4/14/2007 Update-Very nice week-Up 8.6%
Last week we went 9 up, 6 down and 1 even. LINN.ob holds first place on our "biggest dog" list (by far) followed by INFT, PARL, and ARIS. For the week, 2007 year-to-date, and since we started this Blog in January 2006, our model portfolio is +8.6,+14.4% and +32.0% respectively. Since inception we are now 17 stocks up and 4 down (2 of which are down less than 10%).
Last week is long forgotten now as we booked a 8.6% gain last week and are up 14.4% so far in 2007, while the DOW, NASDAQ and the S+P 500 all gained less than 1% last week, and are all now up from 1.2% to 3.2% for the year.
Since inception we have closed out the following positions:
NTCT +44%
ONXS +11% (Buyout offer)
DTLK +41%
CAW +21% (Buyout offer)
IYXI.ob +44% (Buyout offer)
MOBI +47% (Buyout offer-this week)
The model portfolio assumes $10,000 invested in each stock, less $10 commission each way (TD Ameritrade rate).
Great week as we got a buy-out on MOBI for a 47% gain and PDLI, DWCH and QADI had big gains.
Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $10.65, Valuation $18-$20
Down $.03 to $10.90 last week.
This is a great company with great prospects that is executing well. Earnings are out next week on April 19th before the market opens. We expect good sales growth. Bottom line will not be great, but that is good at this point--investing earnings to grow their manufacturing capacity, sales force, installed base of lasers, doctor training and laser capability should lead to big gains ahead.
Now up 2% so far. BUY.
QAD Inc. (QADI-Recommended 6/14/2006)
Buy price $6.93, Valuation $15.92 (was $13.69 $13.73 and $11.86)
Closed at $10.05, up $.76.
No news. But volume continues to be good, along with the price.
Trading at 63% of our valuation.
Up 45% so far. HOLD.
PDL BioPharma Inc. (PDLI-Recommended 5/21/2006)
Buy price $19.31, Valuation > $30
Closed at $24.32, up $2.59.
Activist investment firm Third Point LLC, upped their stake by 1.8 million shares, purchased in the $21-$22 range in April. They now own 11.2 million shares or 9.7% of the company. They also wrote a scathing letter to PDL calling for the firing of the CEO. It was pretty nasty. Looks like they are serious about unlocking the value here with over $200 million invested. This however, remains a very volatile stock.
No news last week.
Now up 26%. HOLD.
MIVA Inc. (MIVA-Recommended 3/18/2006)
Buy price $3.80, Valuation $7.37 (was $7.52, $7.38 and $9.10)
MIVA closed at $4.21, up $.20.
Google made an offer to buy DoubleClick for almost 3X what a private equity firm bought it for in 2005. Maybe we will see some sympathy reaction in the price of MIVA.
Now up 11%. HOLD.
DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (averaged down from $3.66), Valuation $8.32 (was $7.50, $7.63, $9.31)
Closed at $3.42, up $.53 or 18% for the week.
No news.
Now up 7%. BUY.
Inforte Corp. (INFT-Bought January 13, 2006)
Buy price $.74 (averaed down from $4.11), Valuation $6.13 (was $6.95, $6.86)
Closed down another $.11 at $3.25 last week.
This is getting ridiculous. Cash is now 81% of the market cap.
Has $2.64 per share in cash. Price objective $5.50.
Now down 13%. BUY.
Mobius Management Systems (MOBI-Recommended 11/12/2006)
Buy price $6.68 (averaged down from $7.08), Valuation $12.82, was $12.69
Up $2.34 to $9.80 last week.
Buyout offer made at $10.05 per share.
Up 47%. SOLD.
RiT Technologies (RITT-Recommended 11/12/2006)
Buy price $1.00, Valuation $3.36 (Was $2.69)
Closed down another $.19 at $1.38 last week.
No news.
As we cautioned 2 weeks ago, the fairly quick run up in price made us cautious and sure enough we had two bad weeks here. But at 41% of our valuation, we are buying more here.
Up 38%. BUY.
Parlux Fragrances (PARL-Recommended 11/30/2006)
Buy price $6.12 (was $6.65 before double up), NEW Valuation $8.63 (Was $13.77)
PARL closed at $5.77, up $.54 last week.
The good news was that they got their reprieve from the SEC, and then filed the 12/31/2006 10Q on time on Friday. So they are now up to date with the SEC and the delisting appears to old news. The bad news was that their results stunk up the place. Sales were good, up 15% from the prior year and their balance sheet is in much better shape after the Perry Ellis asset sale, but margins fell to 42% from 50% and they had an operating loss of $8 million compared to operating income of $2.6 million in the prior year. Our valuation fell to $8.63. So at 67% of our valuation this is not a buy anymore, but not a sell either. We are still going to hold this one as we suspect that the lousy P+L is the result of the distraction of the proxy contest, so house cleaning of the books, etc. But if margins do not improve, this one may be history for us.
