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

Since our beginning, we have closed out the following positions:
2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW  +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR  +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)
2008-PDLI +9% (company split, and special dividend)
2008-BDAY -39% (long overdue takeover offer-or “take-under”)
2008-DTLK +40% (third trip on this one)
2008-ILOG +26% (Buy-out offer from IBM)
2008-PARL +56%
2009-MBRK +67%
2009-SNWL +14%
2009-CYNO +25%
2009-DTLK +33% (fourth trip on this)
2009-NED +46%
2009-CUTR +13%
2009-HSTM +67% (continued good earnings)
2009-RNWK +36%
2009-OPK +116%
2009-CLZR -32% (a loser even on a buy-out)
2009-DTLK +28% (our 5th profitable trip on this one)
2010-HPOL +110%
2010-DIVX +25%
2010-CHRD +37% Buyout (2 weeks after we recommended it)
2010-HPOL +30%
2010-MGIC +82%
2010-GSL  +78%
2010-CCEL +49%
2010-HPOL +27% (third trip)
2010-CAW EVEN (excluding 2.5 years of dividends)
2011-DWCH +116%
2011-IPAS +15%
2011-PRM +56% Buyout (1 week after we recommended it)
2011-RST +12%
2011-NINE -10%
2012-BVSN +30%
2012-TISA +137%
2012-PTIX -44%
2012-MTSL +157%
2012-LTUS -98% No more Chinese stocks for us
2012-AEZS -63%  a bad speculation.
2012-RIMG -46% (including dividends)
2012-HPOL +34%
2012-MEDW +133% (Buyout 1 week AFTER we sold this)
2012-SPNC +118%
2012-RWWI +1%
2012-MOTR -29% (lost biggest customer contract)
2013-INUV -83% Held this since 2007. Failed business model.
2013-ASTX-+40%
2013-MGCD-+79%
2013-LXK +2
2013-AGYS +41%

For the 65 stocks that we closed out since 2006 (53 were winners) the average net gain was 30%.

Buy Price $1.50
NEW Valuation $6.79 ( Was, $6.50)
Closed up $.07 at $1.89
Earnings announced last week. Pretty good. Although revenues were down to $14.5 million from $15.9 million last year, they were up from $14.2 million last year. More importantly Non-GAAP earnings were $2.2 million compared to $.2 million last year. For the six month period, Non-GAAP earnings were $4.4 million or $.16 per share. Our valuation climbed to $6.79 per share.
UP 26%, BUY

Digital River Inc. (NASDAQ-DRIV)-Recommended 1/11/2013)
Buy Price $14.20
Valuation $35.57 (Was $34.59, $32.20)
Closed down $.25 at $14.91
Earnings announced in May. Pretty good, but tempered by weak guidance. Sales were up 11% (including the LML acquisition) and they made $.33 a share on a Non-GAAP basis, up 10% YOY. Guidance for next quarter was revenue of $89-$92 million and Non-GAAP EPS of $.01 to $.04 per share. Full year guidance is $.55-$.65 a share in Non-GAAP earnings. Net cash rose to $9.49 per share. Our valuation rose to $35.57 but will likely fall to around $30 a share based on the guidance—still double the current market price.
UP 5%, BUY

Daegis Inc. (NASDAQ-DAEG)-Recommended 11/30/2012)
Buy Price $1.20
Valuation $4.86 (Was $4.00)
Closed up $.02 at $1.08
Earnings announced in March. Not bad. Sales fell from $11.1 last year to $10.4 million, but they were up slightly from last quarters $10.35 million. Gross margins were up to over 70% and net debt decreased to $13.8 million from $14.5 million last quarter. Non-GAAP earnings were $449,000 versus $252,000 last quarter. Our valuation spiked to $4.86 per share up 20% from last quarter.
Looks like BlueLine Partners (a “strategic opportunities fund”) have shaken up Daegis management in January with the ouster or the CEO and CFO. The interim CEO and Chairman of the Board is a BlueLine founder. Its feeling like they are not happy with the current stock price for sure.
Down 10%, BUY

Buy Price $1.24
Valuation $2.35 (Was $2.56, $2.24)
Closed down $.03 at $1.17
Next earnings due out Wednesday, May 15^th after the market close.
Earnings announced in February. So-so. Revenues fell from $6.5 million to $6.2 million. iAPPS revenue rose 17% ($4.2 million) and recurring revenues were just under 20% of total sales. They lost $.02 on a Non-GAAP basis versus a profit of $.01 last year. Guidance is for revenues of $27-$28 million for the year. iAPPs revenue is expected to increase 27% to $21 million. They expect to be adjusted EBITDA positive in 2013.
Our valuation fell a bit to $2.35 per share. We see our valuation soaring to $3.25 if they can make their numbers this year.
Down 6%, BUY

Buy Price- $1.37
Valuation $4.89 (Was $6.02, $6.72, $5.49)
Closed up $.14 at $2.23
Earnings announced in May. So-So. Revenues fell 5% to $95 million and they made $2.1 million of adjusted net income versus $3.2 million last year. Guidance was limited to the following quote:  “Our first quarter results were consistent with our expectations, as we worked to set the stage for another strong second half,”. We’ll see. Our valuation fell substantially from $6.02 to $4.89 on lower sales and higher net debt compared to last year.
Carlo Cannell, an activist investor filled a 13D in September 2012 pointing out how undervalued TSYS is and urged them to put themselves on the block. He points to a valuation done on the company as of August 29th of $7.40 to $11.81 a share. Even the low point here is higher than our valuation.
UP 63%, HOLD

Buy Price- $2.62
Valuation $9.31 (Was $10.28. $9.03, $9.37, $8.85, $8.31)
Closed up $.05 at $2.62
Earnings announced in May. Decent we think, but we were the only one. Revenues were $118 million compared to $112 million last year, gross margins were 29.1% and they made $1.2 million on a Non-GAAP basis versus $2.2 million last year. The current quarter included a $1.1 million inventory write-off for a bankrupt customer. Net cash per share was $1.38.
Their book-to-bill ratio was less than 1 this past quarter leading them to give next quarter guidance of $105 to $115 million in revenues and Non-GAAP income of $0 to $.03 per share. Not setting the world on fire, but doing ok. Our valuation fell from the huge prior quarter to $9.31—a $1 a share more than when we recommended AVNW.
Penn Capital Mgmt. filed a 13G in late February disclosing a 6.05% stake.
Dimension Fund filed a Form 13G in February disclosing a 5.3% stake, Vanguard disclosed a 5.67% stake and Blue Mountain has been buying more and is now up to a 5.90% stake.
Even, BUY

Buy Price $7.17 ( Was $7.94 before another $10,000 added at $6.53)
Valuation $28.24 (Was $28.33, $29.04, $29.59, $29.58, $29.21)
Closed up $.19 at $9.22
Earnings announced in May. OK.  Revenue fell from $124 million to $120 million, adjusted EBITDA fell from $23 million to $21 million and they lost $600,000 compared to a $1,200,000 loss last year. Our valuation fell a few pennies to $28.24.
Guidance for 2013 was unchanged- revenues of $475-$485 million, adjusted EBITDA of $75-$82 million and free cash flow of $15-$20 million.
Penn Capital Mgmt. filed a 13G in late February disclosing a 5.55% stake.
$80 million of EBITDA, $.68 a share in net cash and a $230 market cap. Cheap.
UP 29%, BUY

Valuation $27.15 (Was $31.80, $34.60, $28.60, $41.20, $43.20 (after $9.50, $6.00 and $1.40 special dividends), $52.40, $55.80)
Buy Price October 7, 2011- $8.50 ($25.40 before special dividends)
Closed at $9.26 down $.01
Earnings announced in April. Not bad, but not great. Sales were $46 million up slightly from $44.7 last year. They lost $3.1 million pre-tax which included $1.6 million of litigation costs and $400,000 of share based compensation (vapor cost). Net cash was $4.59 per share and our valuation was $27.15.
Lloyd Miller disclosed a 6.9% stake in February.
The 20 for 1 stock split happened in December, so all the share information has been adjusted.
Raging Capital bought another 1.6 million shares in the first week of December at $10.80 bringing their holdings to 20.1% of the company.
Still trading at less than ½ our valuation.
UP 8%  BUY

Buy Price-$8.49
Valuation $8.24 (Was $13.05, $10.67, $8.41 $12.10, $13.40, $16.02)
Closed up $.04 at $4.73
Raging Capital filed a 13D/A last week disclosing the purchase of another 500,000 shares at prices up to $4.79 a share, bringing their holding to 7% of the company.
Raging Capital filed a 13D in April reporting a 5.6% stake in SIGM and calling for faster action to turn the company around or sell it. Maybe there is hope here.
Earnings announced in March. They stunk up the place. While sales were up to $44 million from $36 million last year, they lost $36 million or $1.18 per share. Cash fell again to $2.51 per share (it was $5.40 when we recommended SIGM) and our valuation plunged to its lowest level ever. But wait, there’s more…..they are projecting next quarter to be about breakeven on $49-$52 million in sales. The market looked past this past quarter and the stock rose. We will be watching this one very closely and may sell at any time.
Dimension Fund disclosed a 6.48% stake in SIGM  in February and Vanguard disclosed a 5.61% stake via 13G filings and MAK Capital One sold their 6.6% stake.
Down 45%, HOLD

Buy Price- $3.04( Was $3.36 before $10,000 added, $3.95 before $10,000 added)
Valuation $12.26 (Was $13.10, $10.92, $13.92, $12.81, $15.28, $14.04, $10.39)
Closed down $.05 at $3.39
In addition to refinancing their debt out to 2019-2020, MITL announced earnings in February. Revenues were down to $142 million from $150.5 million last year and Non-GAAP net income was $.23 a share versus $.21 a share last year. Our valuation fell a bit to $12.26 a share-still more that 3X the current price.
UP 12%, BUY

Buy Price-$4.58 (Was $5.08 before $.50 special dividend)
Valuation $16.26 (was $16.20, $15.37, $13.53, $15.85, $14.13, $11.38, $14.04, $18.54, $15.99)
Closed down $.24 at $7.75 (including dividends)
Pays $.24 annual dividend.
We have collected $.24 in dividends so far (excluding the $.50 special dividend).
Earnings announced in April. Pretty good we think. Revenues were $16.9 million, up from $16.3 million last year. They had a profit of $937,000 ($.11 per share) versus $337,000 last year. Net cash was $2.52 a share and our valuation rose to $16.26 per share.
Singer/Miller duo own 12.1% of CCUR.
UP 69%, HOLD

Buy Price-$3.18 (Was $3.04 before adding another $10,000)
Valuation-$6.58 (was $6.99, $6.97, $7.46, $6.31, $7.01, $6.72, $6.45, $5.67, $7.36, $7.23, $7.31, $6.82, $6.81)
Closed at $3.29 up $.08
Earnings announced in April. Not bad. Revenues were $68.2 million down 7% from last year. They lost $2.2 million versus a profit of $2.4 million last year. On a Non-GAAP basis they made $3.3 million versus making $3.8 million last year. Net cash was $189 million or $2.03 per share.
Guidance for next quarter is revenue of $73-$77 million of revenue and Non-GAAP net income of $4-$7 million. Our valuation fell to $6.58 per share, double the current price.
New CEO announced in May. The market seemed to like it.
Vanguard filed a Form 13G in March disclosing a 5.21% stake, Wellington disclosed a 6.3% stake and Soros upped his holdings to 9.85%..
Starboard owns 8.8% and Blackrock owns 5.4% of EXTR.
UP 4%, BUY

Buy Price- $1.45 per ADS (Was $1.68 before double up)
Valuation $4.14-(Was $3.65, $3.41, $5.52, $5.00, $5.39, $5.33, $5.61, $5.73, $4.38, $4.44, $5.15)
Closed at $1.26 up $.01
Gravity finally filed their Form F in April for the year of 2012. Cash was just under $51 million or $1.83 per share. Revenues for the year were about $54 million. They reported a loss of $11.5 million which included about $13 million of impairment write downs. With all this, our valuation increased to $4.14 per share. We had calculated it as $3.86 per share based on their previous filing
Now trading at way below cash value again.
Down 13%, BUY

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

Buy price $1.61 (Was $1.78 before another $10,000 added, was $2.06 before double up),
Valuation $6.14 (was $5.97, $6.21, $6.13, $5.82, $5.81, $5.72, $5.65, $5.39, $4.86, $5.60, $5.73, $5.54, $5.74, $5.96, $4.72, $5.19, $5.66, $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $2.90 up $.25
ARI announced in May that 50 Below revenues are up 25% YOY due to renewed dealer enthusiasm. Sounds good!
Wynnefield Partners filed a 13D/A in April disclosing purchasing another 50,000 shares at $2.50, and now have a 9.95% stake (1.2 million shares) in ARI.
We are almost up to 50% of our valuation!
Earnings announced in March. We saw transitional results as a result of integrating 2 acquisitions including 50 Below which closed November 28, 2012. Revenues were up 36% to $7.5 million but expenses were up 39% excluding $600,000 of acquisition related expenses. As a result pre-tax loss was $206,000 versus income of $122,000. How much of this loss was due to additional integration expenses was not disclosed.
At the same time ARI announced a private placement of stock for $4.8 million at $1.50 a share. They will use this to pay down the 14% debt they took on to buy 50 Below. With all this and only a partial quarter of 50 Below sales, we estimate the current valuation at $6.14 a share. We don’t expect much in the way of earnings over the next 2 quarters as more integration costs will continue for a while. So while this acquisition may be a game changer, we are only in the 3^rd inning.
UP 80%, HOLD, Still a Huge valuation gap here.

Buy price $.27 ask,
Valuation $1.14 (Was $1.17, $1.34, $1.34, $1.37, $1.36, $1.23,  $.91, $1.21, $.71, $.83, $.88 $.96, $.93, $.75, $.85, $1.57, $1.40, $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price $.34 closed at $.30
Well the stock is continuing to trade above the take-private offer price. We have held this for 7 years now so what’s a few more months to see what happens.
Birbeck and Fairford Holdings made an offer to buy CTIG in March for $.29 a share. The company formed a special committee to evaluate the offer. Hopefully they will find somebody else who will pay fair value—or at least close to it.
Earning announced in April. Revenue fell again from last year by about 10% to $4 million, and they made a tiny profit of about $50,000. Net cash fell to $.08 per share and our valuation fell to $1.14.
UP 26%. HOLD

We continued to lag the averages last week-up 1.4%. We are now up 12% for the year. We are a bit discouraged that we are 4 months into the year and had no take-overs, and we have lost significant gains in TSYS, BLIN and AVNW. All while the market averages have already had a good YEAR.

We sold AGYS last week for a 41% gain in a little over 3 months.

