and they lost $.03 per share.
Our valuation fell to $2.78 from $3.30. Still, they are not hemoragging cash and the current share price is less than 20% of our valuation.
Down 37%. HOLD.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $1.40 (Was $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price up $.02 at $.08. Closed at $.08.
Their VOIP business continues to struggle and lose money–$604,000 in the last quarter–but they did have some revenues–$38,000!
They might have to sell or shut this VOIP business down in our opinion. Just losing too much money, and eroding shareholder value.
Still an “undercover” company and stock.
Down 70%. HOLD

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up)
Valuation-$2.22 (Was $1.61, $2.28, $2.08)
Closed at $.19, down $.02
For the 9 months of 2008, EPS is $.13 per share. So looks like we are selling at about 1X earnings. Lotus announced in February that it bought the land use rights in Mongolia for $26 million, subject to contruction approvals etc. If the project is not approved, they get the money back. They said they paid for this out of internally generated funds. Pretty impressive. 3 years and $58 million to go to build this plant. They are also looking to sell or rent up to 80% of the land to other pharma companies to create a pharma industrial park.
Nice Seeking Alpha article on LTUS last week–kept it to only a $.02 loss.
This may work out ok. Unusual legal structure, $58 million construction project all hang over this company. Stock market stinks, Chinese stocks maybe even worse than most.
Down 77%. BUY

Down, down, down we go. Where we’ll stop, nobody knows.

We are recommending OPKO Health (OPK-AMEX) at $1.25 this week as a speculation. OPK’s majority shareholder is Dr. Phillip Frost. He founded and sold Key Pharmaceutical and KOS Pharmaceuticals over the last decade or so for huge premiums. This is a long term hold, but may likely turn into a trading stock in the interim. Frost owns approximately 85 million shares out of 200 million shares.

About OPKO Health, Inc.
Miami-based OPKO is a specialty healthcare company engaged in the development, marketing, and sales of novel agents and both diagnostic and therapeutic devices for the management of ophthalmic diseases.

At the same time, we are selling MBRK at $1.94 for a 67% gain (gotta take em when you have them).

Last week the DOW was down 5.2%, NASDAQ was down 3.6% and S+P 500 was down 4.8%. For the year the DOW is now down 10.6%, NASDAQ down 2.7% and the S+P 500 is down 8.5%. The Russell 3000 and the Wilshire 5000 are also down about 8% this year.

We had a 2.5% loss last week and are down 5.3% for the year.

Last week we went 6 stocks up, 15 down and 1 even. Since inception we are now 22 stocks up, and 23 down.

Since inception 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%

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 23 stocks that we closed out in 2006, 2007, 2008 and 2009 the average gain was 22%.

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 –Suspended.
Down $.27 to $2.98.
SPNC pre-announced Q4 sales in early January. Sales of $104 million for the year. Not the $107 million they predicted–but still not bad considering “the world ended in Q4”. At the current $104 million market-cap, SPNC is trading at just over 50% of sales, net of $44 million in cash. Cash includes $16 million of auction-rate securities. Based on what we have been reading, these “investments” will likely turn out OK.
SPNC is suffering from the FDA, ICE raids that apparently eminated from an ex-employee whistle-blower trying to collect some money from the company. SPNC has the financial where-with-all to deal with this. Just got to wait this one out.
The company has $44 million in cash ($1.30 per share), no debt and is growing about 25% a year.
Earnings due out next Thursday, before the open.
Now down 48%. HOLD.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $2.41 (was $3.02 before adding another $10,000,was $3.21 before adding another $10,000, averaged down from $3.66),
Valuation $8.09 (was $8.12, $8.64, $8.47, $8.47, $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $1.30, down $.15.
Cash is $.83 per share.
Earnings out in early February. Sales down 16% to $5.2 million, but they made $.06 per share. Not bad. Stock did nothing. New valuation is $8.09 down a measley $.03 from last quarter.
Now down 46%. BUY

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up)
Valuation $11.30 (was $11.48, $11.47 $10.99, $10.28, $13.32, $12.89, $13.40)
Down $.30 at $4.40.
Cannell Capital filed a 13D in February 2008, disclosing a 12.9% ownership stake. Cannell has been pushing MEDW management to sell the company. Meanwhile, Constellation Software, a Canadian public company that has been on an acquisition binge filed a 13D in April 2008, disclosing a 6.1% ownership in MEDW (499,000 shares). Constellation has $243 million in revenues and is profitable.
On November 14th, 2008, Constellation filed a 13D/A. One of their subsidiary officers bought over 300,000 MEDW shares in October, bringing their combined owership in MEDW to 17.9%
Looks like something is going to happen here–but when?
Down 31%. BUY

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $3.74 (was $7.26 before double up),
Valuation $4.31 (was $5.88, $8.63, $9.90, $8.69, $11.51)
Down $.10 to $.38
CLZR announced “earnings” in mid-January. Bad as expected. Our valuation fell to $4.31 per share, which is still 10 times the current market price–but they are losing money at an alarming rate, and have decided not to sell the company. They still have $1.29 per share in cash, but at the current burn-rate, this will last about 1 year.
We will give this one 1 more quarter to see if the trend can reverse.
Down 90%. HOLD.

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $1.63 (Was $2.38 before adding another $20,000, $2.62 before another $10,000 and was $3.00 before double up),
Valuation $5.61 (was $6.42, $6.84, $7.58, $7.59)
Down $.01 at $.14.
Blinkx, a U.K. company made an all cash offer to buy MIVA in early August 2008 for $1.20. MIVA rejected the offer almost immediately saying it was too low and they think they can do better.
Blinkx later came back with a $.55 offer to buy MIVA. Not much can make a stock go up these days–even a 300% premium take-over offer.
Down 91%. HOLD

Harris Interactive. (HPOL-Recommended 5/25/2008)
Buy Price $1.79 (was $1.82 before adding $10,000, $2.02 before $10,000 added and $2.15 before double up),
Valuation $4.67 (Was $4.66, $6.00, $5.96)
Down $.03 at $.52.
Finaciere De Sainte Marine, is a big investor in HPOL. They now own 7,779,000 shares up from 6,640,381 shares in mid-2008, or over 14% of the company.
Earnings out last week. Sales off about 20%, and they took about $66 million of write-offs. Without all these charges they essentially had a small operating profit. Not bad for this economy and the 20% sales drop off. Cash was just a tiny bit more than bank debt (+-$26 million), and they triggered a bank covenant default. They expect to get an amended facility in place shortly, and we expect they will. Our valuation actual rose a penny to $4.67.
Down 71%. BUY

IPASS. (IPAS-Recommended 6/1/2008)
Buy Price-$1.90 (Was $2.07 before another $10,000 added and $2.15 before double up), Valuation $4.99 (was $4.30, $4.09)
Down $.15 to $1.06.
Foxhill owns 3,844,000 shares or 6.1% of IPASS.
With $1.10 per share in cash, we feel that this has little additional downside.
Earnings due out Monday, February 23rd after the market close.
Down 44%. BUY

Healthstream Inc. (HSTM-Recommended 8/4/2008)
Buy Price-$2.40
Valuation $4.62 (Was $4.42)
Down $.05 at $2.04.
Down 15%. HOLD

CCA Industries. (CAW-Recommended 8/4/2008)
Buy Price-$5.51 (was $6.14 before $10,000 added, $6.66 before $10,000 added, $7.00 before $10,000 added) (15.8% dividend yield)
Valuation $17.23 (Was $18.36)
Up $.26 to $3.05.
CCA announced in mid-January that they lost $6 million in annual sales to Walmart, as Walmart will no longer carry some of their products. This is about 10% of CCA’s annual sales. When are we going to get some good news? They still have almost $2.60 in cash, and the dividend yield is now over 15%.
Down 45%. HOLD

Magic Software Enterprises. (MGIC-Recommended 8/18/2008)
Buy Price-$1.93 (was $2.08 before another $10,000 added, $2.00 before $10,000 added at $2.16)
Valuation $4.18 (was $4.15)
Closed up $.11 at $1.38
Formula Systems (NASDAQ-FORTY) filed an amended Schedule 13D in early September 2008. They added 569,000 shares to their position between May and August and now hold 17,605,000 shares of MGIC or 55.4%. FORTY is a long-term investor, but this is a good sign of course.
Earnings due out Wednesday, February 18th before the market open.
Down 28%. BUY

Angeion Corporation. (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $13.30 (was $13.03)
Closed down $.06 at $2.86
Has $2.19 per share in cash.
Blueline Partners filed a 13D on ANGN on June 23, 2008. They own 216,000 shares or about 5.3% of the company. All of their purchases were well North of the current price.
Down 25%. BUY

Noah Educational. (NED-Recommended 10/5/2008)
Buy Price-$3.03(was $3.00 before $10,000 added)
Valuation $7.98 (Was $7.18)
Closed down $.08 at $2.84
Has cash of $3.37 per share. NED traded ex-dividend in late December.
Earnings due out Tuesday, Feb. 17th after the close.
Up 12% (adjusted for $.56 dividend).

