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.

Friday, March 30, 2007

3/31/07 Update

Last week we went 8 up and 8 down and 1 even. LINN.ob holds first place on our "biggest dog" list (by far) followed by PARL, INFT, DWCH, ARIS, and ILOG. For the week, 2007 year-to-date, and since we started this Blog in January 2006, our model portfolio is +2.3%,+8.75% and +25.5% respectively. Since inception we are 15 stocks up and 6 down (3 of which are down less than 10%).

We managed another a 2% gain last week and are up 8.75% so far in 2007, while the DOW, NASDAQ and the S+P 500 all fell last week by 1% to 1.4%, and are all now hovering around breakeven for the year.

We closed out INYX last week and added ILOG.

We are officially "doubling" up on Parlux this week.

Since inception we have closed out the following positions:

NTCT +44%
ONXS +11%
DTLK +41%
CAW +21%
IYXI.ob +44%

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

Interesting week. CTIG.ob perked up, Parlux in moving towards SEC compliance, news on LINN.ob, MIVA and DWCH. RITT bouced back to +76%.

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $10.65, Valuation $18-$20
Down $.03 to $10.70 last week.
This is a great company with great prospects that is executing well--but the stock continues to lag. The shorts, for whatever reason, have been playing this stock for months. When it breaks out--it should be very, very, good.
No news.
Now up .5% 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 $9.10, down $.17.
No news.
Trading at 57% of our valuation.
Up 31% so far. BUY.

PDL BioPharma Inc. (PDLI-Recommended 5/21/2006)
Buy price $19.31, Valuation > $30
Closed at $21.70, up $1.66.
Activist investment firm Third Point LLC, which owns 8 million shares or 7.5% of the company, continues to lurk in the background. We think that PDLI is a bargain at this price. This however, remains a very volatile stock.
No news last week.
Now up 12%. HOLD.

MIVA Inc. (MIVA-Recommended 3/18/2006)
Buy price $3.80, NEW Valuation $7.37 (was $7.52, $7.38 and $9.10)
MIVA closed at $3.84, up $.05.
MIVA announced a deal with Conde Nast for a new pay-per-click deal, beating out Google and Yahoo. CN publishes GQ and Vogue among other publications.
Now up 1%. 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 $2.90, down $.05 for the week.
Hired a new CFO, but no impact to the stock price.
Now down 10%. BUY.

Inforte Corp. (INFT-Bought January 13, 2006)
Buy price $4.11, Valuation $6.13 (was $6.95, $6.86)
Closed up $.05 at $3.49 last week.
No news.
Has $2.64 per share in cash. Price objective $5.50.
Now down 15%. HOLD.

Mobius Management Systems (MOBI-Recommended 11/12/2006)
Buy price $6.68 (averaged down from $7.08), Valuation $12.82, was $12.69
Up $.12 to $7.35 last week.
No news.
Up 10%. HOLD.

RiT Technologies (RITT-Recommended 11/12/2006)
Buy price $1.00, Valuation $3.36 (Was $2.69)
Closed up $.06 at $1.76 last week.
No news.
Normally this would still be a "buy", but with the fast run-up, we are cautious.
Up 76%. HOLD.

Parlux Fragrances (PARL-Recommended 11/30/2006)
Buy price $6.65, Valuation $13.77)
PARL closed at $5.58, down $.41 last week.
Parlux finally filed their September 30, 2006 Form 10Q. This was old news, but at least they are moving towards SEC compliance. They are asking the SEC for another extention for their December 31, numbers (Q3)until April 16. Our guess is that they will get it. We think the stock price will continue to vacillate for a while until they get fully compliant on their filings. We reran our valuation based on the 10Q filing and it is still over $12 (this does not include the Perry Ellis transaction and is based on one of their seasonally weakest quarters), so we are recommending averaging down by doubling up on PARL this week. New average buy price will be $6.12. We will of course update our valuation when they get their Q3, 10Q filed--hopefully by the April 16th date.
Down 16%. BUY.

