We are selling PARL. Their last quarter was a disaster. We are surprised that the stock has acted so well after it. Maybe there is some deal around the corner, but we are taking our 56% gain and going home on this one. Tough to make money in this market, so we are cashing out with a profit.

Markets soared last week, we only had a small gain.

The DOW was up 3.6%, NASDAQ was up 4.4% and the S+P 500 was up 2.5%.

We went 7 stocks up, 4 down and 3 even.

MIVA received an unsolicited take-over offer last week for $1.20 a share and promptly rejected it. At least it got the stock moving in the right direction, up 24%last week. This gain got pretty much wiped out by a 22% decline in DWCH–for no reason that we can figure. IPASS, and Parlux announced earnings last week.

For last week, 2008 year-to-date, and since we started this Blog in January 2006, our model portfolio is +.7%,-32.8 and +2.7% respectively. Since inception we are now 23 stocks up and 13 down, with 3 of them being down 10% or less.

So far in 2008 the DOW is down 11.5%, NASDAQ is down 9% and the S+P 500 is down 11.7%. The NASDAQ is still down a 15.6% since October 31, 2007.

The Russell 3000 and the Wilshire 5000 are both down just about 11% this year.

Since inception we have closed out the following positions:

2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)
2008-PDLI +9% (company split, and special dividend)
2008-BDAY -39% (long overdue takeover offer-or “take-under”)
2008-DTLK +40%
2008-ILOG +26% (Buy-out offer from IBM)

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 22 stocks that we closed out in 2006, 2007 and 2008 the average gain was 21%.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $9.40 (was $10.65 before double up), Valuation $20-$22
Up $.25 to $8.96.
SPNC is presenting at the Canaccord Adams conference this Wednesday.
The company has $44.4 million in cash ($1.33 per share), no debt and is trading at about 2.3 times 2008 revenues (net of cash)and is growing about 30% a year.
Now down 5%. BUY.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.02 (was $3.21 added $10,000, averaged down from $3.66), Valuation $8.64 (was $8.47, $8.47, $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $1.91, down $.53.
They have $.75 a share in cash and are profitable.
Now down 37%. BUY

Parlux Fragrances (PARL-Recommended 11/30/2006)
Buy price $4.14 (was $4.78 before $10,000 adder, $6.12 before another $10,000 added, $6.65 before double up), Valuation $12.40 (Was $11.24, $10.80 $9.20, $8.63, $13.77)
PARL closed at $5.39, down $.40.
Earnings last week stunk up the place taking the stock down. They lost about $8 million in sales because of inventory shortages. This led to an $8 million operating loss. The CEO assured that demand was strong and that they would make up these sales in the upcoming quarter. We’ll see. We are not changing our valuation–yet. PARL’s business IS seasonal, so it is harder to value quarter to quarter. CEO says that sales and earnings will “significantly exceed those of the prior year”.
Now trading at 43% of our valuation.
The new management has 2.0 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
Up 30%. HOLD.

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up) NEW Valuation $10.99 (was $10.28, $13.32, $12.89, $13.40)
Up $.19 at $6.01.
Cannell Capital filed a 13D on February 19th, disclosing a 12.9% ownership stake. Cannell is pushing MEDW management to sell the company. Meanwhile, Constellation Software, a Canadian public company that has been on an acquisition binge filed a 13D in April, disclosing a 6.1% ownership in MEDW (499,000 shares). Constellation has $243 million in revenues and is profitable.
In early May, Constellation increased its bank credit line to $105 million from $50 million.
On May 21 Constellation purchased another 586,000 shares of MEDW at prices from $5.43to $5.70 (most at $5.70). So Constellation now owns 1,056,000 shares–13.9%.
Looks like something is going to happen here–but when?
Constellation announced earnings last week, but no mention of MEDW.
Down 5%. BUY

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $3.74 (was $7.26 before double up), Valuation $9.90 (was $8.69, $11.51)
Up $.30 to $2.79
CLZR got a favorable patent ruling in their litigation with Palomar causing a rise in the stock. This may work yet.
Down 25%. HOLD

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $1.63 (Was $2.38 before adding another $20,000, $2.62 before another $10,000 and was $3.00 before double up), Valuation $6.42 (was $6.84, $7.58, $7.59)
Up $.24 to $1.02.
Blinkx, a U.K. company made an all cash offer to buy MIVA last week. MIVA rejected the offer on Friday saying it was too low and they think they can do better.
They better, or there will be shareholder lawsuits on this one.
If they can do what they say in 2008, a valuation of close to $8 is possible.
Trading at 16% of our latest valuation
Down 38%. HOLD

Harris Interactive. (HPOL-Recommended 5/25/2008)
Buy Price $1.82 (was $2.02 before $10,000 added and $2.15 before double up), Valuation $5.96
Down $.02 to $1.39.
Earnings due out Friday, 8/22 before the open.
Trading at 23% of our valuation.
Down 24%. BUY