Datalink . (DTLK-Recommended 10/12/2008)
Buy Price-$3.02
Valuation $10.27 (Was $10.26)
Closed down $.07 at $2.97
Cash is $2.23 per share.
Earnings out in early February. Sales down about 5% at $48 million, and they made $.07 per share compared to $.11 last year. Not bad for this economy. All sounded good until they said they expect a small loss next quarter. Cash is $2.23 per share and our valuation rose to $10.27. We expect our valuation to fall if their projections are correct to maybe $8.50 per share. Still trading at less than 50% of even that reduced projected valuation.
Down 2%. HOLD

Global Shipping . (GSL-Recommended 10/12/2008)
Buy Price-$3.69
Valuation NA-Dividend yield play
Closed down $.02 at $3.48
Current dividend yield–26%
Fleet utilization is still 98%. Their average ship charter life is around 10 years and the closest-in renewal is at the end of 2012. By then, you will have collected more than the current share price in dividends.
Dividend declared last week–still $.23 per quarter and they restructured their bank lines to help insure they can continue the dividend.
Down 6%. BUY

Middlebrook Pharmaceutical. (MBRK-Recommended 10/12/2008)
Buy Price-$1.16
Valuation-NA-Speculation
Closed up $.01 at $1.94
With a 67% gain–we are cashing out. This could be great in the long term, but it could also go back into the $1 range as this is still essentially a start-up.
Up 67%. SELL

SonicWALL. (SNWL-Recommended 10/20/2008)
Buy Price-$4.50
NEW Valuation-$11.47(Was $11.09, $10.44)
Closed down $.04 at $3.90
$3.06 now cash per share.
Earnings out last week. Sales were down less than 5%, but pre-tax earnings almost tripled. They expect to be profitable next quarter also. Aside from this crappy market theis should be an $8 stock right now. Our valuation rose to $11.47 a share. That is 2 straight increases in valuation. Cash is 78% of the current market cap.
Down 13%. BUY

Cynosure. (SNWL-Recommended 10/29/2008)
Buy Price-$9.10
NEW Valuation-$20.79-(Was $29.49)
Closed up $.35 at $8.17
CYNO has $7.45 per share in cash.
Earnings out last week. Sales down 30% and they lost $1.9 million on a non-GAAP basis. Not bad performance given the sales drop. They ended with $95 million in cash ($7.45 a share). Our valuation fell to $20.79 per share. Big drop, but cash is now 91% of the narket cap, and they seem to know how to manage their expenses in this downturn.
Down 10%. HOLD

Cutera. (CUTR-Recommended 10/29/2008)
Buy Price-$7.88
NEW Valuation-$ 18.06 (Was $18.88, $21.07)
Closed up $.88 at $6.85
Earnings out last week. Sales down 32% and they essentially broke-even for the quarter. Again, not bad given the economy. Cash fell a tad to $8.35 a share, and our valuation fell to $18.06. Trading at 82% of cash on the balance sheet. Yes, the business is “free” and you get $1.50 per share of cash as a gift to buy it.
Down 13%. BUY

OB-abies (Bulletin Board Listed Stocks)

As proven by OPTIO, patience is necessary with these stocks, especially in this Bear 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 $5.66 (was $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $.80, up $.05.
Wake up management–you have a great little company here worth 5X what it is selling for.
Now down 50%. BUY. Still a Huge valuation gap here.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.79 (Was $.93, $.99 and $1.19 before adding $10,000-each time),
Valuation $3.30 (was $3.76, $4.00 $3.41, $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.54, down $.01.
Earnings out in mid-November. Sales down 13%, but they remained profitable. Made $.01versus $.02 last year.
Earning due out Tuesday, Feb. 17th, before the open.
Down 32%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $1.40 (Was $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price unchanged at $.06. Closed at $.06.
Their VOIP business continues to struggle and lose money–$604,000 in the last quarter–but they did have some revenues–$38,000!
They might have to sell or shut this VOIP business down in our opinion. Just losing too much money, and eroding shareholder value.
Still an “undercover” company and stock.
Down 77%. HOLD

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up)
Valuation-$2.22 (Was $1.61, $2.28, $2.08)
Closed at $.21, down $.04
For the 9 months of 2008, EPS is $.13 per share. So looks like we are selling at about 2X earnings. Lotus announced last week that it bought the land use rights in Mongolia for $26 million, subject to contruction approvals etc. If the project is not approved, they get the money back. They said they paid for this out of internally generated funds. Pretty impressive. 3 years and $58 million to go to build this plant. They are also looking to sell or rent up to 80% of the land to other pharma companies to create a pharma industrial park. This may work out ok. Unusual legal structure, $58 million construction project all hang over this company. Stock market stinks, Chinese stocks maybe even worse than most.
Down 75%. BUY

Well the markets were up last week, but we went in reverse.

This is still a very tough market to pick winners in. Everything looks scary. We have confined ourselves to just trading some our stocks at this point, when they seems to drop for no reason. We have been trading GSL, SPNC, HPOL and a few others a bit—successfully so far.

Last week the DOW was up 3.5%, NASDAQ was up 7.8% and S+P 500 was up 5.2%. For the year the DOW is now down 5.7%, NASDAQ up .9% and the S+P 500 is down 3.8%. The Russell 3000 and the Wilshire 5000 are also down about 3.5% this year.

We had a 4.5% loss last week and are down 2.8% for the year.

Last week we went 8 stocks up, 13 down and 1 even. Since inception we are now 23 stocks up, and 22 down.

Since inception 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%

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 23 stocks that we closed out in 2006, 2007 and 2008 the average gain was 22%.

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 –Suspended.
Up $.25 to $3.25.
SPNC pre-announced Q4 sales in early January. Sales of $104 million for the year. Not the $107 million they predicted–but still not bad considering “the world ended in Q4”. At the current $104 million market-cap, SPNC is trading at just over 50% of sales, net of $44 million in cash. Cash includes $16 million of auction-rate securities. Based on what we have been reading, these “investments” will likely turn out OK.
SPNC is suffering from the FDA, ICE raids that apparently eminated from an ex-employee whistle-blower trying to collect some money from the company. SPNC has the financial where-with-all to deal with this. Just got to wait this one out.
The company has $44 million in cash ($1.30 per share), no debt and is growing about 25% a year.
Now down 43%. HOLD.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $2.41 (was $3.02 before adding another $10,000,was $3.21 before adding another $10,000, averaged down from $3.66),
NEW Valuation $8.09 (was $8.12, $8.64, $8.47, $8.47, $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $1.45, down $.25.
Cash is $.83 per share.
Earnings out last week. Sales down 16% to $5.2 million, but they made $.06 per share. Not bad. Stock did nothing. New valuation is $8.09 down a measley $.03 from last quarter.
Now down 40%. BUY

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 $11.30 (was $11.48, $11.47 $10.99, $10.28, $13.32, $12.89, $13.40)
Down $.19 at $4.70.
Cannell Capital filed a 13D in February 2008, disclosing a 12.9% ownership stake. Cannell has been pushing MEDW management to sell the company. Meanwhile, Constellation Software, a Canadian public company that has been on an acquisition binge filed a 13D in April 2008, disclosing a 6.1% ownership in MEDW (499,000 shares). Constellation has $243 million in revenues and is profitable.
On November 14th, 2008, Constellation filed a 13D/A. One of their subsidiary officers bought over 300,000 MEDW shares in October, bringing their combined owership in MEDW to 17.9%
Looks like something is going to happen here–but when?
Earnings out last week. Pretty darn good, but the stock was down. Sales up 16% to $10million and they made $.04 per share versus losing $.04 last year. Cash is $2.34 per share. Our valuation fell a tad to $11.30 a share.
Down 26%. BUY

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $3.74 (was $7.26 before double up),
Valuation $4.31 (was $5.88, $8.63, $9.90, $8.69, $11.51)
Down $.06 to $.48
CLZR announced “earnings” in mid-January. Bad as expected. Our valuation fell to $4.31 per share, which is still 10 times the current market price–but they are losing money at an alarming rate, and have decided not to sell the company. They still have $1.29 per share in cash, but at the current burn-rate, this will last about 1 year.
We will give this one 1 more quarter to see if the trend can reverse.
Down 87%. HOLD.