Blonder Tongue Laboratories (BDR-Recommended 3/4/2007)
Buy price $1.83, Valuation $5.88.
Closed at $1.95 up $.16 for the week.
Earnings being announced on Tuesday at 11am EST. This could be good.
Up 7%. BUY

ILOG SA (ILOG-recommended 3/26/2007)
Buy price $13.60, Valuation $20.52
Closed at $13.57 last week, down $.03.
No news.
Down .2%. BUY

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 $1.91, down $.19 last week.
This stock is still illiquid, so price moves are fairly meaningless at this point.
Now down 7%. 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 $.20, down $.02 last week.
Now trading at only 35% of our current valuation.
Lion announced after the close on Friday that their Chairman and CEO resigned. Maybe this is the start of the turnaround. Also 1.1 million shares traded on 3/26. Pretty good for an "illiquid" stock.
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 44%. 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 $2.54 and 2.88)
Closed at $1.59, down $.01 last week.
No news. Volume soared to 356,000 on Friday. Has $.44 in cash per share.
Still hoping we will see north of $2.00 this year.
27% 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 $1.60, unchanged.
No news.
Now up 35%. HOLD.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.28 (Was $1.13, $1.05, $.82)
Ask price jumped $.05 to $.39. Closed at $.38.
Volume "soared" to over 200,000 shares last week. Stock actually traded at $.42. Hopefully with the Ryder acquisition, this one will get some attention. Still trading at only 30% of our valuation.
Up 44% based on the ASK price. BUY

INYX Inc. (IYXI.ob-Bought January 3, 2006)
Buy price $1.91, Valuation--over $3.00)
Closed out last week at $2.75.
Up 44% SOLD.

Monday, March 26, 2007

New Recommendation--ILOG SA (NASDAQ ILOG)

ILOG SA (NASDAQ--ILOG)
Valuation-$20.52
Closing price March 23, 2007-$13.60

Yes, this is a French Company. As usual we have been watching this one for a while. We bought some at this level a few weeks back, just to see it drop into the mid-$12 level right after we bought it. Now it has come back with the overall market rebound. This is as “thin” as they get, but you can buy it if you are patient. As with most “thin” stocks they don’t trade a lot, and then, something happens and they do. We hesitated on recommending another OB stock about the same time we were looking at ILOG because it only traded about 15,000 shares a day. Then it traded over 1 million shares one day and jumped 24%, so we decided to go ahead with ILOG.

ILOG released Q2 results (12/31/2007) on January 25th. Sales were up 27% and they made $.05 net income per share (fully taxed) compared to a loss of $.01 the prior year. They have $3.41 per share in cash, 77% gross margins and are trading at 66% of our valuation. This is at the high end of where we like to recommend our “cheap stocks”, however, this looks more like a growth stock to us. We expect that ILOG’s valuation will increase over the next year and the stock price will too.

ILOG is predicting at least 17% sales growth over fiscal 2006 which should put them in the $155-$160 million sales range for this year (6/30/2007) and increased net income. They made $.35 per share last year, but this was not fully taxed.

There are about 18.6 million fully diluted shares outstanding. ILOG did 50% of its 6/30/2006 revenue in the U.S., 40% in Europe and 10% in Asia/Pacific.

In February, ILOG announced a small acquisition in Chicago, that is expected to close in April. This will help sales growth, increase their U.S. business and only costs $15 million in cash. No details on the sales or profitability of the acquisition have been disclosed yet.

About ILOG

ILOG delivers software and services that empower customers to make better decisions faster and manage change and complexity. Over 2,500 corporations and more than 465 leading software vendors rely on ILOG's market-leading business rule management system (BRMS), optimization and visualization software components, to achieve dramatic returns on investment, create market-defining products and services, and sharpen their competitive edge. ILOG was founded in 1987 and employs more than 775 people worldwide.

IYNX--SELL

The takeover was announced this morning--$3.01 cash per share. We will not wait for this one to close. Traded at $2.80 most of the morning, $2.72 now. Call it $2.75 for a 44% gain.

Friday, March 23, 2007

3/24/2007 Update

Last week we went 7 up and 7 down and 2 even. LINN.ob holds first place on our "biggest dog" list followed by INFT, PARL, DWCH, BDR, and MIVA. For the week, 2007 year-to-date, and since we started this Blog in January 2006, our model portfolio is +1.8%,+6.8% and +23.2% respectively. Since inception we are 14 stocks up and 6 down (4 of which are down less than 10%).

We managed almost a 2% gain last week and are up 6.8% so far in 2007, while the DOW, NASDAQ and the S+P 500 all jumped last week by 3%-3.6%, and are now up .2% to 1.7% for the year.

Nothing much in the way of news last week other than INYX. RITT paused last week and is now only up 70%.