IPASS. (IPAS-Recommended 6/1/2008)
Buy Price-$1.90 (Was $2.07 before another $10,000 added and $2.15 before double up), Valuation $4.09
Up $.10 to $1.99.
Earnings out last week. Sales were up 2% as dial-up revenues were down 49% to just $9.4 million while broadband and software/services were up 34% to $39.2 from $29.3 million. They made $.01 on a non-GAAP basis. They also bought back 229,000 shares during the quarter. Hopefully they can continue to grow their non-dial-up revenues as dial-up continues to evaporate.
Our valuation moved up to $4.30 from $4.09.
With $1.12 per share in cash (56% of market cap), we feel that this has little additional downside.
No news.
Up 5%. BUY

Healthstream Inc. (HSTM-Recommended 8/4/2008)
Buy Price-$2.40
Valuation $4.42
Down $.01 to $2.39.
HSTM got up to $2.88 on Friday before sinking back down to just below our buy-price.
They are presenting at the Noble Financial Equity conference on Augsut 18th.
Down .4%. BUY

CCA Industries. (CAW-Recommended 8/4/2008)
Buy Price-$7.00 (6.4% dividend)
Valuation $18.36
Up $.15 to $7.15.
No news.
Up 2%. 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 $5.63 (was $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.40, up $.05.
Earnings announced in June were impressive. $.06 per share in earnings (untaxed)for the quarter and $.14 per share for the first three quarters. Our valuation moved up to $5.63 per share. This is still way too cheap.
They announced a small aquisition in early July. Will add $1 million in revenue and be profitable. This is the stuff that will help get some attention for ARI.
ARI does little to get any investor attention. Wake up management–you have a great little company here worth 3X what it is selling for.
Now down 13%. BUY. Still a Huge valuation gap here.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.93 (Was $.99 and $1.19 before adding $10,000-twice), NEW Valuation $4.00 (was $3.41, $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.80, even.
Earnings out in early May. Sales weak, but earning were great.
Sales dropped from $14.6 million to $12.8 million. But, net income was $1.005 million compared to a $224,000 loss last year. EPS was $.05 versus a loss of $.02 last year. For the 9 months ended March 31, earnings per share were $.12 (untaxed).
Now down 14%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.38 (Was $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price unchanged at $.28. Closed at $.18.
CTI announced earnings in early May. Sales were good, but they had another loss. Sales were up to $5.339 million from $5.054 million. They managed to reduce their loss to $180,000 from $587,000 last year. Their VOIP business continues to struggle and lose money–$729,000 in the current quarter. Gross margin % rose to 75% from 72%. Still an “undercover” company and stock.
Maybe these guys will wake up and create some shareholder value in 2008.
This is still trading at only 20% of our latest valuation.
UP 4%. BUY

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up) Valuation-$2.28 (Was $2.08)
Closed at $.66, even for the week.
After announcing earnings in mid-May, it took LTUS another week or so to come out and reaffirm that they expect to make at least $13.1 million in earnings this year. On approximately 50 million shares outstanding this is $.26 per share earnings. So we are trading at a little less than 3 times 2008 EPS. 3 new drugs expected to be introduced this year also.
Investors seem to have woken up to the unusual legal structure of Lotus. There is risk here, no doubt, but not until year 2016. PE here is 3–pretty big discount for something 7.5 years out.
Down 21%. BUY

CCA Industries (NASDAQ–CAW)
Valuation-$18.36
Price August 4, 2008-$7.00

We recommended CCA back in 2006. Ultimately, we booked a 21% gain on it.

CCA has consistently made money over the years and pays a handsome dividend—6.3% yield.

Last time we recommended CCA it was at $9.45 a share and sold it at $11.50.

They had a take-over offer that never went through.

CCA has 60%+ gross margins and $2.56 a share in cash.

So far this year (6 months ended 5/31/2008) sales were down 3% and net income was down to $.16 from $.25 last year.

So while their sales and EPS performance has been lackluster, their balance sheet and dividend provides good support.

Trading at 38% of our valuation, with $2.56 per share in cash, we think that this one will be bought-out at some point in the double digit price range.

The 52 week low has been $6.61 and the high–$10.25.

HSTM trades about 5,000 shares a day, so be careful buying. We bought a little today at $7.00.

There are about 7.1 million fully diluted shares outstanding.

About CCA
CCA Industries, Inc. manufactures and markets health and beauty aids, each under its individual brand name. The products include, principally, “Plus+White” toothpastes and teeth whiteners, “Mega-T” Green Tea diet supplements, “Mega-T” Green Tea gum and mint products, “Bikini Zone” medicated topicals and shave gels, “Nutra Nail” nail care treatments, “Scar Zone” scar treatment products, “Sudden Change” anti-aging skin care products, “Parfume de Vanille” fragrances, “Solar Sense” sun protection products, “Hair Off” hair removal and depilatory products, and “Wash ‘N Curl” shampoos and conditioners.