Check this list:

Since our beginning, we have closed out the following positions:
2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW  +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR  +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)
2008-PDLI +9% (company split, and special dividend)
2008-BDAY -39% (long overdue takeover offer-or “take-under”)
2008-DTLK +40% (third trip on this one)
2008-ILOG +26% (Buy-out offer from IBM)
2008-PARL +56%
2009-MBRK +67%
2009-SNWL +14%
2009-CYNO +25%
2009-DTLK +33% (fourth trip on this)
2009-NED +46%
2009-CUTR +13%
2009-HSTM +67% (continued good earnings)
2009-RNWK +36%
2009-OPK +116%
2009-CLZR -32% (a loser even on a buy-out)
2009-DTLK +28% (our 5th profitable trip on this one)
2010-HPOL +110%
2010-DIVX +25%
2010-CHRD +37% Buyout (2 weeks after we recommended it)
2010-HPOL +30%
2010-MGIC +82%
2010-GSL  +78%
2010-CCEL +49%
2010-HPOL +27% (third trip)
2010-CAW EVEN (excluding 2.5 years of dividends)
2011-DWCH +116%
2011-IPAS +15%
2011-PRM +56% Buyout (1 week after we recommended it)
2011-RST +12%
2011-NINE -10%
2012-BVSN +30%
2012-TISA +137%
2012-PTIX -44%
2012-MTSL +157%
2012-LTUS -98% No more Chinese stocks for us
2012-AEZS -63%  a bad speculation.
2012-RIMG -46% (including dividends)
2012-HPOL +34%
2012-MEDW +133% (Buyout 1 week AFTER we sold this)
2012-SPNC +118%
2012-RWWI +1%
2012-MOTR -29% (lost biggest customer contract)
2013-INUV -83% Held this since 2007. Failed business model.
2013-ASTX-+40%
2013-MGCD-+79%
2013-LXK +2
2013-AGYS +41%

Buy Price $1.50
Valuation $6.50
Closed down $.01 at $1.82
UP 22%, BUY

Buy Price $8.40
Valuation (Was $16.10)
SOLD at $11.80
UP 41%

Buy Price $14.20
NEW Valuation $35.57 (Was $34.59, $32.20)
Closed up $1.22 at $15.16
Earnings announced last week. Pretty good, but tempered by weak guidance. Sales were up 11% (including the LML acquisition) and they made $.33 a share on a Non-GAAP basis, up 10% YOY. Guidance for next quarter was revenue of $89-$92 million and Non-GAAP EPS of $.01 to $.04 per share. Full year guidance is $.55-$.65 a share in Non-GAAP earnings. Net cash rose to $9.49 per share. Our valuation rose to $35.57 but will likely fall to around $30 a share based on the guidance—still double the current market price.
UP 7%, BUY

Buy Price $1.20
Valuation $4.86 (Was $4.00)
Closed down $.02 at $1.06
Earnings announced in March. Not bad. Sales fell from $11.1 last year to $10.4 million, but they were up slightly from last quarters $10.35 million. Gross margins were up to over 70% and net debt decreased to $13.8 million from $14.5 million last quarter. Non-GAAP earnings were $449,000 versus $252,000 last quarter. Our valuation spiked to $4.86 per share up 20% from last quarter.
Looks like BlueLine Partners (a “strategic opportunities fund”) have shaken up Daegis management in January with the ouster or the CEO and CFO. The interim CEO and Chairman of the Board is a BlueLine founder. Its feeling like they are not happy with the current stock price for sure.
Down 12%, BUY

Buy Price $1.24
Valuation $2.35 (Was $2.56, $2.24)
Closed up $.09 at $1.25
Next earnings due out Wednesday, May 15^th after the market close.
Earnings announced in February. So-so. Revenues fell from $6.5 million to $6.2 million. iAPPS revenue rose 17% ($4.2 million) and recurring revenues were just under 20% of total sales. They lost $.02 on a Non-GAAP basis versus a profit of $.01 last year. Guidance is for revenues of $27-$28 million for the year. iAPPs revenue is expected to increase 27% to $21 million. They expect to be adjusted EBITDA positive in 2013.
Our valuation fell a bit to $2.35 per share. We see our valuation soaring to $3.25 if they can make their numbers this year.
Down 3%, BUY

Buy Price- $1.37
NEW Valuation $4.89 (Was $6.02, $6.72, $5.49)
Closed up $.08 at $2.09
Earnings announced last week. So-So. Revenues fell 5% to $95 million and they made $2.1 million of adjusted net income versus $3.2 million last year. Guidance was limited to the following quote:  “Our first quarter results were consistent with our expectations, as we worked to set the stage for another strong second half,”. We’ll see. Our valuation fell substantially from $6.02 to $4.89 on lower sales and higher net debt compared to last year.
Carlo Cannell, an activist investor filled a 13D in September 2012 pointing out how undervalued TSYS is and urged them to put themselves on the block. He points to a valuation done on the company as of August 29th of $7.40 to $11.81 a share. Even the low point here is higher than our valuation.
UP 53%, HOLD

Aviat Networks Inc. (NASDAQ-AVNW)-Recommended 2/27/2012)
Buy Price- $2.62
NEW Valuation $9.31 (Was $10.28. $9.03, $9.37, $8.85, $8.31)
Closed down $.54 at $2.57
Earnings announced last week. Decent we think, but we were the only one. Revenues were $118 million compared to $112 million last year, gross margins were 29.1% and they made $1.2 million on a Non-GAAP basis versus $2.2 million last year. The current quarter included a $1.1 million inventory write-off for a bankrupt customer. Net cash per share was $1.38.
Their book-to-bill ratio was less than 1 this past quarter leading them to give next quarter guidance of $105 to $115 million in revenues and Non-GAAP income of $0 to $.03 per share. Not setting the world on fire, but doing ok. Our valuation fell from the huge prior quarter to $9.31—a $1 a share more than when we recommended AVNW.
Penn Capital Mgmt. filed a 13G in late February disclosing a 6.05% stake.
Dimension Fund filed a Form 13G in February disclosing a 5.3% stake, Vanguard disclosed a 5.67% stake and Blue Mountain has been buying more and is now up to a 5.90% stake.
Down 2%, BUY

Buy Price $7.17 ( Was $7.94 before another $10,000 added at $6.53)
NEW Valuation $28.24 (Was $28.33, $29.04, $29.59, $29.58, $29.21)
Closed up $.66 at $89.03
Earnings announced last week. OK.  Revenue fell from $124 million to $120 million, adjusted EBITDA fell from $23 million to $21 million and they lost $600,000 compared to a $1,200,000 loss last year. Our valuation fell a few pennies to $28.24.
Guidance for 2013 was unchanged- revenues of $475-$485 million, adjusted EBITDA of $75-$82 million and free cash flow of $15-$20 million.
Penn Capital Mgmt. filed a 13G in late February disclosing a 5.55% stake.
$80 million of EBITDA, $.68 a share in net cash and a $230 market cap. Cheap.
UP 26%, BUY

Valuation $27.15 (Was $31.80, $34.60, $28.60, $41.20, $43.20 (after $9.50, $6.00 and $1.40 special dividends), $52.40, $55.80)
Buy Price October 7, 2011- $8.50 ($25.40 before special dividends)
Closed at $9.27 down $.48
Earnings announced in April. Not bad, but not great. Sales were $46 million up slightly from $44.7 last year. They lost $3.1 million pre-tax which included $1.6 million of litigation costs and $400,000 of share based compensation (vapor cost). Net cash was $4.59 per share and our valuation was $27.15.
Lloyd Miller disclosed a 6.9% stake in February.
The 20 for 1 stock split happened in December, so all the share information has been adjusted.
Raging Capital bought another 1.6 million shares in the first week of December at $10.80 bringing their holdings to 20.1% of the company.
Still trading at less than ½ our valuation.
UP 8%  BUY

Buy Price-$8.49
Valuation $8.24 (Was $13.05, $10.67, $8.41 $12.10, $13.40, $16.02)
Closed down $.03 at $4.69
Raging Capital filed a 13D in April reporting a 5.6% stake in SIGM and calling for faster action to turn the company around or sell it. Maybe there is hope here.
Earnings announced in March. They stunk up the place. While sales were up to $44 million from $36 million last year, they lost $36 million or $1.18 per share. Cash fell again to $2.51 per share (it was $5.40 when we recommended SIGM) and our valuation plunged to its lowest level ever. But wait, there’s more…..they are projecting next quarter to be about breakeven on $49-$52 million in sales. The market looked past this past quarter and the stock rose. We will be watching this one very closely and may sell at any time.
Dimension Fund disclosed a 6.48% stake in SIGM  in February and Vanguard disclosed a 5.61% stake via 13G filings and MAK Capital One sold their 6.6% stake.
Down 45%, HOLD

Buy Price- $3.04( Was $3.36 before $10,000 added, $3.95 before $10,000 added)
Valuation $12.26 (Was $13.10, $10.92, $13.92, $12.81, $15.28, $14.04, $10.39)
Closed down $.20 at $3.44
In addition to refinancing their debt out to 2019-2020, MITL announced earnings in February. Revenues were down to $142 million from $150.5 million last year and Non-GAAP net income was $.23 a share versus $.21 a share last year. Our valuation fell a bit to $12.26 a share-still more that 3X the current price.
UP 13%, BUY

Buy Price-$4.58 (Was $5.08 before $.50 special dividend)
NEW Valuation $16.26 (was $16.20, $15.37, $13.53, $15.85, $14.13, $11.38, $14.04, $18.54, $15.99)
Closed up $.95 at $7.99 (including dividends)
Pays $.24 annual dividend.
We have collected $.24 in dividends so far (excluding the $.50 special dividend).
Earnings announced last week. Pretty good we think. Revenues were $16.9 million, up from $16.3 million last year. They had a profit of $937,000 ($.11 per share) versus $337,000 last year. Net cash was $2.52 a share and our valuation rose to $16.26 per share.
Singer/Miller duo own 12.1% of CCUR.
UP 75%, HOLD

Buy Price-$3.18 (Was $3.04 before adding another $10,000)
NEW Valuation-$6.58 (was $6.99, $6.97, $7.46, $6.31, $7.01, $6.72, $6.45, $5.67, $7.36, $7.23, $7.31, $6.82, $6.81)
Closed at $3.21 down $.06
Earnings announced last week. Not bad. Revenues were $68.2 million down 7% from last year. They lost $2.2 million versus a profit of $2.4 million last year. On a Non-GAAP basis they made $3.3 million versus making $3.8 million last year. Net cash was $189 million or $2.03 per share.
Guidance for next quarter is revenue of $73-$77 million of revenue and Non-GAAP net income of $4-$7 million. Our valuation fell to $6.58 per share, double the current price.
New CEO announced last week. The market seemed to like it.
Vanguard filed a Form 13G in March disclosing a 5.21% stake, Wellington disclosed a 6.3% stake and Soros upped his holdings to 9.85%..
Starboard owns 8.8% and Blackrock owns 5.4% of EXTR.
UP 1%, BUY

Buy Price- $1.45 per ADS (Was $1.68 before double up)
Valuation $4.14-(Was $3.65, $3.41, $5.52, $5.00, $5.39, $5.33, $5.61, $5.73, $4.38, $4.44, $5.15)
Closed at $1.25 up $.02
Gravity finally filed their Form F last week for the year of 2012. Cash was just under $51 million or $1.83 per share. Revenues for the year were about $54 million. They reported a loss of $11.5 million which included about $13 million of impairment write downs. With all this, our valuation increased to $4.14 per share. We had calculated it as $3.86 per share based on their previous filing
Now trading at way below cash value again.
Down 14%, BUY

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

Buy price $1.61 (Was $1.78 before another $10,000 added, was $2.06 before double up),
Valuation $6.14 (was $5.97, $6.21, $6.13, $5.82, $5.81, $5.72, $5.65, $5.39, $4.86, $5.60, $5.73, $5.54, $5.74, $5.96, $4.72, $5.19, $5.66, $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $2.75 up $.31
ARI announced last week that 50 Below revenues are up 25% YOY due to renewed dealer enthusiasm. Sounds good!
Wynnefield Partners filed a 13D/A in April disclosing purchasing another 50,000 shares at $2.50, and now have a 9.95% stake (1.2 million shares) in ARI.
We are almost up to 50% of our valuation!
Earnings announced in March. We saw transitional results as a result of integrating 2 acquisitions including 50 Below which closed November 28, 2012. Revenues were up 36% to $7.5 million but expenses were up 39% excluding $600,000 of acquisition related expenses. As a result pre-tax loss was $206,000 versus income of $122,000. How much of this loss was due to additional integration expenses was not disclosed.
At the same time ARI announced a private placement of stock for $4.8 million at $1.50 a share. They will use this to pay down the 14% debt they took on to buy 50 Below. With all this and only a partial quarter of 50 Below sales, we estimate the current valuation at $6.14 a share. We don’t expect much in the way of earnings over the next 2 quarters as more integration costs will continue for a while. So while this acquisition may be a game changer, we are only in the 3^rd inning.
UP 71%, HOLD, Still a Huge valuation gap here.

Buy price $.27 ask,
Valuation $1.14 (Was $1.17, $1.34, $1.34, $1.37, $1.36, $1.23,  $.91, $1.21, $.71, $.83, $.88 $.96, $.93, $.75, $.85, $1.57, $1.40, $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price $.35 closed at $.35
Well the stock is continuing to trade  above the take-private offer price. We have held this for 7 years now so what’s a few more months to see what happens.
Birbeck and Fairford Holdings made an offer to buy CTIG in March for $.29 a share. The company formed a special committee to evaluate the offer. Hopefully they will find somebody else who will pay fair value—or at least close to it.
Earning announced in April. Revenue fell again from last year by about 10% to $4 million, and they made a tiny profit of about $50,000. Net cash fell to $.08 per share and our valuation fell to $1.14.
UP 29%. HOLD

While we have been selling too early lately (ASTX and LXK), we never lose taking a profit.

Some of our stocks are just stupid cheap—compared to their net cash on hand per share divided by their stock price.
Check this list:

2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW  +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR  +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)
2008-PDLI +9% (company split, and special dividend)
2008-BDAY -39% (long overdue takeover offer-or “take-under”)
2008-DTLK +40% (third trip on this one)
2008-ILOG +26% (Buy-out offer from IBM)
2008-PARL +56%
2009-MBRK +67%
2009-SNWL +14%
2009-CYNO +25%
2009-DTLK +33% (fourth trip on this)
2009-NED +46%
2009-CUTR +13%
2009-HSTM +67% (continued good earnings)
2009-RNWK +36%
2009-OPK +116%
2009-CLZR -32% (a loser even on a buy-out)
2009-DTLK +28% (our 5th profitable trip on this one)
2010-HPOL +110%
2010-DIVX +25%
2010-CHRD +37% Buyout (2 weeks after we recommended it)
2010-HPOL +30%
2010-MGIC +82%
2010-GSL  +78%
2010-CCEL +49%
2010-HPOL +27% (third trip)
2010-CAW EVEN (excluding 2.5 years of dividends)
2011-DWCH +116%
2011-IPAS +15%
2011-PRM +56% Buyout (1 week after we recommended it)
2011-RST +12%
2011-NINE -10%
2012-BVSN +30%
2012-TISA +137%
2012-PTIX -44%
2012-MTSL +157%
2012-LTUS -98% No more Chinese stocks for us
2012-AEZS -63%  a bad speculation.
2012-RIMG -46% (including dividends)
2012-HPOL +34%
2012-MEDW +133% (Buyout 1 week AFTER we sold this)
2012-SPNC +118%
2012-RWWI +1%
2012-MOTR -29% (lost biggest customer contract)
2013-INUV -83% Held this since 2007. Failed business model.
2013-ASTX-+40%
2013-MGCD-+79%
2013-LXK +2%

Buy Price $1.50
Valuation $6.50
Closed up $.08 at $1.83
UP 22%, BUY

Buy Price $8.40
Valuation (Was $16.10)
Closed up $.86 at $11.51
Earnings announced in January. Pretty good we think. Revenues were up 30% to $67 million and they made $1.7 million on Non-GAAP income, or $.08 per share versus a $1.4 million ($.06) loss last year. Gross margins dropped from 39% to $35% and net cash rose to $3.65 per share. Overall our valuation rose only slightly to $16.23 as the margin drop offset almost everything else. They also raised their 2013 guidance to $230-$232 million in sales and $.24-$.26 of Non-GAAP net income. This means Q4 guidance is sales of about $57 million and Non-GAAP net income of $.07-$.09 per share.
UP 37%, HOLD