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

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $10.65, Valuation $18-$20
Up $.13 to $10.73 last week.
This is a great company with great prospects that is executing well--but the stock continues to lag.
No news.
Now up 1% 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 $9.27, up $.66.
No news.
Trading at 58% of our valuation.
Up 34% so far. BUY.

PDL BioPharma Inc. (PDLI-Recommended 5/21/2006)
Buy price $19.31, Valuation > $30
Closed at $20.04, up $1.32.
Activist investment firm Third Point LLC, which owns 8 million shares or 7.5% of the company, continues to lurk in the background. We think that PDLI is a bargain at this price. This however, remains a very volatile stock.
No real news last week.
Now up 4%. BUY.

MIVA Inc. (MIVA-Recommended 3/18/2006)
Buy price $3.80, NEW Valuation $7.37 (was $7.52, $7.38 and $9.10)
MIVA closed at $3.79, up $.14.
Now down .3%. 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 $2.95, down $.03 for the week.
No news.
Now down 8%. BUY.

Inforte Corp. (INFT-Bought January 13, 2006)
Buy price $4.11, Valuation $6.13 (was $6.95, $6.86)
Closed unchanged at $3.44 last week.
No news.
Has $2.64 per share in cash. Price objective $5.50.
Now down 16%. HOLD.

Mobius Management Systems (MOBI-Recommended 11/12/2006)
Buy price $6.68 (averaged down from $7.08), Valuation $12.82, was $12.69
Down $.13 to $7.23 last week.
No news.
Up 8%. HOLD.

RiT Technologies (RITT-Recommended 11/12/2006)
Buy price $1.00, Valuation $3.36 (Was $2.69)
Closed down $.07 at $1.70 last week.
No news. RITT finally paused last week. Still trading at only 51% of our valuation.
Normally this would still be a "buy", but with the fast run-up, we are cautious.
Up 70%. HOLD.

Parlux Fragrances (PARL-Recommended 11/30/2006)
Buy price $6.65, Valuation $13.77)
PARL closed at $5.99, up $.19 last week.
We think the stock price will continue to vacillate for a while until we get some positive news. Even a 10Q filing might cause this one to spike up.
Down 13%. BUY.

Blonder Tongue Laboratories (BDR-Recommended 3/4/2007)
Buy price $1.83, Valuation $5.88.
Closed at $1.79 down $.01 for the week.
No news.
Down 2%. BUY

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 $2.10, unchanged last week.
This stock is still illiquid, so price moves are fairly meaningless at this point.
Now up 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 $.22, down $.02 last week.
Still trading at only 42% of our current valuation. We will give LION another quarter ot two to see if they can turn things around. They are still "cheap" compared to our valuation (and unfortunately getting cheaper).
Down 39%. 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 $2.54 and 2.88)
Closed at $1.60, up $.16 last week.
No news and volume has dried up. Has $.44 in cash per share.
Still hoping we will see north of $2.00 this year.
28% 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 $1.60, down $.10.
I was wrong last week as the "block" reappeared for sale on Monday, at least 10,000 shares of it.
Now up 35%. HOLD.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.28 (Was $1.13, $1.05, $.82)
Ask price dropped $.01 to $.34. Closed at $.32.
No news.
Up 26% based on the ASK price. BUY

INYX Inc. (IYXI.ob-Bought January 3, 2006)
Buy price $1.91, Valuation--over $3.00)
Closed at $2.60, up $.37 last week.
Still waiting on the "attractive cash offer" that was promised by the end of February. They put out a press release this past Monday saying that they would make the offer by the end of this week. Well, it is late on Friday and nothing yet. Hopefully the offer will come, and it will be attractive by our standards and be at least $3 per share--so we can book a a 50% gain on this one. Bank debt is now scheduled for repayment by March 31, 2007 and they have arranged financing for their latest acquisition.
Up 36% HOLD.

Saturday, March 17, 2007

3/17/2007 Update

Last week we went 8 up and 6 down and 2 even. LINN.ob holds first place on our "biggest dog" list followed by INFT, PARL, DWCH, MIVA, PDLI, BDR and SPNC. For the week, 2007 year-to-date, and since we started this Blog in January 2006, our model portfolio is +.3%,+4.9% and +21.1% respectively. Since inception we are 12 stocks up and 8 down (5 of which are down less than 10%).

We managed a small gain last week and are up 4.9% so far in 2007, while the DOW, NASDAQ and the S+P 500 are all down 2-3%, and all were down again last week.