Healthstream Inc. (NASDAQ–HSTM)
Valuation-$4.42
Closing price August 1, 2008-$2.40

In this market we are looking for what we think are stable businesses with good margins and a decent cash cushion in downturn resistant industries. Healthstream fits the bill we think.

E-Learning to healthcare professionals is here to stay. HSTM had 1.639 million paying subscribers at June 30, 2008. They also have over 1,000 hospitals signed up for their research services. We view this as a very valuable customer base that is worth much more than the $53 million market cap of HSTM today ($32 each). At $50 per subscriber these shares are worth $3.63 and at $75 they are worth $5.44.

HSTM announced Q2 earnings in late July. $13 million in revenues (up about 8%) and GAAP income of $739,000 million (up about 74%) or $.02 per share.

HSTM’s earnings are lightly taxed due to prior year loss carry-forwards ($38 million at 12/31/2007), and should continue this low taxation for many more years.

EBITDA was $2.2 million up from $1.9 million.

HSTM has about $.26 per share in cash and is using its excess cash-flow to buy back shares (spent $1 million in Q2). Debt is about $1.5 million.

Trading at 54% of our valuation, with $.26 per share in cash—and with their subscribers valued at $32 each, we think this is a compelling buy-out candidate. Their growing subscriber base and earnings should also move the share price higher over time.

The 52 week low has been $2.21 and the high–$3.76.

HSTM trades about 26,000 shares a day, so be careful buying. We bought a little over the last week or so at $2.30 and $2.35.

There are about 22.6 million fully diluted shares outstanding.

About HealthStream

HealthStream is a leading provider of research and learning solutions for the healthcare industry, transforming insight into action to deliver outcomes-based results for healthcare organizations. Through HealthStream’s learning solutions—which have been contracted by over 1.7 million hospital-based healthcare professionals—healthcare organizations create safer environments for patients, increase clinical competencies of their workforces, and facilitate the rapid transfer of the latest knowledge and technologies. Through our research products, executives from healthcare organizations gain valuable insight about patients’ experiences, workforce challenges, physician relations, and community perceptions of their services. Based in Nashville, Tennessee, HealthStream has two satellite offices.

Kind of a flat week all around.

The DOW was down .4%, NASDAQ was even and the S+P 500 was up .2%.

We went 4 stocks up, 7 down and 2 even.

We sold ILOG last week for a 26% gain. Despite this gain, declines in SPNC, ARIS.ob and MIVA wiped out our gain in ILOG last week.

For last week, 2008 year-to-date, and since we started this Blog in January 2006, our model portfolio is -1.0%%,-33.4 and +2.0% respectively. Since inception we are now 20 stocks up and 13 down, with 3 of them being down 10% or less.

So far in 2008 the DOW is down 14.6%, NASDAQ is down 12.9% and the S+P 500 is down 14.2%. The NASDAQ is still down a 19.2% since October 31, 2007.

The Russell 3000 and the Wilshire 5000 are both down just about 13.1% this year.

Since inception we have closed out the following positions:

2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)
2008-PDLI +9% (company split, and special dividend)
2008-BDAY -39% (long overdue takeover offer-or “take-under”)
2008-DTLK +40%
2008-ILOG +26% (Buy-out offer from IBM)

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 22 stocks that we closed out in 2006, 2007 and 2008 the average gain was 21%.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $9.40 (was $10.65 before double up), Valuation $20-$22
Down $1.89 to $8.71.
Earnings last week. Apparently the 31% revenue rise, which beat estimates was not enough to make anyone happy. Excluding a $3.85 million one-time write-off for the Kensey Nash acquisition they made about a penny a share.
Who can figure in this market what will make a stock go up–other than a take-over.
The company has $44.4 million in cash ($1.33 per share), no debt and is trading at about 2.3 times 2008 revenues (net of cash)and is growing about 30% a year.
Now down 7%. BUY.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.02 (was $3.21 added $10,000, averaged down from $3.66), NEW Valuation $8.64 (was $8.47, $8.47, $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $2.44, down $.08.
Earnings out last week. Not bad. Although revenues were down from last year to $5,775,000 from 6,483,000, they still managed to make $.02 a share.
They have $.75 a share in cash and our valuation moved up slightly to $8.64 from $8.47.
Now down 19%. BUY

Parlux Fragrances (PARL-Recommended 11/30/2006)
Buy price $4.14 (was $4.78 before $10,000 adder, $6.12 before another $10,000 added, $6.65 before double up), Valuation $12.40 (Was $11.24, $10.80 $9.20, $8.63, $13.77)
PARL closed at $5.79, up $.12.
Parl announced FY 2008 earnings in early June. Sales were $154 million, gross margin was 50%, they have $1 per share in cash and made $.24 a share for the year-fully taxed. Q4 EPS was like $.13. Our valuation moved up to $12.40 per share.
Now trading at 47% of our valuation—still cheap.
The new management has 2.0 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
Up 40%. HOLD.