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $1.63 (Was $2.38 before adding another $20,000, $2.62 before another $10,000 and was $3.00 before double up),
Valuation $5.61 (was $6.42, $6.84, $7.58, $7.59)
Down $.04 at $.15.
Blinkx, a U.K. company made an all cash offer to buy MIVA in early August 2008 for $1.20. MIVA rejected the offer almost immediately saying it was too low and they think they can do better.
Blinkx later came back with a $.55 offer to buy MIVA. Not much can make a stock go up these days–even a 300% premium take-over offer.
Down 91%. HOLD

Harris Interactive. (HPOL-Recommended 5/25/2008)
Buy Price $1.79 (was $1.82 before adding $10,000, $2.02 before $10,000 added and $2.15 before double up),
NEW Valuation $4.67 (Was $4.66, $6.00, $5.96)
Up $.05 at $.55.
Finaciere De Sainte Marine, is a big investor in HPOL. They now own 7,779,000 shares up from 6,640,381 shares in mid-2008, or over 14% of the company.
Earnings out last week. Sales off about 20%, and they took about $66 million of write-offs. Without all these charges they essentially had a small operating profit. Not bad for this economy and the 20% sales drop off. Cash was just a tiny bit more than bank debt (+-$26 million), and they triggered a bank covenant default. They expect to get an amended facility in place shortly, and we expect they will. Our valuation actual rose a penny to $4.67.
Down 69%. BUY

IPASS. (IPAS-Recommended 6/1/2008)
Buy Price-$1.90 (Was $2.07 before another $10,000 added and $2.15 before double up), Valuation $4.99 (was $4.30, $4.09)
Down $.06 to $1.21.
Foxhill owns 3,844,000 shares or 6.1% of IPASS.
With $1.10 per share in cash, we feel that this has little additional downside.
Earnings due out Monday, February 23rd after the market close.
Down 36%. BUY

Healthstream Inc. (HSTM-Recommended 8/4/2008)
Buy Price-$2.40
Valuation $4.62 (Was $4.42)
Up $.03 at $2.09.
Down 13%. HOLD

CCA Industries. (CAW-Recommended 8/4/2008)
Buy Price-$5.51 (was $6.14 before $10,000 added, $6.66 before $10,000 added, $7.00 before $10,000 added) (15.8% dividend yield)
Valuation $17.23 (Was $18.36)
Down $.29 to $2.79.
CCA announced in mid-January that they lost $6 million in annual sales to Walmart, as Walmart will no longer carry some of their products. This is about 10% of CCA’s annual sales. When are we going to get some good news? They still have almost $2.60 in cash, and the dividend yield is now over 15%.
Down 49%. HOLD

Magic Software Enterprises. (MGIC-Recommended 8/18/2008)
Buy Price-$1.93 (was $2.08 before another $10,000 added, $2.00 before $10,000 added at $2.16)
Valuation $4.18 (was $4.15)
Closed up $.02 at $1.27
Formula Systems (NASDAQ-FORTY) filed an amended Schedule 13D in early September 2008. They added 569,000 shares to their position between May and August and now hold 17,605,000 shares of MGIC or 55.4%. FORTY is a long-term investor, but this is a good sign of course.
Earnings due out Wednesday, February 18th before the market open.
Down 34%. BUY

Angeion Corporation. (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $13.03
Closed down $.17 at $2.92
Has $1.80 per share in cash.
Blueline Partners filed a 13D on ANGN on June 23, 2008. They own 216,000 shares or about 5.3% of the company. All of their purchases were well North of the current price.
Down 24%. BUY

Noah Educational. (NED-Recommended 10/5/2008)
Buy Price-$3.03(was $3.00 before $10,000 added)
Valuation $7.98 (Was $7.18)
Closed up $.08 at $2.92
Has cash of $3.37 per share. NED traded ex-dividend in late December.
Earnings due out Tuesday, Feb. 17th after the close.
Up 15% (adjusted for $.56 dividend).

Datalink . (DTLK-Recommended 10/12/2008)
Buy Price-$3.02
NEW Valuation $10.27 (Was $10.26)
Closed down $.41 at $3.04
Cash is $2.23 per share.
Earnings out last week. Sales down about 5% at $48 million, and they made $.07 per share compared to $.11 last year. Not bad for this economy. All sounded good until they said they expect a small loss next quarter. Cash is $2.23 per share and our valuation rose to $10.27. We expect our valuation to fall if their projections are correct to maybe $8.50 per share. Still trading at less than 50% of even that reduced projected valuation.
Up 1%. HOLD

Global Shipping . (GSL-Recommended 10/12/2008)
Buy Price-$3.69
Valuation NA-Dividend yield play
Closed up $.10 at $3.50
Current dividend yield–26%
Fleet utilization is still 98%. Their average ship charter life is around 10 years and the closest-in renewal is at the end of 2012. By then, you will have collected more than the current share price in dividends.
Presenting at BB&T transportation conference next week–Feb. 11th
Down 5%. HOLD

Middlebrook Pharmaceutical. (MBRK-Recommended 10/12/2008)
Buy Price-$1.16
Valuation-NA-Speculation
Closed up $.53 at $1.93
“Earnings” out in mid-November. $2 million in sales and $12 million loss and $83 million of cash left. They expect 2009 sales to be about $40 million and will lose money. Some possibility of profits in 2010 and they think they have enough cash to last until then. Again, this is a speculation. Increased sales in 2009 will drive this stock.
New management and capital investment at $3.90 a share.
Up 66%. HOLD

SonicWALL. (SNWL-Recommended 10/20/2008)
Buy Price-$4.50
Valuation-$11.09(Was $10.44)
Closed up $.42 at $3.94
$3.02 cash per share.
No news.
Down 12%. BUY

Cynosure. (SNWL-Recommended 10/29/2008)
Buy Price-$9.10
Valuation-$29.49
Closed unchanged at $7.82
CYNO has $7.33 per share in cash.
CYNO preannounced Q4 in mid-January. Not good of course. Sales will be down around 30% from last year and they expect to lose around $2.5 million or $.20 per share.
They expect to end the year with $95 million in cash–$7.51 per share.
Earnings due out Tuesday, February 10th before the market open.
Down 14%. BUY

Cutera. (CUTR-Recommended 10/29/2008)
Buy Price-$7.88
Valuation-$ 18.88 (Was $21.07)
Closed down $.74 at $5.97
Cash per share was $8.56 per share. Our valuation fell to $18.88 per share.
We think that given the low valuations in this sector, that consolidation is just around the corner. Too much cash, high margins and a declining economy.
Trading below cash value.
Earnings due out Monday, February 9th after the market close.
Down 24%. HOLD

OB-abies (Bulletin Board Listed Stocks)

As proven by OPTIO, patience is necessary with these stocks, especially in this Bear 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 $5.66 (was $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $.75, down $.15.
Wake up management–you have a great little company here worth 5X what it is selling for.
Now down 54%. BUY. Still a Huge valuation gap here.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.79 (Was $.93, $.99 and $1.19 before adding $10,000-each time),
Valuation $3.30 (was $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 $.05.
Earnings out in mid-November. Sales down 13%, but they remained profitable. Made $.01versus $.02 last year.
Earning due out Tuesday, Feb. 17th, before the open.
Down 31%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $1.40 (Was $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price down $.06 at $.06. Closed at $.06.
Their VOIP business continues to struggle and lose money–$604,000 in the last quarter–but they did have some revenues–$38,000!
They might have to sell or shut this VOIP business down in our opinion. Just losing too much money, and eroding shareholder value.
Still an “undercover” company and stock.
Down 77%. HOLD

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up)
Valuation-$2.22 (Was $1.61, $2.28, $2.08)
Closed at $.25, down $.07
For the 9 months of 2008, EPS is $.13 per share. So looks like we are selling at about 2X earnings. Lotus announced last week that it bought the land use rights in Mongolia for $26 million, subject to contruction approvals etc. If the project is not approved, they get the money back. They said they paid for this out of internally generated funds. Pretty impressive. 3 years and $58 million to go to build this plant. They are also looking to sell or rent up to 80% of the land to other pharma companies to create a pharma industrial park. This may work out ok. Unusual legal structure, $58 million construction project all hang over this company. Stock market stinks, Chinese stocks maybe even worse than most.
Down 70%. HOLD

Well we have finished the first month of 2009. At least all the market indices are only down less that 10% so far!