Buy Price $14.20
Valuation $34.59 (Was $32.20)
Closed up $.80 at $13.94
Next earnings due out Thursday, May 2^nd after the market close.
Earnings announced in February. Revenues were $101 million, above guidance but below last year $112 million. Non-GAAP earnings were $.31 per share compared to $.45 last year. Next quarters guidance is revenues on $101-$104 million and Non-GAAP earnings of $.18-$.22 per share. The market didn’t like the earnings too much but our valuation went up to $37.32—but that is before you take out the $100 million in cash they paid for LML in January. Adjusting for this, and Q1 guidance our valuation still rose to $34.59 and net cash of $7.83.
Down 2%, BUY

Daegis Inc. (NASDAQ-DAEG)-Recommended 11/30/2012)
Buy Price $1.20
Valuation $4.86 (Was $4.00)
Closed down $.19 at $1.08
Earnings announced in March. Not bad. Sales fell from $11.1 last year to $10.4 million, but they were up slightly from last quarters $10.35 million. Gross margins were up to over 70% and net debt decreased to $13.8 million from $14.5 million last quarter. Non-GAAP earnings were $449,000 versus $252,000 last quarter. Our valuation spiked to $4.86 per share up 20% from last quarter.
Looks like BlueLine Partners (a “strategic opportunities fund”) have shaken up Daegis management in January with the ouster or the CEO and CFO. The interim CEO and Chairman of the Board is a BlueLine founder. Its feeling like they are not happy with the current stock price for sure.
Down 10%, BUY

Buy Price $1.24
Valuation $2.35 (Was $2.56, $2.24)
Closed up $.09 at $1.25
Earnings announced in February. So-so. Revenues fell from $6.5 million to $6.2 million. iAPPS revenue rose 17% ($4.2 million) and recurring revenues were just under 20% of total sales. They lost $.02 on a Non-GAAP basis versus a profit of $.01 last year. Guidance is for revenues of $27-$28 million for the year. iAPPs revenue is expected to increase 27% to $21 million. They expect to be adjusted EBITDA positive in 2013.
Our valuation fell a bit to $2.35 per share. We see our valuation soaring to $3.25 if they can make their numbers this year.
UP 1%, BUY

Buy Price- $1.37
Valuation $6.02 (Was $6.72, $5.49)
Closed up $.04 at $2.01
Next earnings due out Thursday, May 2^nd after the market close.
TSYS announced another patent deal in February. This time it is with Acacia Research a patent licensing group. They termed the deal an “alliance” so we think it is more of a brokering agreement where Acacia looks for licensees and they share the revenues.
Earnings announced in January. Revenues rose 9.7% to $132.7 million and they made $.20 per share in Non-GAAP income. However, these results included the previously announced patent deal, which they still did not give any financial details on. We are thinking it could be as much as $8 million of the sales and profit for the quarter. Even adjusting for this our valuation dropped to $6.02. We still like TSYS as they say they will continue to monetize their patents and their results are still better year-over-year.
TSYS announced in November it was one of 20 companies selected to participate in a 5 year, $10 billion contract with the U.S. government.
Carlo Cannell, an activist investor filled a 13D in September pointing out how undervalued TSYS is and urged them to put themselves on the block. He points to a valuation done on the company as of August 29th of $7.40 to $11.81 a share. Even the low point here is higher than our valuation.
UP 47%, HOLD

Buy Price- $2.62
Valuation $10.28 (Was $9.03, $9.37, $8.85, $8.31)
Closed up $.31 at $3.11
Next earnings due out Wednesday, May 1^st, after the market close.
Penn Capital Mgmt. filed a 13G in late February disclosing a 6.05% stake.
Dimension Fund filed a Form 13G in February disclosing a 5.3% stake, Vanguard disclosed a 5.67% stake and Blue Mountain has been buying more and is now up to a 5.90% stake.
AVNW blew away their revised upwards guidance and came in with revenues of $129 million and Non-GAAP income of about $4.5 million. Gross margins were steady at 30% and our valuation jumped to $10.28 per share. Net cash was $1.40 per share.
Next quarter they are projecting $115-$121 million in sales and that they will again be profitable on a non-GAAP basis ($.02 to $.06 per share).
UP 11%, BUY

Buy Price $7.17 ( Was $7.94 before another $10,000 added at $6.53)
Valuation $28.33 (Was $29.04, $29.59, $29.58, $29.21)
Closed up $.18 at $8.37
Next earnings due out Wednesday, May 1^st, after the market close.
Earnings announced in February. Not bad, but didn’t set the world on fire. Revenues were down from last year-$118.9 versus $123.3 million. They lost $5.8 million versus $5 million last year on a GAAP basis. Adjusted EBITDA also fell to $18.8 million from $22.6 million. Nevertheless they did generate $4.3 million of free cash flow versus $4.2 last year. Guidance for 2013 was revenues of $475-$485 million, adjusted EBITDA of $75-$82 million and free cash flow of $15-$20 million. Our valuation fell to $28.33 and based on 2013 guidance should stay in about the same range.
Penn Capital Mgmt. filed a 13G in late February disclosing a 5.55% stake.
$80 million of EBITDA, $.68 a share in net cash and a $230 market cap. Cheap.
UP 17%, BUY

Valuation $27.15 (Was $31.80, $34.60, $28.60, $41.20, $43.20 (after $9.50, $6.00 and $1.40 special dividends), $52.40, $55.80)
Buy Price October 7, 2011- $8.50 ($25.40 before special dividends)
Closed at $9.75 down $.11
Earnings announced in April. Not bad, but not great. Sales were $46 million up slightly from $44.7 last year. They lost $3.1 million pre-tax which included $1.6 million of litigation costs and $400,000 of share based compensation (vapor cost). Net cash was $4.59 per share and our valuation was $27.15.
Lloyd Miller disclosed a 6.9% stake in February.
The 20 for 1 stock split happened in December, so all the share information has been adjusted.
Raging Capital bought another 1.6 million shares in the first week of December at $10.80 bringing their holdings to 20.1% of the company.
Still trading at less than ½ our valuation.
UP 13%  BUY

Buy Price-$8.49
Valuation $8.24 (Was $13.05, $10.67, $8.41 $12.10, $13.40, $16.02)
Closed up $.11 at $4.72
Raging Capital filed a 13D in April reporting a 5.6% stake in SIGM and calling for faster action to turn the company around or sell it. Maybe there is hope here.
Earnings announced in March. They stunk up the place. While sales were up to $44 million from $36 million last year, they lost $36 million or $1.18 per share. Cash fell again to $2.51 per share (it was $5.40 when we recommended SIGM) and our valuation plunged to its lowest level ever. But wait, there’s more…..they are projecting next quarter to be about breakeven on $49-$52 million in sales. The market looked past this past quarter and the stock rose. We will be watching this one very closely and may sell at any time.
Dimension Fund disclosed a 6.48% stake in SIGM  in February and Vanguard disclosed a 5.61% stake via 13G filings and MAK Capital One sold their 6.6% stake.
Down 44%, HOLD

Buy Price- $3.04( Was $3.36 before $10,000 added, $3.95 before $10,000 added)
Valuation $12.26 (Was $13.10, $10.92, $13.92, $12.81, $15.28, $14.04, $10.39)
Closed down $.05 at $3.64
In addition to refinancing their debt out to 2019-2020, MITL announced earnings in February. Revenues were down to $142 million from $150.5 million last year and Non-GAAP net income was $.23 a share versus $.21 a share last year. Our valuation fell a bit to $12.26 a share-still more that 3X the current price.
UP 20%, BUY

Buy Price-$4.58 (Was $5.08 before $.50 special dividend)
Valuation $16.20 (was $15.37, $13.53, $15.85, $14.13, $11.38, $14.04, $18.54, $15.99)
Closed up $.14 at $6.80
Pays $.24 annual dividend.
We have collected $.24 in dividends so far (excluding the $.50 special dividend).
Next earnings due out Tuesday, April 30^th after the market close.
Earnings announced in January. Not bad. Revenues were up a tad to $16.6 million compared to $16.4 million last year. They made $.08 per share versus a loss of $.06 last year. Cash per share dropped to $2.78 per share as they paid $.56 a share in dividends. Our valuation rose to $16.20 a share.
Singer/Miller duo own 12.1% of CCUR.
UP 49%, HOLD

Buy Price-$3.18 (Was $3.04 before adding another $10,000)
Valuation-$6.99 (was $6.97, $7.46, $6.31, $7.01, $6.72, $6.45, $5.67, $7.36, $7.23, $7.31, $6.82, $6.81)
Closed at $3.27 up $.22
New CEO announced last week. The market seemed to like it.
Next earnings due out Tuesday, April 30^th after the market close.
Vanguard filed a Form 13G in March disclosing a 5.21% stake, Wellington disclosed a 6.3% stake and Soros upped his holdings to 9.85%..
Earnings announced in January. Revenues came in at $75.6 million (the low end of revised downward guidance) down 9% from last year. Non-GAAP income was $2.8 million ($.03 per share) compared to $5.8 million ($.06 per share). Net cash was $2.08 per share. Our valuation increased $.02 to $6.99 per share.
Guidance for next quarter looks much the same as this past quarter.
Starboard owns 8.8% and Blackrock owns 5.4% of EXTR.
UP 3%, BUY

Buy Price- $1.45 per ADS (Was $1.68 before double up)
Valuation $3.86-(Was $3.65, $3.41, $5.52, $5.00, $5.39, $5.33, $5.61, $5.73, $4.38, $4.44, $5.15)
Closed at $1.23 down $.04
The last 6K filing showed cash was just under $50 million or $1.79 per share. Revenues for the year were about $49 million up 9% from 2011. They reported a loss of $13.8 million which included about $10 million of impairment write downs. With all this, our valuation increased to $3.86 per share.
Now trading at way below cash value again.
Down 15%, BUY

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

Buy price $1.61 (Was $1.78 before another $10,000 added, was $2.06 before double up),
Valuation $6.14 (was $5.97, $6.21, $6.13, $5.82, $5.81, $5.72, $5.65, $5.39, $4.86, $5.60, $5.73, $5.54, $5.74, $5.96, $4.72, $5.19, $5.66, $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $2.44 down $.06
Wynnefield Partners filed a 13D/A in April disclosing purchasing another 50,000 shares at $2.50, and now have a 9.95% stake (1.2 million shares) in ARI.
We are almost up to 50% of our valuation!
Earnings announced in March. We saw transitional results as a result of integrating 2 acquisitions including 50 Below which closed November 28, 2012. Revenues were up 36% to $7.5 million but expenses were up 39% excluding $600,000 of acquisition related expenses. As a result pre-tax loss was $206,000 versus income of $122,000. How much of this loss was due to additional integration expenses was not disclosed.
At the same time ARI announced a private placement of stock for $4.8 million at $1.50 a share. They will use this to pay down the 14% debt they took on to buy 50 Below. With all this and only a partial quarter of 50 Below sales, we estimate the current valuation at $6.14 a share. We don’t expect much in the way of earnings over the next 2 quarters as more integration costs will continue for a while. So while this acquisition may be a game changer, we are only in the 3^rd inning.
UP 51%, HOLD, Still a Huge valuation gap here.

Buy price $.27 ask,
Valuation $1.14 (Was $1.17, $1.34, $1.34, $1.37, $1.36, $1.23,  $.91, $1.21, $.71, $.83, $.88 $.96, $.93, $.75, $.85, $1.57, $1.40, $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price $.35 closed at $.365
Well the stock is trading—with good volume (for CTIG) above the take-private offer price. We have held this for 7 years now so what’s a few more months to see what happens.
Birbeck and Fairford Holdings made an offer to buy CTIG in March for $.29 a share. The company formed a special committee to evaluate the offer. Hopefully they will find somebody else who will pay fair value—or at least close to it.
Earning announced in April. Revenue fell again from last year by about 10% to $4 million, and they made a tiny profit of about $50,000. Net cash fell to $.08 per share and our valuation fell to $1.14.
UP 30%. HOLD

Check this list:

Last week we went 5 stocks up, 10 down and 1 even. Since inception we are now 64 stocks up and 16 down for an 80% winning percentage (80% is our target win %).
Since our beginning, we have closed out the following positions:
2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW  +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR  +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)
2008-PDLI +9% (company split, and special dividend)
2008-BDAY -39% (long overdue takeover offer-or “take-under”)
2008-DTLK +40% (third trip on this one)
2008-ILOG +26% (Buy-out offer from IBM)
2008-PARL +56%
2009-MBRK +67%
2009-SNWL +14%
2009-CYNO +25%
2009-DTLK +33% (fourth trip on this)
2009-NED +46%
2009-CUTR +13%
2009-HSTM +67% (continued good earnings)
2009-RNWK +36%
2009-OPK +116%
2009-CLZR -32% (a loser even on a buy-out)
2009-DTLK +28% (our 5th profitable trip on this one)
2010-HPOL +110%
2010-DIVX +25%
2010-CHRD +37% Buyout (2 weeks after we recommended it)
2010-HPOL +30%
2010-MGIC +82%
2010-GSL  +78%
2010-CCEL +49%
2010-HPOL +27% (third trip)
2010-CAW EVEN (excluding 2.5 years of dividends)
2011-DWCH +116%
2011-IPAS +15%
2011-PRM +56% Buyout (1 week after we recommended it)
2011-RST +12%
2011-NINE -10%
2012-BVSN +30%
2012-TISA +137%
2012-PTIX -44%
2012-MTSL +157%
2012-LTUS -98% No more Chinese stocks for us
2012-AEZS -63%  a bad speculation.
2012-RIMG -46% (including dividends)
2012-HPOL +34%
2012-MEDW +133% (Buyout 1 week AFTER we sold this)
2012-SPNC +118%
2012-RWWI +1%
2012-MOTR -29% (lost biggest customer contract)
2013-INUV -83% Held this since 2007. Failed business model.
2013-ASTX-+40%
2013-MGCD-+79%
2013-LXK +2%

For the 64 stocks that we closed out since 2006 (53 were winners) the average net gain was 30%.