ILOG SA (ILOG-recommended 3/26/2007)
Buy price $12.08 (was $12.92 before another $10,000 added, $13.60 before double-up), Valuation $24.06 (was $24.67, $20.51, $23.22, $20.99, $20.52)
SOLD at $15.25–up 32% on the week and a total gain of 26%.
Thank you IBM.

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up) NEW Valuation $10.99 (was $10.28, $13.32, $12.89, $13.40)
Up $.11 at $5.82.
Cannell Capital filed a 13D on February 19th, disclosing a 12.9% ownership stake. Cannell is pushing MEDW management to sell the company. Meanwhile, Constellation Software, a Canadian public company that has been on an acquisition binge filed a 13D in April, disclosing a 6.1% ownership in MEDW (499,000 shares). Constellation has $243 million in revenues and is profitable.
In early May, Constellation increased its bank credit line to $105 million from $50 million.
On May 21 Constellation purchased another 586,000 shares of MEDW at prices from $5.43to $5.70 (most at $5.70). So Constellation now owns 1,056,000 shares–13.9%.
Looks like something is going to happen here–but when?
Down 8%. BUY

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $3.74 (was $7.26 before double up), Valuation $9.90 (was $8.69, $11.51)
Down $.06 to $2.49
No news
Down 33%. HOLD

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $1.63 (Was $2.38 before adding another $20,000, $2.62 before another $10,000 and was $3.00 before double up), Valuation $6.42 (was $6.84, $7.58, $7.59)
Down $.15 to $.78.
Nothing much to talk about here until earnings are released and we see how all their favorable press releases translate on the P+L and balance sheet.
If they can do what they say in 2008, a valuation of close to $8 is possible.
Trading at 12% of our latest valuation
Down 52%. BUY

Harris Interactive. (HPOL-Recommended 5/25/2008)
Buy Price $1.82 (was $2.02 before $10,000 added and $2.15 before double up), Valuation $5.96
Down $.01 to $1.41.
No news.
Trading at 24% of our valuation.
Down 23%. BUY

IPASS. (IPAS-Recommended 6/1/2008)
Buy Price-$1.90 (Was $2.07 before another $10,000 added and $2.15 before double up), Valuation $4.09
Down $.01 to $1.89.
With $1.09 per share in cash (57% of market cap), we feel that this has little additional downside.
No news.
Down 1%. 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 $5.63 (was $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.35, down $.20.
Volume last week was interesting. 111,000 shares traded on Friday and 130,000 for the week. This is pretty unusual.
Earnings announced in June were impressive. $.06 per share in earnings (untaxed)for the quarter and $.14 per share for the first three quarters. Our valuation moved up to $5.63 per share. This is still way too cheap.
They announced a small aquisition in early July. Will add $1 million in revenue and be profitable. This is the stuff that will help get some attention for ARI.
ARI does little to get any investor attention. Wake up management–you have a great little company here worth 3X what it is selling for.
Now down 16%. BUY. Still a Huge valuation gap here.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.93 (Was $.99 and $1.19 before adding $10,000-twice), NEW Valuation $4.00 (was $3.41, $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.80, even.
Earnings out in early May. Sales weak, but earning were great.
Sales dropped from $14.6 million to $12.8 million. But, net income was $1.005 million compared to a $224,000 loss last year. EPS was $.05 versus a loss of $.02 last year. For the 9 months ended March 31, earnings per share were $.12 (untaxed).
Now down 14%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.38 (Was $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price unchanged at $.28. Closed at $.28.
CTI announced earnings in early May. Sales were good, but they had another loss. Sales were up to $5.339 million from $5.054 million. They managed to reduce their loss to $180,000 from $587,000 last year. Their VOIP business continues to struggle and lose money–$729,000 in the current quarter. Gross margin % rose to 75% from 72%. Still an “undercover” company and stock.
Maybe these guys will wake up and create some shareholder value in 2008.
This is still trading at only 20% of our latest valuation.
UP 4%. BUY

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up) Valuation-$2.28 (Was $2.08)
Closed at $.66, up $.01.
After announcing earnings in mid-May, it took LTUS another week or so to come out and reaffirm that they expect to make at least $13.1 million in earnings this year. On approximately 50 million shares outstanding this is $.26 per share earnings. So we are trading at a little less than 3 times 2008 EPS. 3 new drugs expected to be introduced this year also.
Investors seem to have woken up to the unusual legal structure of Lotus. There is risk here, no doubt, but not until year 2016. PE here is 3–pretty big discount for something 7.5 years out.
Down 21%. BUY

As announced yesterday, IBM made an offer of 10 Euros per share yesterday. This is worth about $15.75. 33% below our valuation–but still a 26% gain for us. In this market, we will take it gladly. ILOG was halted on the Paris stock exchange yesterday and in the U.S. In Paris today the stock was trading about 9.72 Euro–or $15.30.