Earnings on MIVA and QADI and news on SPNC and PDLI last week. RITT continued to barrel along and is now up 77%.

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

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $10.65, Valuation $18-$20
Jumped $.89 to $10.60 last week.
SPNC released news that the FDA has allowed them to end their CELLO enrollment (after 61 enrollees instead of the planed 85) early based on good preliminary results. This is terrific news. Is all goes well, we could see some revenue from "above-the-knee" procedures before the end of the year--which is not included in the Company's projections. They also presented at Citigroup last week. This is a great company with great prospects that is executing well--but the stock continues to lag.
Now down .5% so far. BUY.

QAD Inc. (QADI-Recommended 6/14/2006)
Buy price $6.93, NEW Valuation $15.92 (was $13.69 $13.73 and $11.86)
Closed at $8.61, up $.15.
Trading at 54% of our new valuation of $15.92. Earnings last week were good. Revenues up 11% to $66.5 million and they made $.14 per share. For 2008 they are projecting $254-$266 million in revenue and $.26 to $.36 per share in net income (including $.12 per share for stock compensation expense) Has $1.19 in cash also.
Up 24% so far. BUY.

PDL BioPharma Inc. (PDLI-Recommended 5/21/2006)
Buy price $19.31, Valuation > $30
Closed at $18.72, up $.02.
On March 12th, PDLI "said the ongoing mid-stage trial of daclizumab, a humanized monoclonal antibody, met its main goal in relapsing multiple sclerosis." This drug is a collaboration with Biogen. The stock got up to $19.55 at one point last week, but then drifted back down to end up only $.02.
Activist investment firm Third Point LLC, which owns 8 million shares or 7.5% of the company, continues to lurk in the background. We think that PDLI is a bargain at this price. This however, remains a very volatile stock.
Now down 3%. BUY.

MIVA Inc. (MIVA-Recommended 3/18/2006)
Buy price $3.80, NEW Valuation $7.37 (was $7.52, $7.38 and $9.10)
MIVA closed at $3.65, down $.34.
Earnings last week were not dazzling. Revenues were up less than 1% from the prior year and they lost $6.2 million. They continue to cut expenses and expect to continue this in Q1 2007. Even so, our valuation did not drop very much, so we will hold the course here for a while longer.
Now down 4%. 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 $2.98, down $.01 for the week.
No news other than some more executive promotions. Go figure.
Now down 7%. BUY.

Inforte Corp. (INFT-Bought January 13, 2006)
Buy price $4.11, Valuation $6.13 (was $6.95, $6.86)
Down $.08 to $3.44 last week.
No news.
Has $2.64 per share in cash. Price objective $5.50.
Now down 16%. HOLD.

Mobius Management Systems (MOBI-Recommended 11/12/2006)
Buy price $6.68 (averaged down from $7.08), Valuation $12.82, was $12.69
Up $.15 to $7.36 last week.
No news.
Up 10%. HOLD.

RiT Technologies (RITT-Recommended 11/12/2006)
Buy price $1.00, Valuation $3.36 (Was $2.69)
Closed up $.09 at $1.77 last week.
No news. Looks like this one still wants to go higher.
Up 77%. HOLD.

Parlux Fragrances (PARL-Recommended 11/30/2006)
Buy price $6.65, Valuation $13.77)
PARL closed at $5.80, up $.01 last week.
We think the stock price will continue to vacillate for a while until we get some positive news. Even a 10Q filing might cause this one to spike up.
Down 13%. BUY.

Blonder Tongue Laboratories (BDR-Recommended 3/4/2007)
Buy price $1.83, Valuation $5.88.
Closed at $1.80 down $.01 for the week.
No news.
Down 1.6%. BUY

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 $2.10, unchanged last week.
This stock is still illiquid, so price moves are fairly meaningless at this point.
Now up 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 $.24, down $.03 last week.
Still trading at only 42% of our current valuation. We will give LION another quarter ot two to see if they can turn things around. They are still "cheap" compared to our valuation.
Down 33%. 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 $2.54 and 2.88)
Closed at $1.44, down $.11 last week.
No news and volume was light. Has $.44 in cash per share. We have now dropped out of the $1.60-$1.70 range and even below the $1.50 level that took so long to reach. Still hoping we will see north of $2.00 this year.
15% 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 $1.70, up $.07.
Looks like the "block overhang" got out of the way last week. Maybe we move higher from here.
Now up 43%. HOLD.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.28 (Was $1.13, $1.05, $.82)
Ask price stayed at $.35. Closed at $.34.
No news.
Up 30% based on the ASK price. BUY