This is still a very tough market to pick winners in. Everything looks scary. We have confined ourselves to just trading some our stocks at this point, when they seems to drop for no reason. We have been trading GSL, SPNC, HPOL and a few others a bit—successfully so far.

Last week the DOW was down 1%, NASDAQ was about even and and S+P 500 down about .7%. For the year the DOW is now down 8.8%, NASDAQ 6.4% and the S+P 500 is down 8.6%. The Russell 3000 and the Wilshire 5000 are also down just over 8% this year.

We had a 5.3% gain last week and are back in positive territory again, + 1.6% for the year.

Last week we went 15 stocks up and 7 down. Since inception we are now 23 stocks up, and 22 down.

Since inception 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%

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 23 stocks that we closed out in 2006, 2007 and 2008 the average gain was 22%.

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 –Suspended.
Up $.07 to $3.00.
SPNC pre-announced Q4 sales in early January. Sales of $104 million for the year. Not the $107 million they predicted–but still not bad considering “the world ended in Q4”. At the current $96 million market-cap, SPNC is trading at less than 50% of sales, net of $44 million in cash. Cash includes $16 million of auction-rate securities. Based on what we have been reading, these “investments” will likely turn out OK.
SPNC is suffering from the FDA, ICE raids that apparently eminated from an ex-employee whistle-blower trying to collect so money from the company. SPNC has the financial where-with-all to deal with this. Just got to wait this one out.
The company has $44 million in cash ($1.30 per share), no debt and is trading at less than 50% of 2008 revenues (net of cash)and is growing about 25% a year.
Now down 47%. HOLD.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $2.41 (was $3.02 before adding another $10,000,was $3.21 before adding another $10,000, averaged down from $3.66),
Valuation $8.12 (was $8.64, $8.47, $8.47, $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $1.70, up $.01.
Cash is $.82 per share.
Earnings due out next week on February 5th, before the market opens.
Now down 29%. BUY

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up)
Valuation $11.48 (was $11.47 $10.99, $10.28, $13.32, $12.89, $13.40)
Down $.21 at $4.89.
Cannell Capital filed a 13D in February 2008, disclosing a 12.9% ownership stake. Cannell has been pushing MEDW management to sell the company. Meanwhile, Constellation Software, a Canadian public company that has been on an acquisition binge filed a 13D in April 2008, disclosing a 6.1% ownership in MEDW (499,000 shares). Constellation has $243 million in revenues and is profitable.
On November 14th, 2008, Constellation filed a 13D/A. One of their subsidiary officers bought over 300,000 MEDW shares in October, bringing their combined owership in MEDW to 17.9%
Looks like something is going to happen here–but when?
Earnings due our next week on February 3rd, before the market opens.
Down 23%. HOLD

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $3.74 (was $7.26 before double up),
Valuation $4.31 (was $5.88, $8.63, $9.90, $8.69, $11.51)
Up $.12 to $.54
CLZR announced “earnings” in mid-January. Bad as expected. Our valuation fell to $4.31 per share, which is still 10 times the current market price–but they are losing money at an alarming rate, and have decided not to sell the company. They still have $1.29 per share in cash, but at the current burn-rate, this will last about 1 year.
We will give this one 1 more quarter to see if the trend can reverse.
Down 86%. HOLD.

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $1.63 (Was $2.38 before adding another $20,000, $2.62 before another $10,000 and was $3.00 before double up),
Valuation $5.61 (was $6.42, $6.84, $7.58, $7.59)
Up $.01 at $.19.
Blinkx, a U.K. company made an all cash offer to buy MIVA in early August 2008 for $1.20. MIVA rejected the offer almost immediately saying it was too low and they think they can do better.
Blinkx recently came back with a $.55 offer to buy MIVA. Not much can make a stock go up these days–even a 200% premium take-over offer.
Down 88%. HOLD

Harris Interactive. (HPOL-Recommended 5/25/2008)
Buy Price $1.79 (was $1.82 before adding $10,000, $2.02 before $10,000 added and $2.15 before double up),
Valuation $4.66 (Was $6.00, $5.96)
Down $.05 at $.50.
Finaciere De Sainte Marine, is a big investor in HPOL. They now own 7,779,000 shares up from 6,640,381 shares in mid-2008, or over 14% of the company.
Earnings due out next week on February 6th, before the market open.
Down 72%. BUY

IPASS. (IPAS-Recommended 6/1/2008)
Buy Price-$1.90 (Was $2.07 before another $10,000 added and $2.15 before double up), Valuation $4.99 (was $4.30, $4.09)
Down $.07 to $1.27.
Foxhill owns 3,844,000 shares or 6.1% of IPASS.
With $1.10 per share in cash, we feel that this has little additional downside.
Earnings due out Monday, February 23rd after the market close.
Down 33%. BUY

Healthstream Inc. (HSTM-Recommended 8/4/2008)
Buy Price-$2.40
Valuation $4.62 (Was $4.42)
Up $.06 at $2.06.
Down 14%. HOLD

CCA Industries. (CAW-Recommended 8/4/2008)
Buy Price-$5.51 (was $6.14 before $10,000 added, $6.66 before $10,000 added, $7.00 before $10,000 added) (14.3% dividend yield)
Valuation $17.23 (Was $18.36)
Down $.42 to $3.08.
CCA announced in mid-January that they lost $6 million in annual sales to Walmart, as Walmart will no longer carry some of their products. This is about 10% of CCA’s annual sales. When are we going to get some good news? They still have almost $2.60 in cash, and the dividend yield is now over 14%.
CAW declared its quarterly dividend of $.11 last week. Record date is February 3rd.
Down 44%. HOLD

Magic Software Enterprises. (MGIC-Recommended 8/18/2008)
Buy Price-$1.93 (was $2.08 before another $10,000 added, $2.00 before $10,000 added at $2.16)
Valuation $4.18 (was $4.15)
Closed up $.06 at $1.25
Formula Systems (NASDAQ-FORTY) filed an amended Schedule 13D in early September 2008. They added 569,000 shares to their position between May and August and now hold 17,605,000 shares of MGIC or 55.4%. FORTY is a long-term investor, but this is a good sign of course.
Earnings due out Wednesday, February 18th before the market open.
Down 35%. BUY

Angeion Corporation. (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $13.03
Closed down $.05 at $3.09
Has $1.80 per share in cash.
Blueline Partners filed a 13D on ANGN on June 23, 2008. They own 216,000 shares or about 5.3% of the company. All of their purchases were well North of the current price.
Down 19%. BUY

Noah Educational. (NED-Recommended 10/5/2008)
Buy Price-$3.03(was $3.00 before $10,000 added)
Valuation $7.98 (Was $7.18)
Closed up $.30 at $2.84
Has cash of $3.37 per share. NED traded ex-dividend in late December.
Up 12% (adjusted for $.56 dividend).