Down 6%. HOLD.
Blonder Tongue Laboratories (BDR-Recommended 3/4/2007)
Buy price $1.83, Valuation $5.12 (was $5.88).
Closed at $1.89 up $.13 for the week.
No news. Trading at 37% of our valuation.
Up 3%. BUY
ILOG SA (ILOG-recommended 3/26/2007)
Buy price $13.60, Valuation $20.52
Closed at $13.73 last week, down $.33.
No news.
Up 1%. HOLD
OB-abies (Bulletin Board Listed Stocks)
ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $2.06, Valuation $5.03 (was $5.28, $5.28, $5.21)
Closed at $2.02, up $.07 last week.
This stock is still illiquid, so price moves are fairly meaningless at this point.
Now down 2%. BUY. Still a Huge valuation gap here.
Lion Inc. (LINN.ob-Recommended 4/15/2006)
Buy price $.36, Valuation $.57 (was $.62, $.66 and before that-$.79)
Closed at $.23, up $.01 last week.
Now trading at only 40% of our current valuation.
We will give LION another quarter or two to see if they can turn things around. They are still "cheap" compared to our valuation (and unfortunately getting cheaper).
Down 36%. HOLD until we get some revenue growth and stop losing money (same story as last quarter).
OPTIO Software Inc. (OPTO.ob-Recommended 3/22/2006)
Buy price $1.25, Valuation $2.89 (was $2.89, $2.54 and 2.88)
Closed at $1.50, unchanged last week.
Has cash of $.47 per share--31% of the market cap.
Still hoping we will see north of $2.00 this year.
20% gain so far. HOLD.
Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $1.19, Valuation $3.29 (was $2.69, $3.36, $3.81)
Stock closed at $1.46, down $.09.
No news.
Now up 23%. HOLD.
CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.28 (Was $1.28 $1.13, $1.05, $.82)
Ask price fell $.02 to $.35. Closed at $.34.
This is now trading at only 27% of our latest valuation.
Up 30% based on the ASK price. BUY
Last week is long forgotten now as we booked a 8.6% gain last week and are up 14.4% so far in 2007, while the DOW, NASDAQ and the S+P 500 all gained less than 1% last week, and are all now up from 1.2% to 3.2% for the year.
Since inception we have closed out the following positions:
NTCT +44%
ONXS +11% (Buyout offer)
DTLK +41%
CAW +21% (Buyout offer)
IYXI.ob +44% (Buyout offer)
MOBI +47% (Buyout offer-this week)
The model portfolio assumes $10,000 invested in each stock, less $10 commission each way (TD Ameritrade rate).
Great week as we got a buy-out on MOBI for a 47% gain and PDLI, DWCH and QADI had big gains.
Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $10.65, Valuation $18-$20
Down $.03 to $10.90 last week.
This is a great company with great prospects that is executing well. Earnings are out next week on April 19th before the market opens. We expect good sales growth. Bottom line will not be great, but that is good at this point--investing earnings to grow their manufacturing capacity, sales force, installed base of lasers, doctor training and laser capability should lead to big gains ahead.
Now up 2% so far. BUY.
QAD Inc. (QADI-Recommended 6/14/2006)
Buy price $6.93, Valuation $15.92 (was $13.69 $13.73 and $11.86)
Closed at $10.05, up $.76.
No news. But volume continues to be good, along with the price.
Trading at 63% of our valuation.
Up 45% so far. HOLD.
PDL BioPharma Inc. (PDLI-Recommended 5/21/2006)
Buy price $19.31, Valuation > $30
Closed at $24.32, up $2.59.
Activist investment firm Third Point LLC, upped their stake by 1.8 million shares, purchased in the $21-$22 range in April. They now own 11.2 million shares or 9.7% of the company. They also wrote a scathing letter to PDL calling for the firing of the CEO. It was pretty nasty. Looks like they are serious about unlocking the value here with over $200 million invested. This however, remains a very volatile stock.
No news last week.
Now up 26%. HOLD.
MIVA Inc. (MIVA-Recommended 3/18/2006)
Buy price $3.80, Valuation $7.37 (was $7.52, $7.38 and $9.10)
MIVA closed at $4.21, up $.20.
Google made an offer to buy DoubleClick for almost 3X what a private equity firm bought it for in 2005. Maybe we will see some sympathy reaction in the price of MIVA.
Now up 11%. HOLD.
DataWatch Corp. (DWCH-Recommended 2/12/2006)
Buy price $3.21 (averaged down from $3.66), Valuation $8.32 (was $7.50, $7.63, $9.31)
Closed at $3.42, up $.53 or 18% for the week.
No news.
Now up 7%. BUY.
Inforte Corp. (INFT-Bought January 13, 2006)
Buy price $.74 (averaed down from $4.11), Valuation $6.13 (was $6.95, $6.86)
Closed down another $.11 at $3.25 last week.