Sell at $15.25 or better. High likelyhood that this deal will close since it is pocket change for IBM, but anything can happen these days.

Good week for us. Up 5.8% last week.

The DOW was down 1.1%, NASDAQ was up 1.2% and the S+P 500 was down .2%.

We went 9 stocks up, 4 down and 1 even.

We sold DTLK last week for a 40% gain. This is our 3rd profitable trip on DTLK (gains of 41%, 25% and 40%)

For last week, 2008 year-to-date, and since we started this Blog in January 2006, our model portfolio is +5.8%,-32.5 and +3.0% respectively. Since inception we are now 21 stocks up and 12 down and 1 even, with 3 of them being down 10% or less.

So far in 2008 the DOW is down 14.3%, NASDAQ is down 12.9% and the S+P 500 is down 14.3%. The NASDAQ is still down a 19.2% since October 31, 2007.

The Russell 3000 and the Wilshire 5000 are both down just about 13.4% this year.

Since inception we have closed out the following positions:

2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)
2008-PDLI +9% (company split, and special dividend)
2008-BDAY -39% (long overdue takeover offer-or “take-under”)
2008-DTLK +40%

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 21 stocks that we closed out in 2006, 2007 and 2008 the average gain was 21%.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $9.40 (was $10.65 before double up), Valuation $20-$22
Up $.26 to $10.60.
Hackers continue to play this stock.
Earnings due out this Tuesday, before the market open.
The company has $43.4 million in cash ($1.37 per share), and is trading at about 2.5 times 2008 revenues (net of cash)and is growing about 30% a year.
Now up 13%. BUY.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.02 (was $3.21 added $10,000, averaged down from $3.66), Valuation $8.47 (was $8.47, $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $2.52, down $.07.
Our valuation is $8.47, so we are trading at 30% of our valuation.
Earnings out Tuesday, July 29th, before the open.
Now down 17%. BUY

Parlux Fragrances (PARL-Recommended 11/30/2006)
Buy price $4.14 (was $4.78 before $10,000 adder, $6.12 before another $10,000 added, $6.65 before double up), Valuation $12.40 (Was $11.24, $10.80 $9.20, $8.63, $13.77)
PARL closed at $5.67, up $.12.
Parl announced FY 2008 earnings in early June. Sales were $154 million, gross margin was 50%, they have $1 per share in cash and made $.24 a share for the year-fully taxed. Q4 EPS was like $.13. Our valuation moved up to $12.40 per share.
Now trading at 46% of our valuation—still cheap.
The new management has 2.0 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
Up 37%. HOLD.

ILOG SA (ILOG-recommended 3/26/2007)
Buy price $12.08 (was $12.92 before another $10,000 added, $13.60 before double-up), Valuation $24.06 (was $24.67, $20.51, $23.22, $20.99, $20.52)
Closed at $11.52 up $1.52.
Despite minimal trading on NASDAQ–ILOG has been trading a fair amount on the Paris exchange. You can get Paris quotes and volumes on Euronext.com. Same ILOG symbol.
ILOG revised their 2008 guidance down from 20% sales growth and $1-6 million in operating income to double digit sales growth and breakeven operating income. ILOG’s market cap, minus cash is $80 million. This is less than 50% of annual sales, for a software company with 70%+ gross margins.
Cash is $3.84 a share (33% of market cap).
ILOG is trading at 48% of our valuation.
A buy-out is a decent possibility here.
Down 5%. BUY

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up) NEW Valuation $10.99 (was $10.28, $13.32, $12.89, $13.40)
Down $.34 at $5.71.
Cannell Capital filed a 13D on February 19th, disclosing a 12.9% ownership stake. Cannell is pushing MEDW management to sell the company. Meanwhile, Constellation Software, a Canadian public company that has been on an acquisition binge filed a 13D in April, disclosing a 6.1% ownership in MEDW (499,000 shares). Constellation has $243 million in revenues and is profitable.
In early May, Constellation increased its bank credit line to $105 million from $50 million.
On May 21 Constellation purchased another 586,000 shares of MEDW at prices from $5.43to $5.70 (most at $5.70). So Constellation now owns 1,056,000 shares–13.9%.
Looks like something is going to happen here–but when?
Down 10%. BUY