Datalink . (DTLK-Recommended 10/12/2008)
Buy Price-$3.02
Valuation $10.26
Closed up $.03 at $3.45
Cash is $2.08 per share.
Earnings due out next week on February 4th after the market close.
Up 14%. BUY

Global Shipping . (GSL-Recommended 10/12/2008)
Buy Price-$3.69
Valuation NA-Dividend yield play
Closed up $.21 at $3.40
Current dividend yield–27%
Fleet utilization is still 98%. Their average ship charter life is around 10 years and the closest-in renewal is at the end of 2012. By then, you will have collected more than the current share price in dividends.
Down 14%. HOLD

Middlebrook Pharmaceutical. (MBRK-Recommended 10/12/2008)
Buy Price-$1.16
Valuation-NA-Speculation
Closed up $.14 at $1.40
“Earnings” out in mid-November. $2 million in sales and $12 million loss and $83 million of cash left. They expect 2009 sales to be about $40 million and will lose money. Some possibility of profits in 2010 and they think they have enough cash to last until then. Again, this is a speculation. Increased sales in 2009 will drive this stock.
New management and capital investment at $3.90 a share.
Up 21%. HOLD

SonicWALL. (SNWL-Recommended 10/20/2008)
Buy Price-$4.50
Valuation-$11.09(Was $10.44)
Closed down $.16 at $3.52
$3.02 cash per share.
No news.
Down 22%. BUY

Cynosure. (SNWL-Recommended 10/29/2008)
Buy Price-$9.10
Valuation-$29.49
Closed up $.16 at $7.82
CYNO has $7.33 per share in cash.
CYNO preannounced Q4 in mid-January. Not good of course. Sales will be down around 30% from last year and they expect to lose around $2.5 million or $.20 per share.
They expect to end the year with $95 million in cash–$7.51 per share.
Earnings due out Tuesday, February 10th before the market open.
Down 14%. BUY

Cutera. (CUTR-Recommended 10/29/2008)
Buy Price-$7.88
Valuation-$ 18.88 (Was $21.07)
Closed down $.14 at $6.71
Cash per share was $8.56 per share. Our valuation fell to $18.88 per share.
We think that given the low valuations in this sector, that consolidation is just around the corner. Too much cash, high margins and a declining economy.
Trading at just above cash value.
Earnings due out Monday, February 9th after the market close.
Down 15%. HOLD

OB-abies (Bulletin Board Listed Stocks)

As proven by OPTIO, patience is necessary with these stocks, especially in this Bear 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 $5.66 (was $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $.90, up $.19.
Wake up management–you have a great little company here worth 5X what it is selling for.
Now down 44%. BUY. Still a Huge valuation gap here.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.79 (Was $.93, $.99 and $1.19 before adding $10,000-each time),
Valuation $3.30 (was $3.76, $4.00 $3.41, $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.60, up $.25.
Earnings out in mid-November. Sales down 13%, but they remained profitable. Made $.01versus $.02 last year.
Down 24%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $1.40 (Was $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price up $.03 at $.12. Closed at $.12.
Their VOIP business continues to struggle and lose money–$604,000 in the last quarter–but they did have some revenues–$38,000!
They might have to sell or shut this VOIP business down in our opinion. Just losing too much money, and eroding shareholder value.
Still an “undercover” company and stock.
Down 56%. HOLD

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up)
Valuation-$2.22 (Was $1.61, $2.28, $2.08)
Closed at $.32, up $.02
For the 9 months of 2008, EPS is $.13 per share. So looks like we are selling at about 2X earnings. Unusual legal structure, $70 million factory plan, $17 million land deposit all hang over this company. Stock market stinks, Chinese stocks maybe even worse than most.
Down 62%. HOLD

This is like a broken record.

The DOW was down 2.5%, NASDAQ down 3.4 and and S+P 500 2.1%. For the year the DOW is now down 8%, NASDAQ 6.3% and the S+P 500 is down 7.9%. The Russell 3000 and the Wilshire 5000 are also down just over 8% this year.

We had a 3.2% loss last week and are down 3.7% for the year.

Last week we went 8 stocks up and 14 down. Since inception we are now 23 stocks up, and 22 down.

Since inception 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%

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 23 stocks that we closed out in 2006, 2007 and 2008 the average gain was 22%.

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 –Suspended.
Up $.22 to $2.93.
SPNC pre-announced Q4 sales in early January. Sales of $104 million for the year. Not the $107 million they predicted–but still not bad considering “the world ended in Q4”. At the current $94 million market-cap, SPNC is trading at less than 50% of sales, net of $44 million in cash. Cash includes $16 million of auction-rate securities. Based on what we have been reading, these “investments” will likely turn out OK.
SPNC is suffering from the FDA, ICE raids that apparently eminated from an ex-employee whistle-blower trying to collect so money from the company. SPNC has the financial where-with-all to deal with this. Just got to wait this one out.
The company has $44 million in cash ($1.30 per share), no debt and is trading at less than 50% of 2008 revenues (net of cash)and is growing about 25% a year.
Now down 48%. HOLD.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $2.41 (was $3.02 before adding another $10,000,was $3.21 before adding another $10,000, averaged down from $3.66),
Valuation $8.12 (was $8.64, $8.47, $8.47, $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $1.69, up $.14.
Cash is $.82 per share.
Now down 30%. BUY

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up)
Valuation $11.48 (was $11.47 $10.99, $10.28, $13.32, $12.89, $13.40)
Up $.51 at $5.10.
Cannell Capital filed a 13D in February 2008, disclosing a 12.9% ownership stake. Cannell has been pushing MEDW management to sell the company. Meanwhile, Constellation Software, a Canadian public company that has been on an acquisition binge filed a 13D in April 2008, disclosing a 6.1% ownership in MEDW (499,000 shares). Constellation has $243 million in revenues and is profitable.
On November 14th, 2008, Constellation filed a 13D/A. One of their subsidiary officers bought over 300,000 MEDW shares in October, bringing their combined owership in MEDW to 17.9%
Looks like something is going to happen here–but when?
Down 20%. HOLD

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $3.74 (was $7.26 before double up),
NEW Valuation $4.31 (was $5.88, $8.63, $9.90, $8.69, $11.51)
Up $.01 to $.42
CLZR announced “earnings” last week. Bad as expected. Our valuation fell to $4.31 per share, which is still 10 times the current market price–but they are losing money at an alarming rate, and have decided not to sell the company. They still have $1.29 per share in cash, but at the current burn-rate, this will last about 1 year.
We will give this one 1 more quarter to see if the trend can reverse.
Down 89%. HOLD.

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $1.63 (Was $2.38 before adding another $20,000, $2.62 before another $10,000 and was $3.00 before double up),
Valuation $5.61 (was $6.42, $6.84, $7.58, $7.59)
Down $.08 at $.18.
Blinkx, a U.K. company made an all cash offer to buy MIVA in early August 2008 for $1.20. MIVA rejected the offer almost immediately saying it was too low and they think they can do better.
Blinkx recently came back with a $.55 offer to buy MIVA. Not much can make a stock go up these days–even a 200% premium take-over offer.
Down 89%. HOLD

Harris Interactive. (HPOL-Recommended 5/25/2008)
Buy Price $1.79 (was $1.82 before adding $10,000, $2.02 before $10,000 added and $2.15 before double up),
Valuation $4.66 (Was $6.00, $5.96)
Down $.10 at $.55.
Finaciere De Sainte Marine, is a big investor in HPOL. They now own 7,779,000 shares up from 6,640,381 shares in mid-2008, or over 14% of the company.
Down 69%. BUY

IPASS. (IPAS-Recommended 6/1/2008)
Buy Price-$1.90 (Was $2.07 before another $10,000 added and $2.15 before double up), Valuation $4.99 (was $4.30, $4.09)
Up $.14 to $1.34.
Foxhill owns 3,844,000 shares or 6.1% of IPASS.
With $1.10 per share in cash, we feel that this has little additional downside.
Down 30%. BUY

Healthstream Inc. (HSTM-Recommended 8/4/2008)
Buy Price-$2.40
Valuation $4.62 (Was $4.42)
Down $.32 at $2.00.
No news, but huge volume on Friday–almost 300,000 shares–15X normal daily volume.
Down 17%. HOLD