INYX Inc. (IYXI.ob-Bought January 3, 2006)
Buy price $1.91, Valuation--over $3.00)
Closed at $2.23, up $.04 last week.
Still waiting on the "attractive cash offer" that was promised by the end of February. Hopefully the offer will come, and it will be attractive by our standards and be at least $3 per share--so we can book a a 50% gain on this one. Bank debt is now scheduled for repayment by March 31, 2007 and they have arranged financing for their latest acquisition.
Rumour is that their will be an announcement this Monday. Not holding our breath though.
Up 15% HOLD.

Thursday, March 15, 2007

New Valuations-MIVA, QADI

Quick update:

Miva valuation fell to $7.37 from $7.52 (2%). More cost cuts promised in 2007, so maybe this one will turn around over the next quarter or two. Stock has fallen this week, but so has the market. HOLD.

QADI valuation jumped from $13.69 to $15.92--16%, on a very nice quarter. Hopefully the stock will reflect this tomorrow. We like it. BUY.

SPNC--very good news on their CELLO trials. FDA agreed to cut the enrollment group to get the data submitted for approval. Think this will get appoved!! This is very big. Stock rose to $10.56 from $9.88. Should have gone higher in our opinion, but the shorts are STILL playing around. Maybe we will see something from Citibank on an increase in their target price too in ths next couple of days, after their presentation yesterday. BUY.

Saturday, March 10, 2007

Still beating the averages

Last week we went 5 up and 9 down and 2 even. LINN.ob holds first place on our "biggest dog" list followed by INFT, PARL, SPNC, DWCH, SPNC, PDLI and BDR . For the week, 2007 year-to-date, and since we started this Blog in January 2006, our model portfolio is +.4%,+4.7% and +20.8% respectively. Since inception we are 13 stocks up and 7 down (4 of which are down less than 10%).

We are still up 4.7% so far in 2007, while the DOW is down 1.5%, NASDAQ is down 1.1% and the S+P 500 is down 1.1%. Really no significant news about any of our stocks last week other than PDLI. RITT continued to barrel along and is now up 68%.

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

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $10.65, Valuation $18-$20
Down $.34 to $9.71 last week. Shorts won the battle again last week. This is a great company with great prospects that is executing well--but the stock continues to lag.
Now down 9% so far. BUY.

QAD Inc. (QADI-Recommended 6/14/2006)
Buy price $6.93, Valuation $13.69 (was $13.73 and $11.86)
Closed at $8.46, up $.39. Trading at 62% of valuation. Earnings due March 15th. No news, although there is some speculation about a LBO on the message boards. Has $1.07 in cash also.
Up 22% so far. HOLD.

PDL BioPharma Inc. (PDLI-Recommended 5/21/2006)
Buy price $19.31, Valuation > $30
Closed at $18.70, up $.44. On March 5th, activist investment firm Third Point LLC wrote a letter to PDLI management, pushing them to get their act together as far as the business and share price. They also disclosed that they owned 8 million shares or 7.5% of the company. A catalyst! We love it. Maybe this will get PDLI to start focusing on the share price and why it is so low. PDLI will present at a Cowen conference on 3/15. We think that PDLI is a bargain at this price. This however, remains a very volatile stock.
Now down 3%. BUY.

MIVA Inc. (MIVA-Recommended 3/18/2006)
Buy price $3.80, Valuation $7.52 (was $7.38 and $9.10)
Earning due out March 14th, after the close.
MIVA closed at $3.99, down $.01. Now up 5%. 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 $2.99, down $.04 for the week. No news.
Now down 9%. BUY.

Inforte Corp. (INFT-Bought January 13, 2006)
Buy price $4.11, Valuation $6.13 (was $6.95, $6.86)
Down $.04 to $3.52 last week. Has $2.64 per share in cash. Price objective $5.50.
Now down 14%. No news. HOLD.

Mobius Management Systems (MOBI-Recommended 11/12/2006)
Buy price $6.68 (averaged down from $7.08), Valuation $12.82, was $12.69
Up $.06 to $7.21 last week. No news.
Up 8%. HOLD.