Buy Price $1.50
Valuation $6.50
Closed down $.05 at $1.75
UP 20%, BUY

Buy Price $8.40
Valuation (Was $16.10)
Closed up $.06 at $10.65
Earnings announced in January. Pretty good we think. Revenues were up 30% to $67 million and they made $1.7 million on Non-GAAP income, or $.08 per share versus a $1.4 million ($.06) loss last year. Gross margins dropped from 39% to $35% and net cash rose to $3.65 per share. Overall our valuation rose only slightly to $16.23 as the margin drop offset almost everything else. They also raised their 2013 guidance to $230-$232 million in sales and $.24-$.26 of Non-GAAP net income. This means Q4 guidance is sales of about $57 million and Non-GAAP net income of $.07-$.09 per share.
UP 27%, HOLD

Buy Price $14.20
Valuation $34.59 (Was $32.20)
Closed down $.38 at $13.14
Next earnings due out Thursday, May 2^nd after the market close.
Earnings announced in February. Revenues were $101 million, above guidance but below last year $112 million. Non-GAAP earnings were $.31 per share compared to $.45 last year. Next quarters guidance is revenues on $101-$104 million and Non-GAAP earnings of $.18-$.22 per share. The market didn’t like the earnings too much but our valuation went up to $37.32—but that is before you take out the $100 million in cash they paid for LML in January. Adjusting for this, and Q1 guidance our valuation still rose to $34.59 and net cash of $7.83.
Down 8%, BUY

Buy Price $1.20
Valuation $4.86 (Was $4.00)
Closed up $.02 at $1.27
Earnings announced in March. Not bad. Sales fell from $11.1 last year to $10.4 million, but they were up slightly from last quarters $10.35 million. Gross margins were up to over 70% and net debt decreased to $13.8 million from $14.5 million last quarter. Non-GAAP earnings were $449,000 versus $252,000 last quarter. Our valuation spiked to $4.86 per share up 20% from last quarter.
Looks like BlueLine Partners (a “strategic opportunities fund”) have shaken up Daegis management in January with the ouster or the CEO and CFO. The interim CEO and Chairman of the Board is a BlueLine founder. Its feeling like they are not happy with the current stock price for sure.
UP 6%, BUY

Buy Price $1.24
Valuation $2.35 (Was $2.56, $2.24)
Closed down $.02 at $1.16
Earnings announced in February. So-so. Revenues fell from $6.5 million to $6.2 million. iAPPS revenue rose 17% ($4.2 million) and recurring revenues were just under 20% of total sales. They lost $.02 on a Non-GAAP basis versus a profit of $.01 last year. Guidance is for revenues of $27-$28 million for the year. iAPPs revenue is expected to increase 27% to $21 million. They expect to be adjusted EBITDA positive in 2013.
Our valuation fell a bit to $2.35 per share. We see our valuation soaring to $3.25 if they can make their numbers this year.
Down 7%, BUY

Buy Price- $1.37
Valuation $6.02 (Was $6.72, $5.49)
Closed up $.01 at $1.97
Next earnings due out Thursday, May 2^nd after the market close.
TSYS announced another patent deal in February. This time it is with Acacia Research a patent licensing group. They termed the deal an “alliance” so we think it is more of a brokering agreement where Acacia looks for licensees and they share the revenues.
Earnings announced in January. Revenues rose 9.7% to $132.7 million and they made $.20 per share in Non-GAAP income. However, these results included the previously announced patent deal, which they still did not give any financial details on. We are thinking it could be as much as $8 million of the sales and profit for the quarter. Even adjusting for this our valuation dropped to $6.02. We still like TSYS as they say they will continue to monetize their patents and their results are still better year-over-year.
TSYS announced in November it was one of 20 companies selected to participate in a 5 year, $10 billion contract with the U.S. government.
Carlo Cannell, an activist investor filled a 13D in September pointing out how undervalued TSYS is and urged them to put themselves on the block. He points to a valuation done on the company as of August 29th of $7.40 to $11.81 a share. Even the low point here is higher than our valuation.
UP 44%, HOLD

Buy Price- $2.62
Valuation $10.28 (Was $9.03, $9.37, $8.85, $8.31)
Closed down $.09 at $2.80
Next earnings due out Wednesday, May 1^st, after the market close.
Penn Capital Mgmt. filed a 13G in late February disclosing a 6.05% stake.
Dimension Fund filed a Form 13G in February disclosing a 5.3% stake, Vanguard disclosed a 5.67% stake and Blue Mountain has been buying more and is now up to a 5.90% stake.
AVNW blew away their revised upwards guidance and came in with revenues of $129 million and Non-GAAP income of about $4.5 million. Gross margins were steady at 30% and our valuation jumped to $10.28 per share. Net cash was $1.40 per share.
Next quarter they are projecting $115-$121 million in sales and that they will again be profitable on a non-GAAP basis ($.02 to $.06 per share).
UP 7%, BUY

Buy Price $7.17 ( Was $7.94 before another $10,000 added at $6.53)
Valuation $28.33 (Was $29.04, $29.59, $29.58, $29.21)
Closed down $.07 at $8.19
Earnings announced in February. Not bad, but didn’t set the world on fire. Revenues were down from last year-$118.9 versus $123.3 million. They lost $5.8 million versus $5 million last year on a GAAP basis. Adjusted EBITDA also fell to $18.8 million from $22.6 million. Nevertheless they did generate $4.3 million of free cash flow versus $4.2 last year. Guidance for 2013 was revenues of $475-$485 million, adjusted EBITDA of $75-$82 million and free cash flow of $15-$20 million. Our valuation fell to $28.33 and based on 2013 guidance should stay in about the same range.
Penn Capital Mgmt. filed a 13G in late February disclosing a 5.55% stake.
$80 million of EBITDA, $.68 a share in net cash and a $230 market cap. Cheap.
UP 14%, BUY

Valuation $27.15 (Was $31.80, $34.60, $28.60, $41.20, $43.20 (after $9.50, $6.00 and $1.40 special dividends), $52.40, $55.80)
Buy Price October 7, 2011- $8.50 ($25.40 before special dividends)
Closed at $9.86 down $.49
Earnings announced in April. Not bad, but not great. Sales were $46 million up slightly from $44.7 last year. They lost $3.1 million pre-tax which included $1.6 million of litigation costs and $400,000 of share based compensation (vapor cost). Net cash was $4.59 per share and our valuation was $27.15.
Lloyd Miller disclosed a 6.9% stake in February.
The 20 for 1 stock split happened in December, so all the share information has been adjusted.
Raging Capital bought another 1.6 million shares in the first week of December at $10.80 bringing their holdings to 20.1% of the company.
Still trading at less than ½ our valuation.
UP 15%  BUY

Buy Price-$8.49
Valuation $8.24 (Was $13.05, $10.67, $8.41 $12.10, $13.40, $16.02)
Closed down $.18 at $4.61
Raging Capital filed a 13D in April reporting a 5.6% stake in SIGM and calling for faster action to turn the company around or sell it. Maybe there is hope here.
Earnings announced in March. They stunk up the place. While sales were up to $44 million from $36 million last year, they lost $36 million or $1.18 per share. Cash fell again to $2.51 per share (it was $5.40 when we recommended SIGM) and our valuation plunged to its lowest level ever. But wait, there’s more…..they are projecting next quarter to be about breakeven on $49-$52 million in sales. The market looked past this past quarter and the stock rose. We will be watching this one very closely and may sell at any time.
Dimension Fund disclosed a 6.48% stake in SIGM  in February and Vanguard disclosed a 5.61% stake via 13G filings and MAK Capital One sold their 6.6% stake.
Down 46%, HOLD

Buy Price- $3.04( Was $3.36 before $10,000 added, $3.95 before $10,000 added)
Valuation $12.26 (Was $13.10, $10.92, $13.92, $12.81, $15.28, $14.04, $10.39)
Closed down $.02 at $3.69
In addition to refinancing their debt out to 2019-2020, MITL announced earnings in February. Revenues were down to $142 million from $150.5 million last year and Non-GAAP net income was $.23 a share versus $.21 a share last year. Our valuation fell a bit to $12.26 a share-still more that 3X the current price.
UP 22%, BUY

Buy Price-$4.58 (Was $5.08 before $.50 special dividend)
Valuation $16.20 (was $15.37, $13.53, $15.85, $14.13, $11.38, $14.04, $18.54, $15.99)
Closed up $.33 at $6.66
Pays $.24 annual dividend.
We have collected $.18 in dividends so far (excluding the $.50 special dividend).
Next earnings due out Tuesday, April 30^th after the market close.
Earnings announced in January. Not bad. Revenues were up a tad to $16.6 million compared to $16.4 million last year. They made $.08 per share versus a loss of $.06 last year. Cash per share dropped to $2.78 per share as they paid $.56 a share in dividends. Our valuation rose to $16.20 a share.
Singer/Miller duo own 12.1% of CCUR.
UP 45%, HOLD

Buy Price-$3.18 (Was $3.04 before adding another $10,000)
Valuation-$6.99 (was $6.97, $7.46, $6.31, $7.01, $6.72, $6.45, $5.67, $7.36, $7.23, $7.31, $6.82, $6.81)
Closed at $3.05 down $.09
Vanguard filed a Form 13G in March disclosing a 5.21% stake, Wellington disclosed a 6.3% stake and Soros upped his holdings to 9.85%..
Earnings announced in January. Revenues came in at $75.6 million (the low end of revised downward guidance) down 9% from last year. Non-GAAP income was $2.8 million ($.03 per share) compared to $5.8 million ($.06 per share). Net cash was $2.08 per share. Our valuation increased $.02 to $6.99 per share.
Guidance for next quarter looks much the same as this past quarter.
Starboard owns 8.8% and Blackrock owns 5.4% of EXTR.
Down 4%, BUY

Buy Price- $1.45 per ADS (Was $1.68 before double up)
Valuation $3.86-(Was $3.65, $3.41, $5.52, $5.00, $5.39, $5.33, $5.61, $5.73, $4.38, $4.44, $5.15)
Closed at $1.27 up $.02
The last 6K filing showed cash was just under $50 million or $1.79 per share. Revenues for the year were about $49 million up 9% from 2011. They reported a loss of $13.8 million which included about $10 million of impairment write downs. With all this, our valuation increased to $3.86 per share.
Now trading at way below cash value again.
Down 13%, BUY

Buy price $1.61 (Was $1.78 before another $10,000 added, was $2.06 before double up),
Valuation $6.14 (was $5.97, $6.21, $6.13, $5.82, $5.81, $5.72, $5.65, $5.39, $4.86, $5.60, $5.73, $5.54, $5.74, $5.96, $4.72, $5.19, $5.66, $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $2.50 unchanged
Wynnefield Partners filed a 13D/A last week disclosing purchasing another 50,000 shares at $2.50, and now have a 9.95% stake (1.2 million shares) in ARI.
We are almost up to 50% of our valuation!
Earnings announced in March. We saw transitional results as a result of integrating 2 acquisitions including 50 Below which closed November 28, 2012. Revenues were up 36% to $7.5 million but expenses were up 39% excluding $600,000 of acquisition related expenses. As a result pre-tax loss was $206,000 versus income of $122,000. How much of this loss was due to additional integration expenses was not disclosed.
At the same time ARI announced a private placement of stock for $4.8 million at $1.50 a share. They will use this to pay down the 14% debt they took on to buy 50 Below. With all this and only a partial quarter of 50 Below sales, we estimate the current valuation at $6.14 a share. We don’t expect much in the way of earnings over the next 2 quarters as more integration costs will continue for a while. So while this acquisition may be a game changer, we are only in the 3^rd inning.
UP 56%, HOLD, Still a Huge valuation gap here.

Buy price $.27 ask,
Valuation $1.14 (Was $1.17, $1.34, $1.34, $1.37, $1.36, $1.23,  $.91, $1.21, $.71, $.83, $.88 $.96, $.93, $.75, $.85, $1.57, $1.40, $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price $.35 closed at $.35
Well the stock is trading—with good volume (for CTIG) above the take-private offer price. We have held this for 7 years now so what’s a few more months to see what happens.
Well Birbeck and Fairford Holdings made an offer to buy CTIG in March for $.29 a share. The company formed a special committee to evaluate the offer. Hopefully they will find somebody else who will pay fair value—or at least close to it.
Earning announced in April. Revenue fell again from last year by about 10% to $4 million, and they made a tiny profit of about $50,000. Net cash fell to $.08 per share and our valuation fell to $1.14.
UP 30%. HOLD

A disappointing week for us-down .2%. We are now up 10.3% for the year.

No earnings last week, or much news of any kind.
We sold LXK for a measly 2% gain.
Some of our stocks are just stupid cheap—compared to their net cash on hand per share divided by their stock price.
Check this list:
EXTR 68%
GRVY 143%
CCUR 44%
SIGM 52%
MRVC 44%
AVNW 48%
DRIV 48%
AGYS 34%

The DOW was up 2.1% last week, NASDAQ was up 2.8% and the Russell 3000 was up 2.3%. For the year, the DOW is up 13.4%, NASDAQ is up 9.1% and the Russell is up 11.6%.

DRIV, DAEG, BLIN, MRVC, GRVY and CBEY are our favorites.

Last week we went 8 stocks up, 8 down and 1 even. Since inception we are now 64 stocks up and 16 down for an 80% winning percentage (80% is our target win %).
Since our beginning, we have closed out the following positions:
2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)
2008-PDLI +9% (company split, and special dividend)
2008-BDAY -39% (long overdue takeover offer-or “take-under”)
2008-DTLK +40% (third trip on this one)
2008-ILOG +26% (Buy-out offer from IBM)
2008-PARL +56%
2009-MBRK +67%
2009-SNWL +14%
2009-CYNO +25%
2009-DTLK +33% (fourth trip on this)
2009-NED +46%
2009-CUTR +13%
2009-HSTM +67% (continued good earnings)
2009-RNWK +36%
2009-OPK +116%
2009-CLZR -32% (a loser even on a buy-out)
2009-DTLK +28% (our 5th profitable trip on this one)
2010-HPOL +110%
2010-DIVX +25%
2010-CHRD +37% Buyout (2 weeks after we recommended it)
2010-HPOL +30%
2010-MGIC +82%
2010-GSL +78%
2010-CCEL +49%
2010-HPOL +27% (third trip)
2010-CAW EVEN (excluding 2.5 years of dividends)
2011-DWCH +116%
2011-IPAS +15%
2011-PRM +56% Buyout (1 week after we recommended it)
2011-RST +12%
2011-NINE -10%
2012-BVSN +30%
2012-TISA +137%
2012-PTIX -44%
2012-MTSL +157%
2012-LTUS -98% No more Chinese stocks for us
2012-AEZS -63% a bad speculation.
2012-RIMG -46% (including dividends)
2012-HPOL +34%
2012-MEDW +133% (Buyout 1 week AFTER we sold this)
2012-SPNC +118%
2012-RWWI +1%
2012-MOTR -29% (lost biggest customer contract)
2013-INUV -83% Held this since 2007. Failed business model.
2013-ASTX-+40%
2013-MGCD-+79%
2013-LXK +2%

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 64 stocks that we closed out since 2006 (53 were winners) the average net gain was 30%.

