Cheap Stocks

We focus on undervalued small-cap stocks. Usually with a large cash cushion. We have developed a valuation formula that has been highly successful, especially on small tech stocks. Since 2006, we have closed out 49 stock positions with an average gain of 37%. 9 stocks have been taken over.

Saturday, December 23, 2006

Merry Christmas

That's all we can say right now. We went 8 up, 5 down and 2 even last week. Our model portfolio year-to-date gain, moved down 1% to 9.4% over the past week. DWCH is still our biggest dog followed by PARL, LINN.ob, MIVA, INFT, MOBI and ARIS.ob. Since the start of the year we are 12 up and 7 down.

CTI news last week.

The model portfolio assumes $10,000 invested in each stock, less $10 commission each way (TD Ameritrade rate).

SPNC-(Buy price $10.65, Valuation $18-$20). Up $.20 to $11.19 last week. No news. Shorts are still at it. They drove the price down into the mid-$10 range again, but couldn't keep it there. Let's hope for a good quarter and some new all-time highs. Up 5% so far. HOLD.

QADI-(Buy price $6.93, Valuation $13.69 (was $13.73 and $11.86). Closed at $8.06, up $.01. Trading at only 59% of valuation. Has $1.03 in cash also. Up 16% so far. HOLD.

PDLI-(Buy price $19.31, Valuation > $30)--Closed at $20.33, down $1.20. No significant news, so maybe it is tax selling and funds cleaning up their year-end portfolios that is hammering the stock. Now up 5%. HOLD.

MIVA-(Buy price $3.80, Valuation $7.52 (was $7.38 and $9.10)). MIVA closed at $3.47, up $.17. No news. Now down only 9% so far. HOLD.

DWCH-(Buy price $3.66, NEW Valuation $7.50 (was $7.63, $9.31)). Closed at $2.62, up $.07, now down 28%. HOLD.

INFT-(Buy price $4.11, Valuation $6.95 (was $6.86)). Up $.02 to $3.72. Still has $2.52 per share in cash. Price objective $5.50. Now down 10%. BUY.

MOBI-(Buy price $7.08, Valuation $12.69). Down another $.38 to $6.53. No news. After a strong start--now a loser, down 8%. BUY.

RITT-(Buy price $1.00, Valuation $2.69). Closed down $.07 at $1.13 last week. Up 13%. No news. HOLD.

PARL-(Buy price $6.65, Valuation $13.77). PARL closed at $5.35, up $.08 last week. SEC filing on Friday by Mr. Nussdorf trying to throw out the current Board of Directors. We are voting with him. There seems to be too many catalysts for this to stay down for long. Down 20%. This remains a BUY.


ARIS.ob-(Buy price $2.06, Valuation $5.28 (was $5.28, $5.21)). Closed at $1.95, up $.05 last week. This stock is still illiquid so price moves are fairly meaningless at this point. Now down 5% so far. BUY if you can find some shares. Huge valuation gap.

Linn.ob-(Buy price $.36, Valuation $.62 (was $.66 and before that-$.79)). Closed at $.30, even last week. Still trading at only 48% of our current valuation. Down 17% YTD. HOLD until we get some revenue growth and stop losing money (same story as last quarter).

OPTO.ob-(Buy price $1.25, NEW Valuation $2.89 (was $2.54 and 2.88)). Closed at $1.43, down $.01. Has $.44 in cash per share also. So now we have a 14% gain. HOLD.

AVSO.ob-(Buy price $1.19, Valuation $2.69 (was $3.36, $3.81)). Stock closed at $1.50, down $.08. Now up 26%. No news. HOLD.

CTIG.ob-(Buy price $.27 ask, Valuation $1.13 (Was $1.05, $.82)). Ask price unchanged at $.28. Closed at $.26. Cash is $.24 per share. On Friday CTI announced the purchase of Ryder Systems LTD. an international provider of electronic and on-line billing solutions and developer of VoIP business applications. No financial details provided at this point, but the cost of the purchase is $11 million. Now up 4% so far (based on ask price). BUY if you can find some shares.

IYXI.ob-(Buy price $1.91, Valuation--over $3.00). Closed up $.035 at $2.185, up 14% to date. Another "collaberation" deal announced but no news on the "take-over". Just have to wait. HOLD.


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