RiT Technologies (RITT-Recommended 11/12/2006)
Buy price $1.00, Valuation $3.36 (Was $2.69)
No news. Closed up $.12 at $1.68 last week.
Looks like this one still wants to go higher.
Up 68%. HOLD.

Parlux Fragrances (PARL-Recommended 11/30/2006)
Buy price $6.65, Valuation $13.77)
PARL closed at $5.79, down $.09 last week.
We think the stock price will continue to vacillate for a while until we get some positive news. Even a 10Q filing might cause this one to spike up.
Down 13%. BUY.

Blonder Tongue Laboratories (BDR-Recommended 3/4/2007)
Buy price $1.83, Valuation $5.88.
Closed at $1.81 down $.02 for the week. No news, not much volume.
Down 1%. BUY

OB-abies (Bulletin Board Listed Stocks)

ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $2.06, NEW Valuation $5.03 (was $5.28, $5.28, $5.21)
Closed at $2.10, unchanged last week. This stock is still illiquid, so price moves are fairly meaningless at this point. Earnings last week. Sales up 5% and they made money--although less than last year as they continue to invest in sales and marketing. Valuation dropped to $5.03, but this is due to no sales contribution of their acquisition of OC-Net yet, while the balance sheet impact did impact the quarter.
Now up 2% so far. 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 $.27, unchanged last week. Still trading at only 48% of our current valuation. Earnings last week. Sales down 11% from the prior year and 1% from the prior quarter. They had a loss of $384,00 for the quarter. We were not expecting great things and we were right. We will give LION another quarter ot two to see if they can turn things around. They are still "cheap" compared to our valuation.
Down 25%. 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 $2.54 and 2.88)
Closed at $1.55, down $.05 last week. No news and volume dried up. We think this is just due to investors focusing on some of the more battered investments opportunites created by the prior weeks market fall. Has $.44 in cash per share also. We have now dropped out of the $1.60-$1.70 range. Still hoping we will see north of $2.00 this year.
24% gain so far. HOLD.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $1.19, NEW Valuation $3.29 (was $2.69, $3.36, $3.81)
Stock closed at $1.63, down $.12. Someone is tryng to unload about 34,000 shares and only managed to sell about 14,000 last week. So until the overhang of about 19,000 shares is cleared away, we appear to be stuck around the $1.65 range. If they would just meter this sell order out a bit, we think they could get a better price, but maybe they are dealing with a margin call and need to sell now.
Now up 37%. HOLD.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, NEW Valuation $1.28 (Was $1.13, $1.05, $.82)
Ask price jumped $.05 to $.35. Closed at $.31. Finally we got some numbers about their Ryder purchase. Not bad at all. Our new valuation based on the "pro-forma" numbers in their SEC filing came in at $1.28 per share.
Up 30% based on the ASK price. BUY

INYX Inc. (IYXI.ob-Bought January 3, 2006)
Buy price $1.91, Valuation--over $3.00)
Closed at $2.19, down $.21 last week. Still waiting on the "attractive cash offer" that was promised by the end of February. Looks like people are getting worried that nothing will happen after some enthusiasm last week. Our guess is that with no update from management on this offer, is that they are "knee-deep" in putting the deal together and there is nothing to report--other than the offer is delayed. Hopefully the offer will come, and it will be attractive by our standards and be at least $3 per share--so we can book a a 50% gain on this one. Bank debt is now scheduled for repayment by March 31, 2007 and they have arranged financing for their latest acquisition.
Up 15% HOLD.

Thursday, March 08, 2007

ARI Networks (ARIS.ob)

ARI released Q2 earnings this morning. Not bad. Sales were up 5% to $3.69 million, but earnings were down to $.248 million from $.524 million as they continue to invest in additional sales and marketing resourses. Our valuation fell a bit to $5.03 per share from $5.28, mostly because they bought OC-Net in Q2, which was reflected in their balance sheet, but not their P+L in Q2. They are forecasting increasing sales gains in the second half of the year, without the impact from OC-Net. OC-Net will get them some "bulk" and maybe help get them on some radar screens--and hopefully increase their earnings. For the six months of FY2007 ARI had net income of $.07 per share, untaxed. So if they can even repeat this in the second half they are at $.14 untaxed and around $.09 fully taxed. We rate this a BUY.