XRS Inc. (NASDAQ-XRSC)-Recommended 2/26/2013)
Buy Price $1.50
Valuation $6.50
Closed up $.09 at $1.80
UP 20%, HOLD

Agilysys Inc. (NASDAQ-AGYS)-Recommended 1/18/2013)
Buy Price $8.40
Valuation (Was $16.10)
Closed up $.06 at $10.59
Earnings announced in January. Pretty good we think. Revenues were up 30% to $67 million and they made $1.7 million on Non-GAAP income, or $.08 per share versus a $1.4 million ($.06) loss last year. Gross margins dropped from 39% to $35% and net cash rose to $3.65 per share. Overall our valuation rose only slightly to $16.23 as the margin drop offset almost everything else. They also raised their 2013 guidance to $230-$232 million in sales and $.24-$.26 of Non-GAAP net income. This means Q4 guidance is sales of about $57 million and Non-GAAP net income of $.07-$.09 per share.
UP 26%, BUY

Digital River Inc. (NASDAQ-DRIV)-Recommended 1/11/2013)
Buy Price $14.20
Valuation $34.59 (Was $32.20)
Closed up $.06 at $13.62
Earnings announced in February. Revenues were $101 million, above guidance but below last year $112 million. Non-GAAP earnings were $.31 per share compared to $.45 last year. Next quarters guidance is revenues on $101-$104 million and Non-GAAP earnings of $.18-$.22 per share. The market didn’t like the earnings too much but our valuation went up to $37.32—but that is before you take out the $100 million in cash they paid for LML in January. Adjusting for this, and Q1 guidance our valuation still rose to $34.59 and net cash of $7.83.
Down 4%, BUY

Daegis Inc. (NASDAQ-DAEG)-Recommended 11/30/2012)
Buy Price $1.20
Valuation $4.86 (Was $4.00)
Closed up $.17 at $1.25
Earnings announced in March. Not bad. Sales fell from $11.1 last year to $10.4 million, but they were up slightly from last quarters $10.35 million. Gross margins were up to over 70% and net debt decreased to $13.8 million from $14.5 million last quarter. Non-GAAP earnings were $449,000 versus $252,000 last quarter. Our valuation spiked to $4.86 per share up 20% from last quarter.
Looks like BlueLine Partners (a “strategic opportunities fund”) have shaken up Daegis management in January with the ouster or the CEO and CFO. The interim CEO and Chairman of the Board is a BlueLine founder. Its feeling like they are not happy with the current stock price for sure.
UP 4%, BUY

Bridgeline Digital Inc. (NASDAQ-BLIN)-Recommended 8/24/2012)
Buy Price $1.24
Valuation $2.35 (Was $2.56, $2.24)
Closed down $.09 at $1.18
Earnings announced in February. So-so. Revenues fell from $6.5 million to $6.2 million. iAPPS revenue rose 17% ($4.2 million) and recurring revenues were just under 20% of total sales. They lost $.02 on a Non-GAAP basis versus a profit of $.01 last year. Guidance is for revenues of $27-$28 million for the year. iAPPs revenue is expected to increase 27% to $21 million. They expect to be adjusted EBITDA positive in 2013.
Our valuation fell a bit to $2.35 per share. We see our valuation soaring to $3.25 if they can make their numbers this year.
Down 5%, BUY

Telecommunications Systems Inc. (NASDAQ-TSYS)-Recommended 6/14/2012)
Buy Price- $1.37
Valuation $6.02 (Was $6.72, $5.49)
Closed down $.29 at $1.96
TSYS announced another patent deal in February. This time it is with Acacia Research a patent licensing group. They termed the deal an “alliance” so we think it is more of a brokering agreement where Acacia looks for licensees and they share the revenues.
Earnings announced in January. Revenues rose 9.7% to $132.7 million and they made $.20 per share in Non-GAAP income. However, these results included the previously announced patent deal, which they still did not give any financial details on. We are thinking it could be as much as $8 million of the sales and profit for the quarter. Even adjusting for this our valuation dropped to $6.02. We still like TSYS as they say they will continue to monetize their patents and their results are still better year-over-year.
TSYS announced in November it was one of 20 companies selected to participate in a 5 year, $10 billion contract with the U.S. government.
Carlo Cannell, an activist investor filled a 13D in September pointing out how undervalued TSYS is and urged them to put themselves on the block. He points to a valuation done on the company as of August 29th of $7.40 to $11.81 a share. Even the low point here is higher than our valuation.
UP 43%, HOLD

Aviat Networks Inc. (NASDAQ-AVNW)-Recommended 2/27/2012)
Buy Price- $2.62
Valuation $10.28 (Was $9.03, $9.37, $8.85, $8.31)
Closed down $.19 at $2.89
Penn Capital Mgmt. filed a 13G in late February disclosing a 6.05% stake.
Dimension Fund filed a Form 13G in February disclosing a 5.3% stake, Vanguard disclosed a 5.67% stake and Blue Mountain has been buying more and is now up to a 5.90% stake.
AVNW blew away their revised upwards guidance and came in with revenues of $129 million and Non-GAAP income of about $4.5 million. Gross margins were steady at 30% and our valuation jumped to $10.28 per share. Net cash was $1.40 per share.
Next quarter they are projecting $115-$121 million in sales and that they will again be profitable on a non-GAAP basis ($.02 to $.06 per share).
UP 10%, HOLD

CBeyond Inc. (NASDAQ-CBEY)-Recommended 2/28/2012)
Buy Price $7.17 ( Was $7.94 before another $10,000 added at $6.53)
Valuation $28.33 (Was $29.04, $29.59, $29.58, $29.21)
Closed up $.99 at $8.26
Earnings announced in February. Not bad, but didn’t set the world on fire. Revenues were down from last year-$118.9 versus $123.3 million. They lost $5.8 million versus $5 million last year on a GAAP basis. Adjusted EBITDA also fell to $18.8 million from $22.6 million. Nevertheless they did generate $4.3 million of free cash flow versus $4.2 last year. Guidance for 2013 was revenues of $475-$485 million, adjusted EBITDA of $75-$82 million and free cash flow of $15-$20 million. Our valuation fell to $28.33 and based on 2013 guidance should stay in about the same range.
Penn Capital Mgmt. filed a 13G in late February disclosing a 5.55% stake.
$80 million of EBITDA, $.68 a share in net cash and a $230 market cap. Cheap.
UP 15%, BUY

MRV Communications (Pink Sheets-MRVC.pk)
Valuation $27.15 (Was $31.80, $34.60, $28.60, $41.20, $43.20 (after $9.50, $6.00 and $1.40 special dividends), $52.40, $55.80)
Buy Price October 7, 2011- $8.50 ($25.40 before special dividends)
Closed at $10.35 up $.25
Earnings announced in April. Not bad, but not great. Sales were $46 million up slightly from $44.7 last year. They lost $3.1 million pre-tax which included $1.6 million of litigation costs and $400,000 of share based compensation (vapor cost). Net cash was $4.59 per share and our valuation was $27.15.
Lloyd Miller disclosed a 6.9% stake in February.
The 20 for 1 stock split happened in December, so all the share information has been adjusted.
Raging Capital bought another 1.6 million shares in the first week of December at $10.80 bringing their holdings to 20.1% of the company.
Still trading at less than ½ our valuation.
UP 20% BUY

Sigma Designs Inc. (NASDAQ-SIGM)-Recommended 7/11/2011)
Buy Price-$8.49
Valuation $8.24 (Was $13.05, $10.67, $8.41 $12.10, $13.40, $16.02)
Closed down $.10 at $4.79
Raging Capital filed a 13D in April reporting a 5.6% stake in SIGM and calling for faster action to turn the company around or sell it. Maybe there is hope here.
Earnings announced in March. They stunk up the place. While sales were up to $44 million from $36 million last year, they lost $36 million or $1.18 per share. Cash fell again to $2.51 per share (it was $5.40 when we recommended SIGM) and our valuation plunged to its lowest level ever. But wait, there’s more…..they are projecting next quarter to be about breakeven on $49-$52 million in sales. The market looked past this past quarter and the stock rose. We will be watching this one very closely and may sell at any time.
Dimension Fund disclosed a 6.48% stake in SIGM in February and Vanguard disclosed a 5.61% stake via 13G filings and MAK Capital One sold their 6.6% stake.
Down 44%, HOLD

Mitel Networks (NASDAQ-MITL)-Recommended 7/6/2011)
Buy Price- $3.04( Was $3.36 before $10,000 added, $3.95 before $10,000 added)
Valuation $12.26 (Was $13.10, $10.92, $13.92, $12.81, $15.28, $14.04, $10.39)
Closed up $.11 at $3.71
In addition to refinancing their debt out to 2019-2020, MITL announced earnings in February. Revenues were down to $142 million from $150.5 million last year and Non-GAAP net income was $.23 a share versus $.21 a share last year. Our valuation fell a bit to $12.26 a share-still more that 3X the current price.
UP 22%, BUY

Concurrent Computer (NASDAQ-CCUR)-Recommended 2/4/2011)
Buy Price-$4.58 (Was $5.08 before $.50 special dividend)
Valuation $16.20 (was $15.37, $13.53, $15.85, $14.13, $11.38, $14.04, $18.54, $15.99)
Closed down $.91 at $7.33
Pays $.24 annual dividend.
We have collected $.18 in dividends so far (excluding the $.50 special dividend).
Earnings announced in January. Not bad. Revenues were up a tad to $16.6 million compared to $16.4 million last year. They made $.08 per share versus a loss of $.06 last year. Cash per share dropped to $2.78 per share as they paid $.56 a share in dividends. Our valuation rose to $16.20 a share.
Singer/Miller duo own 12.1% of CCUR.
UP 38%, HOLD

Extreme Networks (EXTR-Recommended 3/22/2010)
Buy Price-$3.18 (Was $3.04 before adding another $10,000)
Valuation-$6.99 (was $6.97, $7.46, $6.31, $7.01, $6.72, $6.45, $5.67, $7.36, $7.23, $7.31, $6.82, $6.81)
Closed at $3.14 down $.05
Vanguard filed a Form 13G in March disclosing a 5.21% stake, Wellington disclosed a 6.3% stake and Soros upped his holdings to 9.85%..
Earnings announced in January. Revenues came in at $75.6 million (the low end of revised downward guidance) down 9% from last year. Non-GAAP income was $2.8 million ($.03 per share) compared to $5.8 million ($.06 per share). Net cash was $2.08 per share. Our valuation increased $.02 to $6.99 per share.
Guidance for next quarter looks much the same as this past quarter.
Starboard owns 8.8% and Blackrock owns 5.4% of EXTR.
Down 1%, BUY

Gravity Company Ltd. (GRVY-Recommended 1/18/2010)
Buy Price- $1.45 per ADS (Was $1.68 before double up)
Valuation $3.86-(Was $3.65, $3.41, $5.52, $5.00, $5.39, $5.33, $5.61, $5.73, $4.38, $4.44, $5.15)
Closed at $1.25 down $.03
The last 6K filing showed cash was just under $50 million or $1.79 per share. Revenues for the year were about $49 million up 9% from 2011. They reported a loss of $13.8 million which included about $10 million of impairment write downs. With all this, our valuation increased to $3.86 per share.
Now trading at way below cash value again.
Down 14%, BUY

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 $6.14 (was $5.97, $6.21, $6.13, $5.82, $5.81, $5.72, $5.65, $5.39, $4.86, $5.60, $5.73, $5.54, $5.74, $5.96, $4.72, $5.19, $5.66, $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $2.50 unchanged
Wynnefield Partners participated in the private placement and owns 900,000 shares of ARI (about 7%) as reported in their Form 13D last week.
ARI closed their private placement in March and the stock continued its climb. We are almost up to 50% of our valuation!
Earnings announced in March. We saw transitional results as a result of integrating 2 acquisitions including 50 Below which closed November 28, 2012. Revenues were up 36% to $7.5 million but expenses were up 39% excluding $600,000 of acquisition related expenses. As a result pre-tax loss was $206,000 versus income of $122,000. How much of this loss was due to additional integration expenses was not disclosed.
At the same time ARI announced a private placement of stock for $4.8 million at $1.50 a share. They will use this to pay down the 14% debt they took on to buy 50 Below. With all this and only a partial quarter of 50 Below sales, we estimate the current valuation at $6.14 a share. We don’t expect much in the way of earnings over the next 2 quarters as more integration costs will continue for a while. So while this acquisition may be a game changer, we are only in the 3rd inning.
UP 55%, HOLD, Still a Huge valuation gap here.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $1.14 (Was $1.17, $1.34, $1.34, $1.37, $1.36, $1.23, $.91, $1.21, $.71, $.83, $.88 $.96, $.93, $.75, $.85, $1.57, $1.40, $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price $.36 closed at $.355
Well the stock is trading—with good volume (for CTIG) above the take-private offer price. We have held this for 7 years now so what’s a few more months to see what happens.
Well Birbeck and Fairford Holdings made an offer to buy CTIG in March for $.29 a share. The company formed a special committee to evaluate the offer. Hopefully they will find somebody else who will pay fair value—or at least close to it.
Earning announced in April. Revenue fell again from last year by about 10% to $4 million, and they made a tiny profit of about $50,000. Net cash fell to $.08 per share and our valuation fell to $1.14.
UP 37%. HOLD

We are nervous about the market. LXK has been up and then down. With dividends, we are up 3% (we bought before it started paying a dividend) so we are taking our money off the table. LXK is still a cash cow and may be bought out someday. We may get back in if the market tanks and takes LXK with it.

Another down for us this week-1.9%. We are now up 10.5% for the year.

GRVY, MRV and CTIG earnings last week.

Some of our stocks are just stupid cheap—compared to their net cash on hand per share divided by their stock price.
Check this list:
EXTR 67%
GRVY 140%
CCUR 38%
SIGM 51%
MRVC 45%
AVNW 44%
DRIV 48%
AGYS 35%
The DOW was down .1% last week, NASDAQ was down 2% and the Russell 3000 was down 1.3%. For the year, the DOW is up 11.1%, NASDAQ is up 6.1% and the Russell is up 9.1%.

XRSC, DRIV, DAEG, BLIN, MRVC, GRVY and CBEY are our favorites.

Last week we went 4 stocks up, 11 down and 2 even. Since inception we are now 64 stocks up and 16 down for an 80% winning percentage (80% is our target win %).
Since our beginning, we have closed out the following positions:
2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)
2008-PDLI +9% (company split, and special dividend)
2008-BDAY -39% (long overdue takeover offer-or “take-under”)
2008-DTLK +40% (third trip on this one)
2008-ILOG +26% (Buy-out offer from IBM)
2008-PARL +56%
2009-MBRK +67%
2009-SNWL +14%
2009-CYNO +25%
2009-DTLK +33% (fourth trip on this)
2009-NED +46%
2009-CUTR +13%
2009-HSTM +67% (continued good earnings)
2009-RNWK +36%
2009-OPK +116%
2009-CLZR -32% (a loser even on a buy-out)
2009-DTLK +28% (our 5th profitable trip on this one)
2010-HPOL +110%
2010-DIVX +25%
2010-CHRD +37% Buyout (2 weeks after we recommended it)
2010-HPOL +30%
2010-MGIC +82%
2010-GSL +78%
2010-CCEL +49%
2010-HPOL +27% (third trip)
2010-CAW EVEN (excluding 2.5 years of dividends)
2011-DWCH +116%
2011-IPAS +15%
2011-PRM +56% Buyout (1 week after we recommended it)
2011-RST +12%
2011-NINE -10%
2012-BVSN +30%
2012-TISA +137%
2012-PTIX -44%
2012-MTSL +157%
2012-LTUS -98% No more Chinese stocks for us
2012-AEZS -63% a bad speculation.
2012-RIMG -46% (including dividends)
2012-HPOL +34%
2012-MEDW +133% (Buyout 1 week AFTER we sold this)
2012-SPNC +118%
2012-RWWI +1%
2012-MOTR -29% (lost biggest customer contract)
2013-INUV -83% Held this since 2007. Failed business model.
2013-ASTX-+40%
2013-MGCD-+79%

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 63 stocks that we closed out since 2006 (52 were winners) the average net gain was 30%.