CCA Industries. (CAW-Recommended 8/4/2008)
Buy Price-$5.51 (was $6.14 before $10,000 added, $6.66 before $10,000 added, $7.00 before $10,000 added) (12.6% dividend yield)
Valuation $17.23 (Was $18.36)
Down $.63 to $3.5.
CCA announced last week they lost $6 million in annual sales to Walmart, as Walmart will no longer carry some of their products. This is about 10% of CCA’s annual sales. When are we going to get some good news? They still have almost $2.60 in cash, and the dividend yield is now 12.6%.
Down 37%. HOLD

Magic Software Enterprises. (MGIC-Recommended 8/18/2008)
Buy Price-$1.93 (was $2.08 before another $10,000 added, $2.00 before $10,000 added at $2.16)
Valuation $4.18 (was $4.15)
Closed down $.02 at $1.19
Formula Systems (NASDAQ-FORTY) filed an amended Schedule 13D in early September 2008. They added 569,000 shares to their position between May and August and now hold 17,605,000 shares of MGIC or 55.4%. FORTY is a long-term investor, but this is a good sign of course.
Down 38%. BUY

Angeion Corporation. (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $13.03
Closed down $.02 at $3.14
Has $1.80 per share in cash.
Blueline Partners filed a 13D on ANGN on June 23, 2008. They own 216,000 shares or about 5.3% of the company. All of their purchases were well North of the current price.
Down 18%. BUY

Noah Educational. (NED-Recommended 10/5/2008)
Buy Price-$3.03(was $3.00 before $10,000 added)
Valuation $7.98 (Was $7.18)
Closed up $.02 at $2.54
Has cash of $3.37 per share. NED traded ex-dividend in late December.
Up 3% (adjusted for $.56 dividend).

Datalink . (DTLK-Recommended 10/12/2008)
Buy Price-$3.02
Valuation $10.26
Closed up $.18 at $3.42
Cash is $2.08 per share.
Up 13%. BUY

Global Shipping . (GSL-Recommended 10/12/2008)
Buy Price-$3.69
Valuation NA-Dividend yield play
Closed down $.14 at $3.19
Current dividend yield–29%
Fleet utilization is still 98%. Their average ship charter life is around 10 years and the closest-in renewal is at the end of 2012. By then, you will have collected more than the current share price in dividends.
Down 14%. HOLD

Middlebrook Pharmaceutical. (MBRK-Recommended 10/12/2008)
Buy Price-$1.16
Valuation-NA-Speculation
Closed down $.18 at $1.26
“Earnings” out in mid-November. $2 million in sales and $12 million loss and $83 million of cash left. They expect 2009 sales to be about $40 million and will lose money. Some possibility of profits in 2010 and they think they have enough cash to last until then. Again, this is a speculation. Increased sales in 2009 will drive this stock.
New management and capital investment at $3.90 a share.
Up 9%. HOLD

SonicWALL. (SNWL-Recommended 10/20/2008)
Buy Price-$4.50
Valuation-$11.09(Was $10.44)
Closed down $.10 at $3.68
$3.02 cash per share.
No news.
Down 18%. BUY

Cynosure. (SNWL-Recommended 10/29/2008)
Buy Price-$9.10
Valuation-$29.49
Closed up $.45 at $7.66
CYNO has $7.33 per share in cash.
CYNO preannounced Q4 last week. Not good of course. Sales will be down around 30% from last year and they expect to lose around $2.5 million or $.20 per share.
They expect to end the year with $95 million in cash–$7.51 per share.
Down 16%. BUY

Cutera. (CUTR-Recommended 10/29/2008)
Buy Price-$7.88
Valuation-$ 18.88 (Was $21.07)
Closed down $.89 at $6.85
Cash per share was $8.56 per share. Our valuation fell to $18.88 per share.
We think that given the low valuations in this sector, that consolidation is just around the corner. Too much cash, high margins and a declining economy.
Trading at just above cash value.
Down 13%. HOLD

OB-abies (Bulletin Board Listed Stocks)

As proven by OPTIO, patience is necessary with these stocks, especially in this Bear 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 $5.66 (was $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $.71, down 14%.
Wake up management–you have a great little company here worth 5X what it is selling for.
Now down 56%. BUY. Still a Huge valuation gap here.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.79 (Was $.93, $.99 and $1.19 before adding $10,000-each time),
Valuation $3.30 (was $3.76, $4.00 $3.41, $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.35, down $.05.
Earnings out in mid-November. Sales down 13%, but they remained profitable. Made $.01versus $.02 last year.
Down 56%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $1.40 (Was $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price down $.05 at $.09. Closed at $.08.
Their VOIP business continues to struggle and lose money–$604,000 in the last quarter–but they did have some revenues–$38,000!
They might have to sell or shut this VOIP business down in our opinion. Just losing too much money, and eroding shareholder value.
Still an “undercover” company and stock.
Down 65%. HOLD

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up)
Valuation-$2.22 (Was $1.61, $2.28, $2.08)
Closed at $.30, down $.03
For the 9 months of 2008, EPS is $.13 per share. So looks like we are selling at about 2X earnings. Unusual legal structure, $70 million factory plan, $17 million land deposit all hang over this company. Stock market stinks, Chinese stocks maybe even worse than most.
Down 64%. HOLD

Here we go again. Markets tanking, financial stocks (which we don’t buy–ever) tanking. Looks like it could be another long year.

The DOW was down 3.7%, NASDAQ down 2.7 and and S+P 500 4.5%. For the year the DOW is now down 5.6%, NASDAQ 3% and the S+P 500 is down 5.9%. The Russell 3000 and the Wilshire 5000 are also down just over 5% this year.

We had a 6.5% loss last week and have joined the rest of the indices in negative territory at minus .5% for the year.

Last week we went 5 stocks up and 15 down and 2 even. Since inception we are now 23 stocks up, and 22 down.

Since inception 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%

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 23 stocks that we closed out in 2006, 2007 and 2008 the average gain was 22%.

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 –Suspended.
Down $.05 to $2.71.
SPNC pre-announced Q4 sales in early January. Sales of $104 million for the year. Not the $107 million they predicted–but still not bad considering “the world ended in Q4”. At the current $88 million market-cap, SPNC is trading at less than 50% of sales, net of $44 million in cash. Cash includes $16 million of auction-rate securities. Based on what we have been reading, these “investments” will likely turn out OK.
SPNC is suffering from the FDA, ICE raids that apparently eminated from an ex-employee whistle-blower trying to collect so money from the company. SPNC has the financial where-with-all to deal with this. Just got to wait this one out.
The company has $44 million in cash ($1.30 per share), no debt and is trading at less than 50% of 2008 revenues (net of cash)and is growing about 25% a year.
Now down 52%. HOLD.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $2.41 (was $3.02 before adding another $10,000,was $3.21 before adding another $10,000, averaged down from $3.66),
Valuation $8.12 (was $8.64, $8.47, $8.47, $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $1.57, down $.28.
Cash is $.82 per share.
Now down 35%. BUY

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up)
Valuation $11.48 (was $11.47 $10.99, $10.28, $13.32, $12.89, $13.40)
Up $.03 at $4.59.
Cannell Capital filed a 13D in February 2008, disclosing a 12.9% ownership stake. Cannell has been pushing MEDW management to sell the company. Meanwhile, Constellation Software, a Canadian public company that has been on an acquisition binge filed a 13D in April 2008, disclosing a 6.1% ownership in MEDW (499,000 shares). Constellation has $243 million in revenues and is profitable.
On November 14th, 2008, Constellation filed a 13D/A. One of their subsidiary officers bought over 300,000 MEDW shares in October, bringing their combined owership in MEDW to 17.9%
Looks like something is going to happen here–but when?
Down 28%. HOLD

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $3.74 (was $7.26 before double up), Valuation $5.88 (was $8.63, $9.90, $8.69, $11.51)
Down $.17 to $.41
CLZR has hired an investment banker to sell the company. We’ll see. Maybe Palomar will buy it to cut both there legal fees ($3.2 million this quarter for CLZR).
Looks like Palomar’s lawsuit against CLZR has been “stayed” by the courts for a while. Legal expense should drop for maybe a couple of years.
Down 89%. HOLD, we may get lucky and this thing will be sold for North of $1.