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $3.74 (was $7.26 before double up), Valuation $9.90 (was $8.69, $11.51)
Up $.09 to $2.55
No news
Down 32%. HOLD

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $1.63 (Was $2.38 before adding another $20,000, $2.62 before another $10,000 and was $3.00 before double up), Valuation $6.42 (was $6.84, $7.58, $7.59)
Down $.02 to $.93.
MIVA announced big growth in their toolbar product and Spill.com site. At least this got the stock back from alow of $.62 .
Even a “Seeking Alpha” blog article touting MIVA as a buy-out candidate at “3 or 4 times the current price” has done nothing for the stock.
If they can do what they say in 2008, a valuation of close to $8 is possible.
Trading at 15% of our latest valuation
Down 43%. BUY

Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, NEW Valuation $10.49 (Was, $9.97, $10.66, $9.39)
Up $.83 to $6.00.
Sold for a 40% gain.

Harris Interactive. (HPOL-Recommended 5/25/2008)
Buy Price $1.82 (was $2.02 before $10,000 added and $2.15 before double up), Valuation $5.96
Up $.08 to $1.42.
No news.
Trading at 24% of our valuation.
Down 22%. BUY

IPASS. (IPAS-Recommended 6/1/2008)
Buy Price-$1.90 (Was $2.07 before another $10,000 added and $2.15 before double up), Valuation $4.09
Up $.09 to $1.90.
With $1.09 per share in cash (57% of market cap), we feel that this has little additional downside.
No news.
Even. BUY

OB-abies (Bulletin Board Listed Stocks)

Our OB-abies have held up better than the “higher-quality” stocks so far this year. They are down about 12.0% on average, compared to 17% for the stocks above. At least so far. As proven by OPTIO, patience is necessary with these stocks.

ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $1.61 (Was $1.78 before another $10,000 added, was $2.06 before double up), Valuation $5.63 (was $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.55, up $.05.
Earnings announced in June were impressive. $.06 per share in earnings (untaxed)for the quarter and $.14 per share for the first three quarters. Our valuation moved up to $5.63 per share. This is still way too cheap.
They announced a small aquisition in early July. Will add $1 million in revenue and be profitable. This is the stuff that will help get some attention for ARI.
ARI does little to get any investor attention. Wake up management–you have a great little company here worth 3X what it is selling for.
Now down 4%. BUY. Still a Huge valuation gap here.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.93 (Was $.99 and $1.19 before adding $10,000-twice), NEW Valuation $4.00 (was $3.41, $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.80, down $.03.
Earnings out in early May. Sales weak, but earning were great.
Sales dropped from $14.6 million to $12.8 million. But, net income was $1.005 million compared to a $224,000 loss last year. EPS was $.05 versus a loss of $.02 last year. For the 9 months ended March 31, earnings per share were $.12 (untaxed).
Now down 14%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.38 (Was $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price unchanged at $.28. Closed at $.28.
CTI announced earnings in early May. Sales were good, but they had another loss. Sales were up to $5.339 million from $5.054 million. They managed to reduce their loss to $180,000 from $587,000 last year. Their VOIP business continues to struggle and lose money–$729,000 in the current quarter. Gross margin % rose to 75% from 72%. Still an “undercover” company and stock.
Maybe these guys will wake up and create some shareholder value in 2008.
This is still trading at only 20% of our latest valuation.
UP 4%. BUY

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up) Valuation-$2.28 (Was $2.08)
Closed at $.65, up $.03.
After announcing earnings in mid-May, it took LTUS another week or so to come out and reaffirm that they expect to make at least $13.1 million in earnings this year. On approximately 50 million shares outstanding this is $.26 per share earnings. So we are trading at a little less than 3 times 2008 EPS. 3 new drugs expected to be introduced this year also.
Investors seem to have woken up to the unusual legal structure of Lotus. There is risk here, no doubt, but not until year 2016. PE here is 3–pretty big discount for something 7.5 years out.
Down 22%. BUY

DTLK hit our $6 target today and continues to trade over it.

We are done. 40% gain.

Apparently the world is not ending!

We were up 3.6%, last week.

The DOW was up 3.6%, NASDAQ was up 2.0% and the S+P 500 was up 1.7%.

We went 7 stocks up, 4 down and 3 even.

For last week, 2008 year-to-date, and since we started this Blog in January 2006, our model portfolio is +3.6%,-38.2 and -2.7% respectively. Since inception we are now 21 stocks up and 13 down, with 3 of them being down 10% or less.

So far in 2008 the DOW is down 13.3%, NASDAQ is down 13.9% and the S+P 500 is down 14.1%. The NASDAQ is still down a 20.2% since October 31, 2007.

The Russell 3000 and the Wilshire 5000 are both down just about 13.3% this year.