XRS Inc. (NASDAQ-XRSC)-Recommended 2/26/2013)
Buy Price $1.50
Valuation $6.50
Closed down $.13 at $1.71
UP 14%, BUY

Agilysys Inc. (NASDAQ-AGYS)-Recommended 1/18/2013)
Buy Price $8.40
Valuation $16.23 (Was $16.10)
Closed up $.59 at $10.53
Earnings announced in January. Pretty good we think. Revenues were up 30% to $67 million and they made $1.7 million on Non-GAAP income, or $.08 per share versus a $1.4 million ($.06) loss last year. Gross margins dropped from 39% to $35% and net cash rose to $3.65 per share. Overall our valuation rose only slightly to $16.23 as the margin drop offset almost everything else. They also raised their 2013 guidance to $230-$232 million in sales and $.24-$.26 of Non-GAAP net income. This means Q4 guidance is sales of about $57 million and Non-GAAP net income of $.07-$.09 per share.
UP 25%, HOLD

Digital River Inc. (NASDAQ-DRIV)-Recommended 1/11/2013)
Buy Price $14.20
Valuation $34.59 (Was $32.20)
Closed down $.58 at $13.56
Earnings announced in February. Revenues were $101 million, above guidance but below last year $112 million. Non-GAAP earnings were $.31 per share compared to $.45 last year. Next quarters guidance is revenues on $101-$104 million and Non-GAAP earnings of $.18-$.22 per share. The market didn’t like the earnings too much but our valuation went up to $37.32—but that is before you take out the $100 million in cash they paid for LML in January. Adjusting for this, and Q1 guidance our valuation still rose to $34.59 and net cash of $7.83.
Down 5%, BUY

Daegis Inc. (NASDAQ-DAEG)-Recommended 11/30/2012)
Buy Price $1.20
Valuation $4.86 (Was $4.00)
Closed down $.06 at $1.08
Earnings announced in March. Not bad. Sales fell from $11.1 last year to $10.4 million, but they were up slightly from last quarters $10.35 million. Gross margins were up to over 70% and net debt decreased to $13.8 million from $14.5 million last quarter. Non-GAAP earnings were $449,000 versus $252,000 last quarter. Our valuation spiked to $4.86 per share up 20% from last quarter.
Looks like BlueLine Partners (a “strategic opportunities fund”) have shaken up Daegis management in January with the ouster or the CEO and CFO. The interim CEO and Chairman of the Board is a BlueLine founder. Its feeling like they are not happy with the current stock price for sure.
Down 10%, BUY

Bridgeline Digital Inc. (NASDAQ-BLIN)-Recommended 8/24/2012)
Buy Price $1.24
Valuation $2.35 (Was $2.56, $2.24)
Closed unchanged at $1.27
Earnings announced in February. So-so. Revenues fell from $6.5 million to $6.2 million. iAPPS revenue rose 17% ($4.2 million) and recurring revenues were just under 20% of total sales. They lost $.02 on a Non-GAAP basis versus a profit of $.01 last year. Guidance is for revenues of $27-$28 million for the year. iAPPs revenue is expected to increase 27% to $21 million. They expect to be adjusted EBITDA positive in 2013.
Our valuation fell a bit to $2.35 per share. We see our valuation soaring to $3.25 if they can make their numbers this year.
UP 2%, BUY

Telecommunications Systems Inc. (NASDAQ-TSYS)-Recommended 6/14/2012)
Buy Price- $1.37
Valuation $6.02 (Was $6.72, $5.49)
Closed up $.02 at $2.25
TSYS announced another patent deal in February. This time it is with Acacia Research a patent licensing group. They termed the deal an “alliance” so we think it is more of a brokering agreement where Acacia looks for licensees and they share the revenues.
Earnings announced in January. Revenues rose 9.7% to $132.7 million and they made $.20 per share in Non-GAAP income. However, these results included the previously announced patent deal, which they still did not give any financial details on. We are thinking it could be as much as $8 million of the sales and profit for the quarter. Even adjusting for this our valuation dropped to $6.02. We still like TSYS as they say they will continue to monetize their patents and their results are still better year-over-year.
TSYS announced in November it was one of 20 companies selected to participate in a 5 year, $10 billion contract with the U.S. government.
Carlo Cannell, an activist investor filled a 13D in September pointing out how undervalued TSYS is and urged them to put themselves on the block. He points to a valuation done on the company as of August 29th of $7.40 to $11.81 a share. Even the low point here is higher than our valuation.
UP 64%, HOLD

Aviat Networks Inc. (NASDAQ-AVNW)-Recommended 2/27/2012)
Buy Price- $2.62
Valuation $10.28 (Was $9.03, $9.37, $8.85, $8.31)
Closed down $.19 at $3.18
Penn Capital Mgmt. filed a 13G in late February disclosing a 6.05% stake.
Dimension Fund filed a Form 13G in February disclosing a 5.3% stake, Vanguard disclosed a 5.67% stake and Blue Mountain has been buying more and is now up to a 5.90% stake.
AVNW blew away their revised upwards guidance and came in with revenues of $129 million and Non-GAAP income of about $4.5 million. Gross margins were steady at 30% and our valuation jumped to $10.28 per share. Net cash was $1.40 per share.
Next quarter they are projecting $115-$121 million in sales and that they will again be profitable on a non-GAAP basis ($.02 to $.06 per share).
UP 21%, HOLD

CBeyond Inc. (NASDAQ-CBEY)-Recommended 2/28/2012)
Buy Price $7.17 ( Was $7.94 before another $10,000 added at $6.53)
Valuation $28.33 (Was $29.04, $29.59, $29.58, $29.21)
Closed down $.16 at $7.27
Earnings announced in February. Not bad, but didn’t set the world on fire. Revenues were down from last year-$118.9 versus $123.3 million. They lost $5.8 million versus $5 million last year on a GAAP basis. Adjusted EBITDA also fell to $18.8 million from $22.6 million. Nevertheless they did generate $4.3 million of free cash flow versus $4.2 last year. Guidance for 2013 was revenues of $475-$485 million, adjusted EBITDA of $75-$82 million and free cash flow of $15-$20 million. Our valuation fell to $28.33 and based on 2013 guidance should stay in about the same range.
Penn Capital Mgmt. filed a 13G in late February disclosing a 5.55% stake.
$80 million of EBITDA, $.68 a share in net cash and a $230 market cap. Cheap.
UP 1%, BUY

MRV Communications (Pink Sheets-MRVC.pk)
NEW Valuation $27.15 (Was $31.80, $34.60, $28.60, $41.20, $43.20 (after $9.50, $6.00 and $1.40 special dividends), $52.40, $55.80)
Buy Price October 7, 2011- $8.50 ($25.40 before special dividends)
Closed at $10.10 down $.30
Earnings announced last week. Not bad, but not great. Sales were $46 million up slightly from $44.7 last year. They lost $3.1 million pre-tax which included $1.6 million of litigation costs and $400,000 of share based compensation (vapor cost). Net cash was $4.59 per share and our valuation was $27.15.
Lloyd Miller disclosed a 6.9% stake in February.
The 20 for 1 stock split happened in December, so all the share information has been adjusted.
Raging Capital bought another 1.6 million shares in the first week of December at $10.80 bringing their holdings to 20.1% of the company.
Still trading at less than ½ our valuation.
UP 17% BUY

Sigma Designs Inc. (NASDAQ-SIGM)-Recommended 7/11/2011)
Buy Price-$8.49
Valuation $8.24 (Was $13.05, $10.67, $8.41 $12.10, $13.40, $16.02)
Closed up $.02 at $4.89
Raging Capital filed a 13D last week reporting a 5.6% stake in SIGM and calling for faster action to turn the company around or sell it. Maybe there is hope here.
Earnings announced in March. They stunk up the place. While sales were up to $44 million from $36 million last year, they lost $36 million or $1.18 per share. Cash fell again to $2.51 per share (it was $5.40 when we recommended SIGM) and our valuation plunged to its lowest level ever. But wait, there’s more…..they are projecting next quarter to be about breakeven on $49-$52 million in sales. The market looked past this past quarter and the stock rose. We will be watching this one very closely and may sell at any time.
Dimension Fund disclosed a 6.48% stake in SIGM in February and Vanguard disclosed a 5.61% stake via 13G filings and MAK Capital One sold their 6.6% stake.
Down 42%, HOLD

Mitel Networks (NASDAQ-MITL)-Recommended 7/6/2011)
Buy Price- $3.04( Was $3.36 before $10,000 added, $3.95 before $10,000 added)
Valuation $12.26 (Was $13.10, $10.92, $13.92, $12.81, $15.28, $14.04, $10.39)
Closed down $.30 at $3.60
In addition to refinancing their debt out to 2019-2020, MITL announced earnings in February. Revenues were down to $142 million from $150.5 million last year and Non-GAAP net income was $.23 a share versus $.21 a share last year. Our valuation fell a bit to $12.26 a share-still more that 3X the current price.
UP 19%, BUY

Lexmark International (NYSE-LXK)-Recommended 5/24/2011)
Buy Price-$28.80
Valuation $60.44 (Was $60.41, $70.28, $62.59, $63.94, $63.84, $79.12, $63.99)
Closed down $.31 at $27.79 (includes dividends)
We have collected $1.70 a share in dividends here (they started paying dividend after we bought LXK).
LXK now pays a $1.20 annual dividend.
Earnings announced in January. Not that good, but this is a strong company. Revenues came in $967 million, down 9% from last year. Not unexpected. Net income was only $.61 per share (Non-GAAP) versus $1.25 last year. Guidance for 2013 is for sales to decline 11-13% and Non-GAAP earnings for Q1 are expected to be between $.80-$.90 per share compared to $1.05. Based on 2013 guidance our valuation is $60.44. Not bad.
LXK announced in September that it was getting out of the inkjet printer business and cutting 1,700 employees. There was also speculation that they would get bought out.
They reiterated their intent to return over 50% of their free cash flow to shareholders in dividends and share repurchases
Down 4%, HOLD

Concurrent Computer (NASDAQ-CCUR)-Recommended 2/4/2011)
Buy Price-$4.58 (Was $5.08 before $.50 special dividend)
Valuation $16.20 (was $15.37, $13.53, $15.85, $14.13, $11.38, $14.04, $18.54, $15.99)
Closed down $.67 at $7.24
Pays $.24 annual dividend.
We have collected $.18 in dividends so far (excluding the $.50 special dividend).
Earnings announced in January. Not bad. Revenues were up a tad to $16.6 million compared to $16.4 million last year. They made $.08 per share versus a loss of $.06 last year. Cash per share dropped to $2.78 per share as they paid $.56 a share in dividends. Our valuation rose to $16.20 a share.
Singer/Miller duo own 12.1% of CCUR.
UP 58%, HOLD

Extreme Networks (EXTR-Recommended 3/22/2010)
Buy Price-$3.18 (Was $3.04 before adding another $10,000)
Valuation-$6.99 (was $6.97, $7.46, $6.31, $7.01, $6.72, $6.45, $5.67, $7.36, $7.23, $7.31, $6.82, $6.81)
Closed at $3.19 down $.18
Vanguard filed a Form 13G in March disclosing a 5.21% stake, Wellington disclosed a 6.3% stake and Soros upped his holdings to 9.85%..
Earnings announced in January. Revenues came in at $75.6 million (the low end of revised downward guidance) down 9% from last year. Non-GAAP income was $2.8 million ($.03 per share) compared to $5.8 million ($.06 per share). Net cash was $2.08 per share. Our valuation increased $.02 to $6.99 per share.
Guidance for next quarter looks much the same as this past quarter.
Starboard owns 8.8% and Blackrock owns 5.4% of EXTR.
UP 1%, BUY

Gravity Company Ltd. (GRVY-Recommended 1/18/2010)
Buy Price- $1.45 per ADS (Was $1.68 before double up)
NEW Valuation $3.86-(Was $3.65, $3.41, $5.52, $5.00, $5.39, $5.33, $5.61, $5.73, $4.38, $4.44, $5.15)
Closed at $1.28 down $.02
We missed the 6k filing last week on Gravity with their 2012 consolidated results. Cash was just under $50 million or $1.79 per share. Revenues for the year were about $49 million up 9% from 2011. They reported a loss of $13.8 million which included about $10 million of impairment write downs. With all this, our valuation increased to $3.86 per share.
Now trading at way below cash value again.
Down 12%, BUY

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),
NEW Valuation $6.14 (was $5.97, $6.21, $6.13, $5.82, $5.81, $5.72, $5.65, $5.39, $4.86, $5.60, $5.73, $5.54, $5.74, $5.96, $4.72, $5.19, $5.66, $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $2.50 unchanged
Wynnefield Partners participated in the private placement and owns 900,000 shares of ARI (about 7%) as reported in their Form 13D last week.
ARI closed their private placement in March and the stock continued its climb. We are almost up to 50% of our valuation!
Earnings announced in March. We saw transitional results as a result of integrating 2 acquisitions including 50 Below which closed November 28, 2012. Revenues were up 36% to $7.5 million but expenses were up 39% excluding $600,000 of acquisition related expenses. As a result pre-tax loss was $206,000 versus income of $122,000. How much of this loss was due to additional integration expenses was not disclosed.
At the same time ARI announced a private placement of stock for $4.8 million at $1.50 a share. They will use this to pay down the 14% debt they took on to buy 50 Below. With all this and only a partial quarter of 50 Below sales, we estimate the current valuation at $6.14 a share. We don’t expect much in the way of earnings over the next 2 quarters as more integration costs will continue for a while. So while this acquisition may be a game changer, we are only in the 3rd inning.
UP 55%, HOLD, Still a Huge valuation gap here.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
NEW Valuation $1.14 (Was $1.17, $1.34, $1.34, $1.37, $1.36, $1.23, $.91, $1.21, $.71, $.83, $.88 $.96, $.93, $.75, $.85, $1.57, $1.40, $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price $.37 closed at $.355
Well the stock is trading—with good volume (for CTIG) above the take-private offer price. We have held this for 7 years now so what’s a few more months to see what happens.
Well Birbeck and Fairford Holdings made an offer to buy CTIG in March for $.29 a share. The company formed a special committee to evaluate the offer. Hopefully they will find somebody else who will pay fair value—or at least close to it.
Earning announced last week. Revenue fell again from last year by about 10% to $4 million, and they made a tiny profit of about $50,000. Net cash fell to $.08 per share and our valuation fell to $1.14.
UP 37%. HOLD

A bit down for us this week-1.2%, as ARIS closed off its highs. We are now up 12.4% for the year.

No earnings last week.

Some of our stocks are just stupid cheap—compared to their net cash on hand per share divided by their stock price.
Check this list:
EXTR 63%
GRVY 141%
CCUR 35%
SIGM 52%
CTIG 32%
MRVC 75%
AVNW 42%
DRIV 46%
AGYS 37%

The DOW was up .5% last week, NASDAQ was up .7% and the Russell 3000 was up .8%. For the year, the DOW is up 11.3%, NASDAQ is up 8.2% and the Russell is up 10.50%.

DRIV, AGYS, DAEG, BLIN, MRVC, GRVY and CBEY are our favorites.

Last week we went 7 stocks up, 8 down and 2 even. Since inception we are now 64 stocks up and 16 down for an 80% winning percentage (80% is our target win %).
Since our beginning, we have closed out the following positions:
2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)
2008-PDLI +9% (company split, and special dividend)
2008-BDAY -39% (long overdue takeover offer-or “take-under”)
2008-DTLK +40% (third trip on this one)
2008-ILOG +26% (Buy-out offer from IBM)
2008-PARL +56%
2009-MBRK +67%
2009-SNWL +14%
2009-CYNO +25%
2009-DTLK +33% (fourth trip on this)
2009-NED +46%
2009-CUTR +13%
2009-HSTM +67% (continued good earnings)
2009-RNWK +36%
2009-OPK +116%
2009-CLZR -32% (a loser even on a buy-out)
2009-DTLK +28% (our 5th profitable trip on this one)
2010-HPOL +110%
2010-DIVX +25%
2010-CHRD +37% Buyout (2 weeks after we recommended it)
2010-HPOL +30%
2010-MGIC +82%
2010-GSL +78%
2010-CCEL +49%
2010-HPOL +27% (third trip)
2010-CAW EVEN (excluding 2.5 years of dividends)
2011-DWCH +116%
2011-IPAS +15%
2011-PRM +56% Buyout (1 week after we recommended it)
2011-RST +12%
2011-NINE -10%
2012-BVSN +30%
2012-TISA +137%
2012-PTIX -44%
2012-MTSL +157%
2012-LTUS -98% No more Chinese stocks for us
2012-AEZS -63% a bad speculation.
2012-RIMG -46% (including dividends)
2012-HPOL +34%
2012-MEDW +133% (Buyout 1 week AFTER we sold this)
2012-SPNC +118%
2012-RWWI +1%
2012-MOTR -29% (lost biggest customer contract)
2013-INUV -83% Held this since 2007. Failed business model.
2013-ASTX-+40%
2013-MGCD-+79%

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 63 stocks that we closed out since 2006 (52 were winners) the average net gain was 30%.