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $1.63 (Was $2.38 before adding another $20,000, $2.62 before another $10,000 and was $3.00 before double up),
Valuation $5.61 (was $6.42, $6.84, $7.58, $7.59)
Unchanged at $.26.
Blinkx, a U.K. company made an all cash offer to buy MIVA in early August 2008 for $1.20. MIVA rejected the offer almost immediately saying it was too low and they think they can do better.
Blinkx recently came back with a $.55 offer to buy MIVA. Not much can make a stock go up these days–even a 200% premium take-over offer.
Down 84%. HOLD

Harris Interactive. (HPOL-Recommended 5/25/2008)
Buy Price $1.79 (was $1.82 before adding $10,000, $2.02 before $10,000 added and $2.15 before double up),
Valuation $4.66 (Was $6.00, $5.96)
Down $.05 at $.65.
Finaciere De Sainte Marine, is a big investor in HPOL. They now own 7,779,000 shares up from 6,640,381 shares in mid-2008, or just over 14% of the company.
Trading at 13% of our valuation.
Down 67%. BUY

IPASS. (IPAS-Recommended 6/1/2008)
Buy Price-$1.90 (Was $2.07 before another $10,000 added and $2.15 before double up), Valuation $4.99 (was $4.30, $4.09)
Down $.07 to $1.20.
Foxhill owns 3,844,000 shares or 6.1% of IPASS.
With $1.10 per share in cash, we feel that this has little additional downside.
Down 37%. BUY

Healthstream Inc. (HSTM-Recommended 8/4/2008)
Buy Price-$2.40
Valuation $4.62 (Was $4.42)
Up $.04 at $2.32.
No news
Down 3%. HOLD

CCA Industries. (CAW-Recommended 8/4/2008)
Buy Price-$5.51 (was $6.14 before $10,000 added, $6.66 before $10,000 added, $7.00 before $10,000 added) (10.6% dividend yield)
Valuation $17.23 (Was $18.36)
Down $.02 to $4.13.
No news.
Down 25%. BUY

Magic Software Enterprises. (MGIC-Recommended 8/18/2008)
Buy Price-$1.93 (was $2.08 before another $10,000 added, $2.00 before $10,000 added at $2.16)
Valuation $4.18 (was $4.15)
Closed down $.01 at $1.21
Formula Systems (NASDAQ-FORTY) filed an amended Schedule 13D in early September 2008. They added 569,000 shares to their position between May and August and now hold 17,605,000 shares of MGIC or 55.4%. FORTY is a long-term investor, but this is a good sign of course.
Down 37%. BUY

Angeion Corporation. (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $13.03
Closed up $.11 at $3.16
Has $1.80 per share in cash.
Blueline Partners filed a 13D on ANGN on June 23, 2008. They own 216,000 shares or about 5.3% of the company. All of their purchases were well North of the current price.
Down 17%. BUY

Noah Educational. (NED-Recommended 10/5/2008)
Buy Price-$3.03(was $3.00 before $10,000 added)
Valuation $7.98 (Was $7.18)
Closed down $.65 at $2.52
Has cash of $3.37 per share.NED traded ex-dividend in late December.
Up 2% (adjusted for $.56 dividend). BUY (we did on Friday)

Datalink . (DTLK-Recommended 10/12/2008)
Buy Price-$3.02
Valuation $10.26
Closed up $.01 at $3.33
Cash is $2.08 per share.
Up 7%. BUY

Global Shipping . (GSL-Recommended 10/12/2008)
Buy Price-$3.69
Valuation NA-Dividend yield play
Closed down $.16 at $3.33
Current dividend yield–28%
Fleet utilization is still 98%. Their average ship charter life is around 10 years and the closest-in renewal is at the end of 2012. By then, you will have collected more than the current share price in dividends.
Down 10%. HOLD

Middlebrook Pharmaceutical. (MBRK-Recommended 10/12/2008)
Buy Price-$1.16
Valuation-NA-Speculation
Closed down $.20 at $1.44
“Earnings” out in mid November. $2 million in sales and $12 million loss and $83 million of cash left. They expect 2009 sales to be about $40 million and will lose money. Some possibility of profits in 2010 and they think they have enough cash to last until then. Again, this is a speculation. Increased sales in 2009 will drive this stock.
New management and capital investment at $3.90 a share.
Up 24%. HOLD

SonicWALL. (SNWL-Recommended 10/20/2008)
Buy Price-$4.50
Valuation-$11.09(Was $10.44)
Closed up $.09 at $3.78
$3.02 cash per share.
No news.
Down 16%. BUY

Cynosure. (SNWL-Recommended 10/29/2008)
Buy Price-$9.10
Valuation-$29.49
Closed down $1.17 at $7.21
CYNO has $7.33 per share in cash.
CYNO preannounced Q4 last week. Not good of course. Sales will be down around 30% from last year and they expect to lose around $2.5 million or $.20 per share.
They expect to end the year with $95 million in cash–$7.51 per share. We are now below cash value.
Down 21%. BUY

Cutera. (CUTR-Recommended 10/29/2008)
Buy Price-$7.88
Valuation-$ 18.88 (Was $21.07)
Closed down $.27 at $7.74
Cash per share was $8.56 per share. Our valuation fell to $18.88 per share.
We think that given the low valuations in this sector, that consolidation is just around the corner. Too much cash, high margins and a declining economy.
Trading at just above cash value.
Down 2%. HOLD

OB-abies (Bulletin Board Listed Stocks)

As proven by OPTIO, patience is necessary with these stocks, especially in this Bear 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 $5.66 (was $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $.85, unchanged.
Wake up management–you have a great little company here worth 5X what it is selling for.
Now down 47%. BUY. Still a Huge valuation gap here.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.79 (Was $.93, $.99 and $1.19 before adding $10,000-each time),
Valuation $3.30 (was $3.76, $4.00 $3.41, $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.40, down $.10.
Earnings out in mid-November. Sales down 13%, but they remained profitable. Made $.01versus $.02 last year.
Down 50%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $1.40 (Was $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price up $.06 at $.14. Closed at $.12.
Their VOIP business continues to struggle and lose money–$604,000 in the last quarter–but they did have some revenues–$38,000!
They might have to sell or shut this VOIP business down in our opinion. Just losing too much money, and eroding shareholder value.
Still an “undercover” company and stock.
Down 48%. HOLD

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up)
Valuation-$2.22 (Was $1.61, $2.28, $2.08)
Closed at $.33, down $.05
For the 9 months of 2008, EPS is $.13 per share. So looks like we are selling at about 2X earnings. Unusual legal structure, $70 million factory plan, $17 million land deposit all hang over this company. Stock market stinks, Chinese stocks maybe even worse than most.
Down 61%. BUY

After a promising start, the markets tanked again last week.
The DOW was down 4.8%, NASDAQ down 3.7 and and S+P 500 4.5%. For the year the DOW is now down 2%, NASDAQ .3% and the S+P 500 was down 1.4%. The Russell 3000 and the Wilshire 5000 are also down just over 1% this year.

We had a 2.7% gain last week and are up 6% for the year.

Last week we went 11 stocks up and 11 down. Since inception we are now 23 stocks up, and 22 down.

Since inception 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%

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 23 stocks that we closed out in 2006, 2007 and 2008 the average gain was 22%.