Since inception we have closed out the following positions:

2006-NTCT +44%
2006-ONXS +11% (Buyout offer)
2006-DTLK +41%
2006-CAW +21% (Buyout offer)
2007-IYXI.ob +44% (Buyout offer)
2007-MOBI +47% (Buyout offer)
2007-INFT +11% (Buyout offer)
2007-RITT +62%
2007-MIVA +55%
2007-DTLK +25% (2 weeks)
2007-PDLI + 3%
2007-QADI +25%
2007-CIMT +50%
2007-BDR +19%
2007-LINN.ob -57% (mortgage business bust didn’t help here)
2007-TISA -39% (take some tax loss for 2007 due to disappointing results.
2008-ANGN +26%
2008-OPTO.ob +40% (Buy-out offer)
2008-PDLI +9% (company split, and special dividend)
2008-BDAY -39% (long overdue takeover offer-or “take-under”)

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 20 stocks that we closed out in 2006, 2007 and 2008 the average gain was 20%.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $9.40 (was $10.65 before double up), Valuation $20-$22
Up $.16 to $10.34.
Hackers continue to play this stock.
Earnings should be due out soon, but nothing has been announced. Likely due to getting the recent acquisition numbers done, but we can always hope that something good and “material” is going on.
The company has $43.4 million in cash ($1.37 per share), and is trading at about 2.5 times 2008 revenues (net of cash)and is growing about 30% a year.
Now up 10%. BUY.

DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.02 (was $3.21 added $10,000, averaged down from $3.66), Valuation $8.47 (was $8.47, $10.30, $9.28, $9.20, $8.32, $7.50, $7.63, $9.31)
Closed at $2.59, unchanged.
Our valuation is $8.47, so we are trading at 31% of our valuation.
Earnings out Tuesday, July 29th, before the open.
Now down 14%. BUY

Parlux Fragrances (PARL-Recommended 11/30/2006)
Buy price $4.14 (was $4.78 before $10,000 adder, $6.12 before another $10,000 added, $6.65 before double up), Valuation $12.40 (Was $11.24, $10.80 $9.20, $8.63, $13.77)
PARL closed at $5.55, up $.36.
Parl announced FY 2008 earnings in early June. Sales were $154 million, gross margin was 50%, they have $1 per share in cash and made $.24 a share for the year-fully taxed. Q4 EPS was like $.13. Our valuation moved up to $12.40 per share.
Now trading at 45% of our valuation—still cheap.
The new management has 2.0 million reasons to make this stock go up. Glenn Nussdorf paid $6 for his shares.
Up 34%. BUY.

ILOG SA (ILOG-recommended 3/26/2007)
Buy price $12.08 (was $12.92 before another $10,000 added, $13.60 before double-up), Valuation $24.06 (was $24.67, $20.51, $23.22, $20.99, $20.52)
Closed at $10.00 down $.34.
ILOG revised their 2008 guidance down from 20% sales growth and $1-6 million in operating income to double digit sales growth and breakeven operating income. ILOG’s market cap, minus cash is $80 million. This is less than 50% of annual sales, for a software company with 70%+ gross margins.
Cash is $3.84 a share (38% of market cap).
ILOG is trading at 42% of our valuation.
A buy-out is a decent possibility here.
Down 14%. BUY

Mediware (MEDW-Recommended 6/4/2007)
Buy Price $6.33, (was $6.52, $6.67 ($10,000 added), $6.98 after double up) NEW Valuation $10.99 (was $10.28, $13.32, $12.89, $13.40)
Up $.25 at $6.05.
Cannell Capital filed a 13D on February 19th, disclosing a 12.9% ownership stake. Cannell is pushing MEDW management to sell the company. Meanwhile, Constellation Software, a Canadian public company that has been on an acquisition binge filed a 13D in April, disclosing a 6.1% ownership in MEDW (499,000 shares). Constellation has $243 million in revenues and is profitable.
In early May, Constellation increased its bank credit line to $105 million from $50 million.
On May 21 Constellation purchased another 586,000 shares of MEDW at prices from $5.43to $5.70 (most at $5.70). So Constellation now owns 1,056,000 shares–13.9%.
Looks like something is going to happen here.
Down 5%. BUY

Candela Corp. (CLZR-Recommended 8/30/2007)
Buy Price $3.74 (was $7.26 before double up), Valuation $9.90 (was $8.69, $11.51)
Up $.18 to $2.46
No news
Down 34%. HOLD

MIVA. (MIVA-Recommended 10/21/2007)
Buy Price $1.63 (Was $2.38 before adding another $20,000, $2.62 before another $10,000 and was $3.00 before double up), Valuation $6.42 (was $6.84, $7.58, $7.59)
Down $.02 to $.95.
MIVA announced big growth in their toolbar product and Spill.com site. At least this got the stock back from $.62 on Tuesday.
Even a “Seeking Alpha” blog article touting MIVA as a buy-out candidate at “3 or 4 times the current price” has done nothing for the stock.
If they can do what they say in 2008, a valuation of close to $8 is possible.
Trading at 15% of our latest valuation
Down 42%. BUY