XRS Inc. (NASDAQ-XRSC)-Recommended 2/26/2013)
Buy Price $1.50
Valuation $6.50
Closed up $.04 at $1.84
UP 23%, BUY

Agilysys Inc. (NASDAQ-AGYS)-Recommended 1/18/2013)
Buy Price $8.40
Valuation (Was $16.10)
Closed up $.33 at $9.94
Earnings announced in January. Pretty good we think. Revenues were up 30% to $67 million and they made $1.7 million on Non-GAAP income, or $.08 per share versus a $1.4 million ($.06) loss last year. Gross margins dropped from 39% to $35% and net cash rose to $3.65 per share. Overall our valuation rose only slightly to $16.23 as the margin drop offset almost everything else. They also raised their 2013 guidance to $230-$232 million in sales and $.24-$.26 of Non-GAAP net income. This means Q4 guidance is sales of about $57 million and Non-GAAP net income of $.07-$.09 per share.
UP 18%, BUY

Digital River Inc. (NASDAQ-DRIV)-Recommended 1/11/2013)
Buy Price $14.20
Valuation $34.59 (Was $32.20)
Closed down $.11 at $14.14
Earnings announced in February. Revenues were $101 million, above guidance but below last year $112 million. Non-GAAP earnings were $.31 per share compared to $.45 last year. Next quarters guidance is revenues on $101-$104 million and Non-GAAP earnings of $.18-$.22 per share. The market didn’t like the earnings too much but our valuation went up to $37.32—but that is before you take out the $100 million in cash they paid for LML in January. Adjusting for this, and Q1 guidance our valuation still rose to $34.59 and net cash of $7.83.
Down 1%, BUY

Daegis Inc. (NASDAQ-DAEG)-Recommended 11/30/2012)
Buy Price $1.20
Valuation $4.86 (Was $4.00)
Closed unchanged at $1.14
Earnings announced in March. Not bad. Sales fell from $11.1 last year to $10.4 million, but they were up slightly from last quarters $10.35 million. Gross margins were up to over 70% and net debt decreased to $13.8 million from $14.5 million last quarter. Non-GAAP earnings were $449,000 versus $252,000 last quarter. Our valuation spiked to $4.86 per share up 20% from last quarter.
Looks like BlueLine Partners (a “strategic opportunities fund”) have shaken up Daegis management in January with the ouster or the CEO and CFO. The interim CEO and Chairman of the Board is a BlueLine founder. Its feeling like they are not happy with the current stock price for sure.
Down 5%, BUY

Bridgeline Digital Inc. (NASDAQ-BLIN)-Recommended 8/24/2012)
Buy Price $1.24
Valuation $2.35 (Was $2.56, $2.24)
Closed down $.03 at $1.27
Earnings announced in February. So-so. Revenues fell from $6.5 million to $6.2 million. iAPPS revenue rose 17% ($4.2 million) and recurring revenues were just under 20% of total sales. They lost $.02 on a Non-GAAP basis versus a profit of $.01 last year. Guidance is for revenues of $27-$28 million for the year. iAPPs revenue is expected to increase 27% to $21 million. They expect to be adjusted EBITDA positive in 2013.
Our valuation fell a bit to $2.35 per share. We see our valuation soaring to $3.25 if they can make their numbers this year.
UP 2%, HOLD

Telecommunications Systems Inc. (NASDAQ-TSYS)-Recommended 6/14/2012)
Buy Price- $1.37
Valuation $6.02 (Was $6.72, $5.49)
Closed down $.08 at $2.23
TSYS announced another patent deal in February. This time it is with Acacia Research a patent licensing group. They termed the deal an “alliance” so we think it is more of a brokering agreement where Acacia looks for licensees and they share the revenues.
Earnings announced in January. Revenues rose 9.7% to $132.7 million and they made $.20 per share in Non-GAAP income. However, these results included the previously announced patent deal, which they still did not give any financial details on. We are thinking it could be as much as $8 million of the sales and profit for the quarter. Even adjusting for this our valuation dropped to $6.02. We still like TSYS as they say they will continue to monetize their patents and their results are still better year-over-year.
TSYS announced in November it was one of 20 companies selected to participate in a 5 year, $10 billion contract with the U.S. government.
Carlo Cannell, an activist investor filled a 13D in September pointing out how undervalued TSYS is and urged them to put themselves on the block. He points to a valuation done on the company as of August 29th of $7.40 to $11.81 a share. Even the low point here is higher than our valuation.
UP 63%, HOLD

Aviat Networks Inc. (NASDAQ-AVNW)-Recommended 2/27/2012)
Buy Price- $2.62
Valuation $10.28 (Was $9.03, $9.37, $8.85, $8.31)
Closed up $.01 at $3.37
Penn Capital Mgmt. filed a 13G in late February disclosing a 6.05% stake.
Dimension Fund filed a Form 13G in February disclosing a 5.3% stake, Vanguard disclosed a 5.67% stake and Blue Mountain has been buying more and is now up to a 5.90% stake.
AVNW blew away their revised upwards guidance and came in with revenues of $129 million and Non-GAAP income of about $4.5 million. Gross margins were steady at 30% and our valuation jumped to $10.28 per share. Net cash was $1.40 per share.
Next quarter they are projecting $115-$121 million in sales and that they will again be profitable on a non-GAAP basis ($.02 to $.06 per share).
UP 29%, HOLD

CBeyond Inc. (NASDAQ-CBEY)-Recommended 2/28/2012)
Buy Price $7.17 ( Was $7.94 before another $10,000 added at $6.53)
Valuation $28.33 (Was $29.04, $29.59, $29.58, $29.21)
Closed up $.08 at $7.43
Earnings announced in February. Not bad, but didn’t set the world on fire. Revenues were down from last year-$118.9 versus $123.3 million. They lost $5.8 million versus $5 million last year on a GAAP basis. Adjusted EBITDA also fell to $18.8 million from $22.6 million. Nevertheless they did generate $4.3 million of free cash flow versus $4.2 last year. Guidance for 2013 was revenues of $475-$485 million, adjusted EBITDA of $75-$82 million and free cash flow of $15-$20 million. Our valuation fell to $28.33 and based on 2013 guidance should stay in about the same range.
Penn Capital Mgmt. filed a 13G in late February disclosing a 5.55% stake.
$80 million of EBITDA, $.68 a share in net cash and a $230 market cap. Cheap.
UP 4%, BUY

MRV Communications (Pink Sheets-MRVC.pk)
Valuation $31.80 (Was $34.60, $28.60, $41.20, $43.20 (after $9.50, $6.00 and $1.40 special dividends), $52.40, $55.80)
Buy Price October 7, 2011- $8.50 ($25.40 before special dividends)
Closed at $10.40 down $.10
Lloyd Miller disclosed a 6.9% stake in February.
The 20 for 1 stock split happened in December, so all the share information has been adjusted.
Raging Capital bought another 1.6 million shares in the first week of December at $.54 bringing their holdings to 30.7 million shares or 20.1% of the company.
Earnings announced in November. Not bad. Revenues fell a bit to $51 million but it appears that the revenue shortfall was in the divisions that were sold in October. Hard to tell from their press release or 10Q what the real results were excluding the sold divisions so we are still estimating our valuation which dropped to $31.80 per share. Looks like they broke even for the quarter after excluding an asset impairment write-off.
Still trading at less than ½ our valuation.
UP 21% BUY

Sigma Designs Inc. (NASDAQ-SIGM)-Recommended 7/11/2011)
Buy Price-$8.49
Valuation $8.24 (Was $13.05, $10.67, $8.41 $12.10, $13.40, $16.02)
Closed down $.13 at $4.87
Earnings announced in March. They stunk up the place. While sales were up to $44 million from $36 million last year, they lost $36 million or $1.18 per share. Cash fell again to $2.51 per share (it was $5.40 when we recommended SIGM) and our valuation plunged to its lowest level ever. But wait, there’s more…..they are projecting next quarter to be about breakeven on $49-$52 million in sales. The market looked past this past quarter and the stock rose. We will be watching this one very closely and may sell at any time.
Dimension Fund disclosed a 6.48% stake in SIGM in February and Vanguard disclosed a 5.61% stake via 13G filings and MAK Capital One sold their 6.6% stake.
Down 43%, HOLD

Mitel Networks (NASDAQ-MITL)-Recommended 7/6/2011)
Buy Price- $3.04( Was $3.36 before $10,000 added, $3.95 before $10,000 added)
Valuation $12.26 (Was $13.10, $10.92, $13.92, $12.81, $15.28, $14.04, $10.39)
Closed up $.14 at $3.90
In addition to refinancing their debt out to 2019-2020, MITL announced earnings in February. Revenues were down to $142 million from $150.5 million last year and Non-GAAP net income was $.23 a share versus $.21 a share last year. Our valuation fell a bit to $12.26 a share-still more that 3X the current price.
UP 28%, BUY

Lexmark International (NYSE-LXK)-Recommended 5/24/2011)
Buy Price-$28.80
Valuation $60.44 (Was $60.41, $70.28, $62.59, $63.94, $63.84, $79.12, $63.99)
Closed up $.91 at $28.10 (includes dividends)
We have collected $1.70 a share in dividends here.
LXK now pays a $1.20 annual dividend.
Earnings announced in January. Not that good, but this is a strong company. Revenues came in $967 million, down 9% from last year. Not unexpected. Net income was only $.61 per share (Non-GAAP) versus $1.25 last year. Guidance for 2013 is for sales to decline 11-13% and Non-GAAP earnings for Q1 are expected to be between $.80-$.90 per share compared to $1.05. Based on 2013 guidance our valuation is $60.44. Not bad.
LXK announced in September that it was getting out of the inkjet printer business and cutting 1,700 employees. There was also speculation that they would get bought out.
They reiterated their intent to return over 50% of their free cash flow to shareholders in dividends and share repurchases
Down 2%, HOLD

Concurrent Computer (NASDAQ-CCUR)-Recommended 2/4/2011)
Buy Price-$4.58 (Was $5.08 before $.50 special dividend)
Valuation $16.20 (was $15.37, $13.53, $15.85, $14.13, $11.38, $14.04, $18.54, $15.99)
Closed up $.12 at $7.91
Pays $.24 annual dividend.
We have collected $.18 in dividends so far (excluding the $.50 special dividend).
Earnings announced in January. Not bad. Revenues were up a tad to $16.6 million compared to $16.4 million last year. They made $.08 per share versus a loss of $.06 last year. Cash per share dropped to $2.78 per share as they paid $.56 a share in dividends. Our valuation rose to $16.20 a share.
Singer/Miller duo own 12.1% of CCUR.
UP 73%, HOLD

Extreme Networks (EXTR-Recommended 3/22/2010)
Buy Price-$3.18 (Was $3.04 before adding another $10,000)
Valuation-$6.99 (was $6.97, $7.46, $6.31, $7.01, $6.72, $6.45, $5.67, $7.36, $7.23, $7.31, $6.82, $6.81)
Closed at $3.37 down $.13
Vanguard filed a Form 13G in March disclosing a 5.21% stake, Wellington disclosed a 6.3% stake and Soros upped his holdings to 9.85%..
Earnings announced in January. Revenues came in at $75.6 million (the low end of revised downward guidance) down 9% from last year. Non-GAAP income was $2.8 million ($.03 per share) compared to $5.8 million ($.06 per share). Net cash was $2.08 per share. Our valuation increased $.02 to $6.99 per share.
Guidance for next quarter looks much the same as this past quarter.
Starboard owns 8.8% and Blackrock owns 5.4% of EXTR.
UP 6%, BUY

Gravity Company Ltd. (GRVY-Recommended 1/18/2010)
Buy Price- $1.45 per ADS (Was $1.68 before double up)
Valuation $3.65-(Was $3.41, $5.52, $5.00, $5.39, $5.33, $5.61, $5.73, $4.38, $4.44, $5.15)
Closed at $1.30 down $.02
Earnings announced in November. Not bad and better than Q2. Revenues were $12.8 million and they lost about $.2 million (excluding a $2.5 million impairment charge). Cash rose to $51 million or $1.83 per share. Our valuation rose to $3.65 per share.
Now trading at way below cash value again.
Down 11%, BUY

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),
NEW Valuation $6.14 (was $5.97, $6.21, $6.13, $5.82, $5.81, $5.72, $5.65, $5.39, $4.86, $5.60, $5.73, $5.54, $5.74, $5.96, $4.72, $5.19, $5.66, $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $2.50 down $.20
Wynnefield Partners participated in the private placement and owns 900,000 shares of ARI (about 7%) as reported in their Form 13D last week.
ARI closed their private placement in March and the stock continued its climb. We are almost up to 50% of our valuation!
Earnings announced in March. We saw transitional results as a result of integrating 2 acquisitions including 50 Below which closed November 28, 2012. Revenues were up 36% to $7.5 million but expenses were up 39% excluding $600,000 of acquisition related expenses. As a result pre-tax loss was $206,000 versus income of $122,000. How much of this loss was due to additional integration expenses was not disclosed.
At the same time ARI announced a private placement of stock for $4.8 million at $1.50 a share. They will use this to pay down the 14% debt they took on to buy 50 Below. With all this and only a partial quarter of 50 Below sales, we estimate the current valuation at $6.14 a share. We don’t expect much in the way of earnings over the next 2 quarters as more integration costs will continue for a while. So while this acquisition may be a game changer, we are only in the 3rd inning.
UP 55%, HOLD, Still a Huge valuation gap here.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $1.17 (Was $1.34, $1.34, $1.37, $1.36, $1.23, $.91, $1.21, $.71, $.83, $.88 $.96, $.93, $.75, $.85, $1.57, $1.40, $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price $.28 closed at $.27
Well Birbeck and Fairford Holdings made an offer to buy CTIG in March for $.29 a share. The company formed a special committee to evaluate the offer. Hopefully they will find somebody else who will pay fair value—or at least close to it.
Earning announced in November. The good news was that they were again profitable, making $.01 versus losing $.01 last year. However revenue fell 10% from $4.4 million to $4 million. Net cash fell to $.09 per share and our valuation fell to $1.17.
UP 4%. HOLD

We had another nice week last week, driven by an additional 15% gain in ARIS. We were up 2.4% and are now up 13.6% for the year.

No earnings last week.

Some of our stocks are just stupid cheap—compared to their net cash on hand per share divided by their stock price.
Check this list:
EXTR 61%
GRVY 138%
CCUR 36%
SIGM 50%
CTIG 32%
MRVC 74%
AVNW 41%
DRIV 45%
AGYS 38%
The DOW was even last week, NASDAQ was down .1% and the Russell 3000 was down .3%. For the year, the DOW is up 10.7%, NASDAQ is up 7.5% and the Russell is up 9.60%.