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 –Suspended.
Up $.04 to $2.76.
SPNC pre-announced Q4 sales last week. Sales of $104 million for the year. Not the $107 million they predicted–but still not bad considering “the world ended in Q4”. At the current $88 million market-cap, SPNC is trading at less than 50% of sales, net of $44 million in cash. Cash includes $16 million of auction-rate securities. Based on what we have been reading, these “investments” will likely turn out OK.
SPNC is suffering from the FDA, ICE raids that apparently eminated from an ex-employee whistle-blower trying to collect so money from the company. SPNC has the financial where-with-all to deal with this. Just got to wait this one out.
The company has $44 million in cash ($1.30 per share), no debt and is trading at less than 50% of 2008 revenues (net of cash)and is growing about 25% a year.
Now down 51%. HOLD.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $2.41 (was $3.02 before adding another $10,000,was $3.21 before adding another $10,000, averaged down from $3.66),
Valuation $8.12 (was $8.64, $8.47, $8.47, $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $1.85, up $.61.
Cash is now $.82 per share.
Got a nice plug in “Seeking Alpha” last week as being significant;y undervalued.
Now down 23%. BUY

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up)
Valuation $11.48 (was $11.47 $10.99, $10.28, $13.32, $12.89, $13.40)
Down $.15 at $4.56.
Cannell Capital filed a 13D in February 2008, disclosing a 12.9% ownership stake. Cannell has been pushing MEDW management to sell the company. Meanwhile, Constellation Software, a Canadian public company that has been on an acquisition binge filed a 13D in April 2008, disclosing a 6.1% ownership in MEDW (499,000 shares). Constellation has $243 million in revenues and is profitable.
On November 14th, 2008, Constellation filed a 13D/A. One of their subsidiary officers bought over 300,000 MEDW shares in October, bringing their combined owership in MEDW to 17.9%
Looks like something is going to happen here–but when?
Down 28%. HOLD

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $3.74 (was $7.26 before double up), Valuation $5.88 (was $8.63, $9.90, $8.69, $11.51)
Up $.07 to $.58
CLZR has hired an investment banker to sell the company. We’ll see. Maybe Palomar will buy it to cut both there legal fees ($3.2 million this quarter for CLZR).
Looks like Palomar’s lawsuit against CLZR has been “stayed” by the courts for a while. Legal expense should drop for maybe a couple of years.
Down 85%. HOLD, we may get lucky and this thing will be sold for North of $1.

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $1.63 (Was $2.38 before adding another $20,000, $2.62 before another $10,000 and was $3.00 before double up),
Valuation $5.61 (was $6.42, $6.84, $7.58, $7.59)
Up $.04 to $.26.
Blinkx, a U.K. company made an all cash offer to buy MIVA in early August 2008 for $1.20. MIVA rejected the offer almost immediately saying it was too low and they think they can do better.
Blinkx recently came back with a $.55 offer to buy MIVA. Not much can make a stock go up these days–even a 200% premium take-over offer.
Down 84%. HOLD

Harris Interactive. (HPOL-Recommended 5/25/2008)
Buy Price $1.79 (was $1.82 before adding $10,000, $2.02 before $10,000 added and $2.15 before double up),
Valuation $4.66 (Was $6.00, $5.96)
Up $.02 at $.65.
Finaciere De Sainte Marine, is a big investor in HPOL. They now own 7,779,000 shares up from 6,640,381 shares in mid-2008, or just over 14% of the company.
Trading at 14% of our valuation.
Down 64%. BUY

IPASS. (IPAS-Recommended 6/1/2008)
Buy Price-$1.90 (Was $2.07 before another $10,000 added and $2.15 before double up), Valuation $4.99 (was $4.30, $4.09)
Up $.08 to $1.27.
They still have $1.10 per share in cash.
Foxhill owns 3,844,000 shares or 6.1% of IPASS.
With $1.10 per share in cash, we feel that this has little additional downside.
Down 33%. BUY

Healthstream Inc. (HSTM-Recommended 8/4/2008)
Buy Price-$2.40
Valuation $4.62 (Was $4.42)
Up $.05 at $2.28.
No news
Down 5%. HOLD

CCA Industries. (CAW-Recommended 8/4/2008)
Buy Price-$5.51 (was $6.14 before $10,000 added, $6.66 before $10,000 added, $7.00 before $10,000 added) (10.6% dividend yield)
Valuation $17.23 (Was $18.36)
Up $.30 to $4.15.
No news.
Down 25%. BUY

Magic Software Enterprises. (MGIC-Recommended 8/18/2008)
Buy Price-$1.93 (was $2.08 before another $10,000 added, $2.00 before $10,000 added at $2.16)
Valuation $4.18 (was $4.15)
Closed down $.24 at $1.22
Formula Systems (NASDAQ-FORTY) filed an amended Schedule 13D in early September 2008. They added 569,000 shares to their position between May and August and now hold 17,605,000 shares of MGIC or 55.4%. FORTY is a long-term investor, but this is a good sign of course.
Down 37%. BUY

Angeion Corporation. (ANGN-Recommended 8/28/2008)
Buy Price-$3.82 (was $5.15 before $10,000 added)
Valuation $13.03
Closed down $.09 at $3.05
Has $1.80 per share in cash.
Blueline Partners filed a 13D on ANGN on June 23, 2008. They own 216,000 shares or about 5.3% of the company. All of their purchases were well North of the current price.
Down 20%. BUY

Noah Educational. (NED-Recommended 10/5/2008)
Buy Price-$3.03(was $3.00 before $10,000 added)
Valuation $7.98 (Was $7.18)
Closed down $.12 at $3.17
Has cash of $3.93 per share (before special dividend).NED traded ex-dividend in late December.
Up 23% (adjusted for $.56 dividend). HOLD

Datalink . (DTLK-Recommended 10/12/2008)
Buy Price-$3.02
Valuation $10.26
Closed up $.12 at $3.32
Cash is $2.08 per share.
Up 10%. BUY

Global Shipping . (GSL-Recommended 10/12/2008)
Buy Price-$3.69
Valuation NA-Dividend yield play
Closed down $.01 at $3.49
Current dividend yield–26%
Fleet utilization is still 98%. Their average ship charter life is around 10 years and the closest-in renewal is at the end of 2012. By then, you will have collected more than the current share price in dividends.
Down 5%. HOLD

Middlebrook Pharmaceutical. (MBRK-Recommended 10/12/2008)
Buy Price-$1.16
Valuation-NA-Speculation
Closed up $.06 at $1.64
“Earnings” out in mid November. $2 million in sales and $12 million loss and $83 million of cash left. They expect 2009 sales to be about $40 million and will lose money. Some possibility of profits in 2010 and they think they have enough cash to last until then. Again, this is a speculation. Increased sales in 2009 will drive this stock.
New management and capital investment at $3.90 a share.
Up 41%. HOLD

SonicWALL. (SNWL-Recommended 10/20/2008)
Buy Price-$4.50
Valuation-$11.09(Was $10.44)
Closed down $.44 at $3.69
$3.02 cash per share.
No news.
Down 18%. BUY

Cynosure. (SNWL-Recommended 10/29/2008)
Buy Price-$9.10
Valuation-$29.49
Closed down $1.09 at $8.38
CYNO has $7.33 per share in cash.
Down 8%. HOLD

Cutera. (CUTR-Recommended 10/29/2008)
Buy Price-$7.88
Valuation-$ 18.88 (Was $21.07)
Closed down $.70 at $8.01
Cash per share was $8.56 per share. Our valuation fell to $18.88 per share.
We think that given the low valuations in this sector, that consolidation is just around the corner. Too much cash, high margins and a declining economy.
Trading at just above cash value.
Up 2%. HOLD

OB-abies (Bulletin Board Listed Stocks)

As proven by OPTIO, patience is necessary with these stocks.

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 $5.66 (was $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $.85, down $.23.
Wake up management–you have a great little company here worth 5X what it is selling for.
Now down 47%. BUY. Still a Huge valuation gap here.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.79 (Was $.93, $.99 and $1.19 before adding $10,000-each time),
Valuation $3.30 (was $3.76, $4.00 $3.41, $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.50, down $.01.
Earnings out in mid-November. Sales down 13%, but they remained profitable. Made $.01versus $.02 last year.
Down 37%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $1.40 (Was $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price down $.05 at $.08. Closed at $.07.
Their VOIP business continues to struggle and lose money–$604,000 in the last quarter–but they did have some revenues–$38,000!
They might have to sell or shut this VOIP business down in our opinion. Just losing too much money, and eroding shareholder value.
Still an “undercover” company and stock.
This is still trading at only 6% of our latest valuation.
Down 70%. BUY

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up)
Valuation-$2.22 (Was $1.61, $2.28, $2.08)
Closed at $.38, up $.14
For the 9 months of 2008, EPS is $.13 per share. So looks like we are selling at about 2X earnings. Unusual legal structure, $70 million factory plan, $17 million land deposit all hang over this company. Stock market stinks, Chinese stocks maybe even worse than most.
Down 55%. BUY