Datalink. (DTLK-Recommended 10/31/2007)
Buy Price $4.28, NEW Valuation $10.49 (Was, $9.97, $10.66, $9.39)
Up $.54 to $5.17.
Good earnings in a good market week let this stock rise.
CEO selling done until August.
Trading at 46% of our valuation.
Up 21%. HOLD

Harris Interactive. (HPOL-Recommended 5/25/2008)
Buy Price $1.82 (was $2.02 before $10,000 added and $2.15 before double up), Valuation $5.96
Down $.18 to $1.34.
No news.
Trading at 22% of our valuation.
Down 26%. BUY

IPASS. (IPAS-Recommended 6/1/2008)
Buy Price-$1.90 (Was $2.07 before another $10,000 added and $2.15 before double up), Valuation $4.09
Up $.18 to $1.81.
With $1.09 per share in cash (60% of market cap), we feel that this has little additional downside.
No news.
Down 5%. BUY

OB-abies (Bulletin Board Listed Stocks)

Our OB-abies have held up better than the “higher-quality” stocks so far this year. They are down about 12.5% on average, compared to 20% for the stocks above. At least so far. As proven by OPTIO, patience is necessary with these stocks.

ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $1.61 (Was $1.78 before another $10,000 added, was $2.06 before double up), Valuation $5.63 (was $5.61, $5.71, $5.49, $5.34, $5.03, $5.28, $5.28, $5.21)
Closed at $1.50, unchanged.
Earnings announced in June were impressive. $.06 per share in earnings (untaxed)for the quarter and $.14 per share for the first three quarters. Our valuation moved up to $5.63 per share. This is still way too cheap.
They announced a small aquisition in early July. Will add $1 million in revenue and be profitable. This is the stuff that will help get some attention for ARI.
ARI does little to get any investor attention. Wake up management–you have a great little company here worth 3X what it is selling for.
Now down 7%. BUY. Still a Huge valuation gap here.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $.93 (Was $.99 and $1.19 before adding $10,000-twice), NEW Valuation $4.00 (was $3.41, $3.05, $2.53, $3.25, $3.29 $2.69, $3.36, $3.81)
Stock closed at $.83, up $.10.
AVSO had its biggest volume trading day last week since February–147,000 shares.
Earnings out in early May. Sales weak, but earning were great.
Sales dropped from $14.6 million to $12.8 million. But, net income was $1.005 million compared to a $224,000 loss last year. EPS was $.05 versus a loss of $.02 last year. For the 9 months ended March 31, earnings per share were $.12 (untaxed).
Now down 11%. BUY.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.38 (Was $1.31, $1.38, $1.29, $1.42, $1.28 $1.13, $1.05, $.82)
Ask price unchanged at $.28. Closed at $.28.
CTI announced earnings in early May. Sales were good, but they had another loss. Sales were up to $5.339 million from $5.054 million. They managed to reduce their loss to $180,000 from $587,000 last year. Their VOIP business continues to struggle and lose money–$729,000 in the current quarter. Gross margin % rose to 75% from 72%. Still an “undercover” company and stock.
Maybe these guys will wake up and create some shareholder value in 2008.
This is still trading at only 20% of our latest valuation.
UP 4%. BUY

Lotus Pharmaceuticals (LTUS.ob-Recommended 12/3/2007)
Buy price $.84 (Was $.95 before $10,000 adder, $1.08 before double-up) Valuation-$2.28 (Was $2.08)
Closed at $.62, down $.12.
After announcing earnings in mid-May, it took LTUS another week or so to come out and reaffirm that they expect to make at least $13.1 million in earnings this year. On approximately 50 million shares outstanding this is $.26 per share earnings. So we are trading at a little less than 3 times 2008 EPS. 3 new drugs expected to be introduced this year also.
Investors seem to have woken up to the unusual legal structure of Lotus. There is risk here, no doubt, but not until year 2016. PE here is 3–pretty big discount for something 7.5 years out.
Down 26%. BUY

DTLK announced Q2 results last night. Looks like demand for data storage continues to be good. Q2 revenues were up 23% and they made $.10 per share (non-GAAP, but fully taxed) up from a essentially breakeven last year. Outlook for Q3 is good also-$49-$53 million in revenue and $.09-$.13 per share non-GAAP EPS.

Our valuation increased to $10.49 per share from $9.97. Cash of $28 million is $2.24 per share and was 45% of yesterdays closing stock price of $4.95. We are up 16% on DTLK. We like the stock, but if it should hit $6, we would sell for a 40% gain.

In this market, gains have been hard to come by.