DRIV, AGYS, DAEG, BLIN, MRVC, GRVY and CBEY are our favorites.
Last week we went 6 stocks up, 10 down and 1 even. Since inception we are now 65 stocks up and 15 down for an 81.3% winning percentage (80% is our target win %).
Since our beginning, we have closed out the following positions:
2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)
2008-PDLI +9% (company split, and special dividend)
2008-BDAY -39% (long overdue takeover offer-or “take-under”)
2008-DTLK +40% (third trip on this one)
2008-ILOG +26% (Buy-out offer from IBM)
2008-PARL +56%
2009-MBRK +67%
2009-SNWL +14%
2009-CYNO +25%
2009-DTLK +33% (fourth trip on this)
2009-NED +46%
2009-CUTR +13%
2009-HSTM +67% (continued good earnings)
2009-RNWK +36%
2009-OPK +116%
2009-CLZR -32% (a loser even on a buy-out)
2009-DTLK +28% (our 5th profitable trip on this one)
2010-HPOL +110%
2010-DIVX +25%
2010-CHRD +37% Buyout (2 weeks after we recommended it)
2010-HPOL +30%
2010-MGIC +82%
2010-GSL +78%
2010-CCEL +49%
2010-HPOL +27% (third trip)
2010-CAW EVEN (excluding 2.5 years of dividends)
2011-DWCH +116%
2011-IPAS +15%
2011-PRM +56% Buyout (1 week after we recommended it)
2011-RST +12%
2011-NINE -10%
2012-BVSN +30%
2012-TISA +137%
2012-PTIX -44%
2012-MTSL +157%
2012-LTUS -98% No more Chinese stocks for us
2012-AEZS -63% a bad speculation.
2012-RIMG -46% (including dividends)
2012-HPOL +34%
2012-MEDW +133% (Buyout 1 week AFTER we sold this)
2012-SPNC +118%
2012-RWWI +1%
2012-MOTR -29% (lost biggest customer contract)
2013-INUV -83% Held this since 2007. Failed business model.
2013-ASTX-+40%
2013-MGCD-+79%

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 63 stocks that we closed out since 2006 (52 were winners) the average net gain was 30%.

XRS Inc. (NASDAQ-XRSC)-Recommended 2/26/2013)
Buy Price $1.50
Valuation $6.50
Closed up $.20 at $1.80
Up 20%, BUY

Agilysys Inc. (NASDAQ-AGYS)-Recommended 1/18/2013)
Buy Price $8.40
Valuation (Was $16.10)
Closed up $.02 at $9.61
Earnings announced in January. Pretty good we think. Revenues were up 30% to $67 million and they made $1.7 million on Non-GAAP income, or $.08 per share versus a $1.4 million ($.06) loss last year. Gross margins dropped from 39% to $35% and net cash rose to $3.65 per share. Overall our valuation rose only slightly to $16.23 as the margin drop offset almost everything else. They also raised their 2013 guidance to $230-$232 million in sales and $.24-$.26 of Non-GAAP net income. This means Q4 guidance is sales of about $57 million and Non-GAAP net income of $.07-$.09 per share.
UP 14%, BUY

Digital River Inc. (NASDAQ-DRIV)-Recommended 1/11/2013)
Buy Price $14.20
Valuation $34.59 (Was $32.20)
Closed down $.38 at $14.25
Earnings announced in February. Revenues were $101 million, above guidance but below last year $112 million. Non-GAAP earnings were $.31 per share compared to $.45 last year. Next quarters guidance is revenues on $101-$104 million and Non-GAAP earnings of $.18-$.22 per share. The market didn’t like the earnings too much but our valuation went up to $37.32—but that is before you take out the $100 million in cash they paid for LML in January. Adjusting for this, and Q1 guidance our valuation still rose to $34.59 and net cash of $7.83.
Up 1%, BUY

Daegis Inc. (NASDAQ-DAEG)-Recommended 11/30/2012)
Buy Price $1.20
Valuation $4.86 (Was $4.00)
Closed down $.06 at $1.14
Earnings announced in March. Not bad. Sales fell from $11.1 last year to $10.4 million, but they were up slightly from last quarters $10.35 million. Gross margins were up to over 70% and net debt decreased to $13.8 million from $14.5 million last quarter. Non-GAAP earnings were $449,000 versus $252,000 last quarter. Our valuation spiked to $4.86 per share up 20% from last quarter.
Looks like BlueLine Partners (a “strategic opportunities fund”) have shaken up Daegis management in January with the ouster or the CEO and CFO. The interim CEO and Chairman of the Board is a BlueLine founder. Its feeling like they are not happy with the current stock price for sure.
Down 5%, BUY

Bridgeline Digital Inc. (NASDAQ-BLIN)-Recommended 8/24/2012)
Buy Price $1.24
Valuation $2.35 (Was $2.56, $2.24)
Closed down $.10 at $1.30
Earnings announced in February. So-so. Revenues fell from $6.5 million to $6.2 million. iAPPS revenue rose 17% ($4.2 million) and recurring revenues were just under 20% of total sales. They lost $.02 on a Non-GAAP basis versus a profit of $.01 last year. Guidance is for revenues of $27-$28 million for the year. iAPPs revenue is expected to increase 27% to $21 million. They expect to be adjusted EBITDA positive in 2013.
Our valuation fell a bit to $2.35 per share. We see our valuation soaring to $3.25 if they can make their numbers this year.
Up 5%, HOLD

Telecommunications Systems Inc. (NASDAQ-TSYS)-Recommended 6/14/2012)
Buy Price- $1.37
Valuation $6.02 (Was $6.72, $5.49)
Closed down $.03 at $2.31
TSYS announced another patent deal in February. This time it is with Acacia Research a patent licensing group. They termed the deal an “alliance” so we think it is more of a brokering agreement where Acacia looks for licensees and they share the revenues.
Earnings announced in January. Revenues rose 9.7% to $132.7 million and they made $.20 per share in Non-GAAP income. However, these results included the previously announced patent deal, which they still did not give any financial details on. We are thinking it could be as much as $8 million of the sales and profit for the quarter. Even adjusting for this our valuation dropped to $6.02. We still like TSYS as they say they will continue to monetize their patents and their results are still better year-over-year.
TSYS announced in November it was one of 20 companies selected to participate in a 5 year, $10 billion contract with the U.S. government.
Carlo Cannell, an activist investor filled a 13D in September pointing out how undervalued TSYS is and urged them to put themselves on the block. He points to a valuation done on the company as of August 29th of $7.40 to $11.81 a share. Even the low point here is higher than our valuation.
TSYS announced in September it was selected as part of a group of 8 companies to participate in a $2.6 million government contract.
Up 69%, HOLD

Aviat Networks Inc. (NASDAQ-AVNW)-Recommended 2/27/2012)
Buy Price- $2.62
Valuation $10.28 (Was $9.03, $9.37, $8.85, $8.31)
Closed down $.14 at $3.39
Penn Capital Mgmt. filed a 13G in late February disclosing a 6.05% stake.
Dimension Fund filed a Form 13G in February disclosing a 5.3% stake, Vanguard disclosed a 5.67% stake and Blue Mountain has been buying more and is now up to a 5.90% stake.
AVNW blew away their revised upwards guidance and came in with revenues of $129 million and Non-GAAP income of about $4.5 million. Gross margins were steady at 30% and our valuation jumped to $10.28 per share. Net cash was $1.40 per share.
Next quarter they are projecting $115-$121 million in sales and that they will again be profitable on a non-GAAP basis ($.02 to $.06 per share).
Up 29%, HOLD

CBeyond Inc. (NASDAQ-CBEY)-Recommended 2/28/2012)
Buy Price $7.17 ( Was $7.94 before another $10,000 added at $6.53)
Valuation $28.33 (Was $29.04, $29.59, $29.58, $29.21)
Closed down $.19 at $7.35
Earnings announced in February. Not bad, but didn’t set the world on fire. Revenues were down from last year-$118.9 versus $123.3 million. They lost $5.8 million versus $5 million last year on a GAAP basis. Adjusted EBITDA also fell to $18.8 million from $22.6 million. Nevertheless they did generate $4.3 million of free cash flow versus $4.2 last year. Guidance for 2013 was revenues of $475-$485 million, adjusted EBITDA of $75-$82 million and free cash flow of $15-$20 million. Our valuation fell to $28.33 and based on 2013 guidance should stay in about the same range.
Penn Capital Mgmt. filed a 13G in late February disclosing a 5.55% stake.
$80 million of EBITDA, $.68 a share in net cash and a $230 market cap. Cheap.
Up 3%, BUY

MRV Communications (Pink Sheets-MRVC.pk)
Valuation $31.80 (Was $34.60, $28.60, $41.20, $43.20 (after $9.50, $6.00 and $1.40 special dividends), $52.40, $55.80)
Buy Price October 7, 2011- $8.50 ($25.40 before special dividends)
Closed at $10.50 down $.49
Lloyd Miller disclosed a 6.9% stake in February.
The 20 for 1 stock split happened in December, so all the share information has been adjusted.
Raging Capital bought another 1.6 million shares in the first week of December at $.54 bringing their holdings to 30.7 million shares or 20.1% of the company.
Earnings announced in November. Not bad. Revenues fell a bit to $51 million but it appears that the revenue shortfall was in the divisions that were sold in October. Hard to tell from their press release or 10Q what the real results were excluding the sold divisions so we are still estimating our valuation which dropped to $31.80 per share. Looks like they broke even for the quarter after excluding an asset impairment write-off.
Still trading at less than ½ our valuation.
Up 22% BUY

Sigma Designs Inc. (NASDAQ-SIGM)-Recommended 7/11/2011)
Buy Price-$8.49
Valuation $8.24 (Was $13.05, $10.67, $8.41 $12.10, $13.40, $16.02)
Closed down $.02 at $5.00
Earnings announced in March. They stunk up the place. While sales were up to $44 million from $36 million last year, they lost $36 million or $1.18 per share. Cash fell again to $2.51 per share (it was $5.40 when we recommended SIGM) and our valuation plunged to its lowest level ever. But wait, there’s more…..they are projecting next quarter to be about breakeven on $49-$52 million in sales. The market looked past this past quarter and the stock rose. We will be watching this one very closely and may sell at any time.
Dimension Fund disclosed a 6.48% stake in SIGM in February and Vanguard disclosed a 5.61% stake via 13G filings and MAK Capital One sold their 6.6% stake.
Down 41%, HOLD

Mitel Networks (NASDAQ-MITL)-Recommended 7/6/2011)
Buy Price- $3.04( Was $3.36 before $10,000 added, $3.95 before $10,000 added)
Valuation $12.26 (Was $13.10, $10.92, $13.92, $12.81, $15.28, $14.04, $10.39)
Closed up $.10 at $3.76
No news but all of MITL’s loss last week was in the last hour or so of trading.
In addition to refinancing their debt out to 2019-2020, MITL announced earnings in February. Revenues were down to $142 million from $150.5 million last year and Non-GAAP net income was $.23 a share versus $.21 a share last year. Our valuation fell a bit to $12.26 a share-still more that 3X the current price.
Up 24%, BUY

Lexmark International (NYSE-LXK)-Recommended 5/24/2011)
Buy Price-$28.80
Valuation $60.44 (Was $60.41, $70.28, $62.59, $63.94, $63.84, $79.12, $63.99)
Closed up $.87 at $27.19 (includes dividends)
We have collected $1.70 a share in dividends here.
LXK now pays a $1.20 annual dividend.
Earnings announced in January. Not that good, but this is a strong company. Revenues came in $967 million, down 9% from last year. Not unexpected. Net income was only $.61 per share (Non-GAAP) versus $1.25 last year. Guidance for 2013 is for sales to decline 11-13% and Non-GAAP earnings for Q1 are expected to be between $.80-$.90 per share compared to $1.05. Based on 2013 guidance our valuation is $60.44. Not bad.
LXK announced in September that it was getting out of the inkjet printer business and cutting 1,700 employees. There was also speculation that they would get bought out.
They reiterated their intent to return over 50% of their free cash flow to shareholders in dividends and share repurchases
Down 6%, HOLD

Concurrent Computer (NASDAQ-CCUR)-Recommended 2/4/2011)
Buy Price-$4.58 (Was $5.08 before $.50 special dividend)
Valuation $16.20 (was $15.37, $13.53, $15.85, $14.13, $11.38, $14.04, $18.54, $15.99)
Closed up $.64 at $7.79
Pays $.24 annual dividend.
Looks like the NIA effect may be wearing off. But we will continue to hold on the large discount to our valuation.
We have collected $.18 in dividends so far (excluding the $.50 special dividend).
Earnings announced in January. Not bad. Revenues were up a tad to $16.6 million compared to $16.4 million last year. They made $.08 per share versus a loss of $.06 last year. Cash per share dropped to $2.78 per share as they paid $.56 a share in dividends. Our valuation rose to $16.20 a share.
Singer/Miller duo own 12.1% of CCUR.
Up 70%, HOLD

Extreme Networks (EXTR-Recommended 3/22/2010)
Buy Price-$3.18 (Was $3.04 before adding another $10,000)
Valuation-$6.99 (was $6.97, $7.46, $6.31, $7.01, $6.72, $6.45, $5.67, $7.36, $7.23, $7.31, $6.82, $6.81)
Closed at $3.50 down $.05
Vanguard filed a Form 13G in March disclosing a 5.21% stake, Wellington disclosed a 6.3% stake and Soros upped his holdings to 9.85%..
Earnings announced in January. Revenues came in at $75.6 million (the low end of revised downward guidance) down 9% from last year. Non-GAAP income was $2.8 million ($.03 per share) compared to $5.8 million ($.06 per share). Net cash was $2.08 per share. Our valuation increased $.02 to $6.99 per share.
Guidance for next quarter looks much the same as this past quarter.
Starboard owns 8.8% and Blackrock owns 5.4% of EXTR.
Up 10%, BUY

Gravity Company Ltd. (GRVY-Recommended 1/18/2010)
Buy Price- $1.45 per ADS (Was $1.68 before double up)
Valuation $3.65-(Was $3.41, $5.52, $5.00, $5.39, $5.33, $5.61, $5.73, $4.38, $4.44, $5.15)
Closed at $1.32 down $.03
Earnings announced in November. Not bad and better than Q2. Revenues were $12.8 million and they lost about $.2 million (excluding a $2.5 million impairment charge). Cash rose to $51 million or $1.83 per share. Our valuation rose to $3.65 per share.
Now trading at way below cash value again.
Down 9%, BUY

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 $6.14 (was $5.97, $6.21, $6.13, $5.82, $5.81, $5.72, $5.65, $5.39, $4.86, $5.60, $5.73, $5.54, $5.74, $5.96, $4.72, $5.19, $5.66, $5.63, $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $2.70 up $.35
ARI closed their private placement last week and the stock continued its climb. We are almost up to 50% of our valuation!
Earnings announced in March. We saw transitional results as a result of integrating 2 acquisitions including 50 Below which closed November 28, 2012. Revenues were up 36% to $7.5 million but expenses were up 39% excluding $600,000 of acquisition related expenses. As a result pre-tax loss was $206,000 versus income of $122,000. How much of this loss was due to additional integration expenses was not disclosed.
At the same time ARI announced a private placement of stock for $4.8 million at $1.50 a share. They will use this to pay down the 14% debt they took on to buy 50 Below. With all this and only a partial quarter of 50 Below sales, we estimate the current valuation at $6.14 a share. We don’t expect much in the way of earnings over the next 2 quarters as more integration costs will continue for a while. So while this acquisition may be a game changer, we are only in the 3rd inning.
Now up 68%, HOLD, Still a Huge valuation gap here.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask,
Valuation $1.17 (Was $1.34, $1.34, $1.37, $1.36, $1.23, $.91, $1.21, $.71, $.83, $.88 $.96, $.93, $.75, $.85, $1.57, $1.40, $1.29, $1.38, $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price $.28 closed at $.265
Well Birbeck and Fairford Holdings made an offer to buy CTIG in March for $.29 a share. The company formed a special committee to evaluate the offer. Hopefully they will find somebody else who will pay fair value—or at least close to it.
Earning announced in November. The good news was that they were again profitable, making $.01 versus losing $.01 last year. However revenue fell 10% from $4.4 million to $4 million. Net cash fell to $.09 per share and our valuation fell to $1.17.
Five profitable quarters in a row. .
UP 4%. HOLD