This is getting ridiculous. Cash is now 81% of the market cap.
Has $2.64 per share in cash. Price objective $5.50.
Now down 13%. BUY.
Mobius Management Systems (MOBI-Recommended 11/12/2006)
Buy price $6.68 (averaged down from $7.08), Valuation $12.82, was $12.69
Up $2.34 to $9.80 last week.
Buyout offer made at $10.05 per share.
Up 47%. SOLD.
RiT Technologies (RITT-Recommended 11/12/2006)
Buy price $1.00, Valuation $3.36 (Was $2.69)
Closed down another $.19 at $1.38 last week.
No news.
As we cautioned 2 weeks ago, the fairly quick run up in price made us cautious and sure enough we had two bad weeks here. But at 41% of our valuation, we are buying more here.
Up 38%. BUY.
Parlux Fragrances (PARL-Recommended 11/30/2006)
Buy price $6.12 (was $6.65 before double up), NEW Valuation $8.63 (Was $13.77)
PARL closed at $5.77, up $.54 last week.
The good news was that they got their reprieve from the SEC, and then filed the 12/31/2006 10Q on time on Friday. So they are now up to date with the SEC and the delisting appears to old news. The bad news was that their results stunk up the place. Sales were good, up 15% from the prior year and their balance sheet is in much better shape after the Perry Ellis asset sale, but margins fell to 42% from 50% and they had an operating loss of $8 million compared to operating income of $2.6 million in the prior year. Our valuation fell to $8.63. So at 67% of our valuation this is not a buy anymore, but not a sell either. We are still going to hold this one as we suspect that the lousy P+L is the result of the distraction of the proxy contest, so house cleaning of the books, etc. But if margins do not improve, this one may be history for us.
Down 6%. HOLD.
Blonder Tongue Laboratories (BDR-Recommended 3/4/2007)
Buy price $1.83, Valuation $5.12 (was $5.88).
Closed at $1.89 up $.13 for the week.
No news. Trading at 37% of our valuation.
Up 3%. BUY
ILOG SA (ILOG-recommended 3/26/2007)
Buy price $13.60, Valuation $20.52
Closed at $13.73 last week, down $.33.
No news.
Up 1%. HOLD
OB-abies (Bulletin Board Listed Stocks)
ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $2.06, Valuation $5.03 (was $5.28, $5.28, $5.21)
Closed at $2.02, up $.07 last week.
This stock is still illiquid, so price moves are fairly meaningless at this point.
Now down 2%. BUY. Still a Huge valuation gap here.
Lion Inc. (LINN.ob-Recommended 4/15/2006)
Buy price $.36, Valuation $.57 (was $.62, $.66 and before that-$.79)
Closed at $.23, up $.01 last week.
Now trading at only 40% of our current valuation.
We will give LION another quarter or two to see if they can turn things around. They are still "cheap" compared to our valuation (and unfortunately getting cheaper).
Down 36%. HOLD until we get some revenue growth and stop losing money (same story as last quarter).
OPTIO Software Inc. (OPTO.ob-Recommended 3/22/2006)
Buy price $1.25, Valuation $2.89 (was $2.89, $2.54 and 2.88)
Closed at $1.50, unchanged last week.
Has cash of $.47 per share--31% of the market cap.
Still hoping we will see north of $2.00 this year.
20% gain so far. HOLD.
Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $1.19, Valuation $3.29 (was $2.69, $3.36, $3.81)
Stock closed at $1.46, down $.09.
No news.
Now up 23%. HOLD.
CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.28 (Was $1.28 $1.13, $1.05, $.82)
Ask price fell $.02 to $.35. Closed at $.34.
This is now trading at only 27% of our latest valuation.
Up 30% based on the ASK price. BUY
posted by Cheap Stock Investor | 3:47 PM
2 Comments:
Yes, Inforte and its recent decline to all-time low of $3.25 is absolutely ridiculous.
1Q 2007 financials/earnings come out within the next week or two, so those will be very interesting to see. The 4Q 2006 numbers took a beating primarily due to a lot of non-recurring, extraordinary factors that I do not believe we will see happen again in 2007. With any luck, when they put their #'s out, we should maybe see some redemption. Volume was very high, relatively speaking, especially the April 9 day of 100,000+ shares.
Insiders own 32% of it, mostly by the founders. They could easily launch a tender offer of $5.00-$5.50 per share, make out like bandits, and take the $30M in cash for themselves.
The 1Q 2007 report will also be interesting to see how the # of shares outstanding is effective. Another 100,000 came off the books per the most recent 10-K.
I know this one is a winner; not a 10-bagger, but should be good for $5-$6 per share.
What else are you seeing?
INFT keeps getting cheaper. I suspect one of the big holders is selling. Will just have to wait and see their earnings this Q to see if there is something we are missing. Good luck.
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