Sunday, March 04, 2007

Blonder Tongue Laboratories (AMEX--BDR)-BUY

Blonder Tongue Laboratories (AMEX--BDR)
Valuation-$5.88
Closing price March 2, 2007-$1.83

We had looked at BDR back in January and early February and tried to buy some back then. But then the stock took off and went as high as $2.60 before we could get any. With the market swoon, it has retraced all the way back to where it was. We have been buying last week at $1.90-$1.95, so the price now is even better! We recommend buying BDR now up to the $1.95 level, if necessary.

BDR is more a hardware company than the software companies we normally look at, but it has a number of things going on that caught our eye:

1) Announced a 100,000 share buy-back in early February.
2) Sold its cable TV subsidiary in December for $3.1 million, which will also save the company $525,000 a year on their P+L going forward.
3) Will have an $875,000 gain from the cable sale
4) Sold some patents in December for $2 million
5) In November 2006, they took advantage of a former Directors bad fortune and bought back 1.3 million shares at $.75 per share, when the Director could not meet his margin call.

These asset sales ought to allow them to pay off most of their debt (about $6 million at 9/30/2006).

In the September 30, 2006 quarter BDR did a bit under $10 million in sales and made $.02 per share (untaxed). So it appears they have turned the corner of profitability, have shorn up their balance sheet, reduced their shares outstanding and we have a potential double here over the next year.

BDR's products address a growing market segment:

The Company designs, manufactures, and supplies a comprehensive line of equipment to deliver video (analog & digital), high speed data and voice services over integrated coaxial and fiber optic broadband networks today and over packet based, Internet protocol networks of the future.

Saturday, March 03, 2007

Beating all the Averages!

Last week we went 5 up and 8 down and 2 even. LINN.ob holds first place on our "biggest dog" list followed by INFT, PARL, DWCH, SPNC and PDLI. For the week, 2007 year-to-date, and since we started this Blog in January 2006, our model portfolio is -2.3%,+4.3% and +20.4% respectively. Since inception we are 13 stocks up and 6 down (3 of which are down less than 10%).

What a nasty week last week. While we got hit some, we are still up 4.3% so far in 2007, while the DOW is down 2.8%, NASDAQ is down 2% and the S+P 500 is down 2.2%. Really no significant news about any of our stocks last week. RITT and AVSO.ob continued to barrel along and are now up 56% and 47% respectively.

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

Spectranetics (SPNC-Recommended 9/2/2006)
Buy price $10.65, Valuation $18-$20
Down $.57 to $10.05 last week. Shorts won the battle last week as the markets obviously didn't help. This is a great company with great prospects that is executing well--but the stock continues to lag.
Now down 6% so far. BUY.

QAD Inc. (QADI-Recommended 6/14/2006)
Buy price $6.93, Valuation $13.69 (was $13.73 and $11.86)
Closed at $8.07, down $.46. QAD lost all the gain from the previous week when it jumped due to the Robinson Humphrey upgrade. Trading at 59% of valuation. Earnings due March 15th. No news. Has $1.07 in cash also.
Up 17% so far. HOLD.

PDL BioPharma Inc. (PDLI-Recommended 5/21/2006)
Buy price $19.31, Valuation > $30
Closed at $18.26, down $1.23. We still think that PDLI is a bargain at this price. This however, remains a very volatile stock.
Now down 5%. BUY.

MIVA Inc. (MIVA-Recommended 3/18/2006)
Buy price $3.80, Valuation $7.52 (was $7.38 and $9.10)
MIVA closed at $4.00, down $.35. Now up 5%. 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 $3.03, up $.02 for the week.
Now down 6%. BUY.

Inforte Corp. (INFT-Bought January 13, 2006)
Buy price $4.11, Valuation $6.13 (was $6.95, $6.86)
Down $.01 to $3.56 last week. Has $2.64 per share in cash. Price objective $5.50.
Now down 13%. Like watching "moss grow". HOLD.

Mobius Management Systems (MOBI-Recommended 11/12/2006)
Buy price $6.68 (averaged down from $7.08), Valuation $12.82, was $12.69
Up $.03 to $7.15 last week. Holding up well.
Up 7%. HOLD.

RiT Technologies (RITT-Recommended 11/12/2006)
Buy price $1.00, Valuation $3.36 (Was $2.69)
No news. Closed up $.08 at $1.56 last week.
Looks like this one wants to go higher.
Up 56%. HOLD.

Parlux Fragrances (PARL-Recommended 11/30/2006)
Buy price $6.65, Valuation $13.77)
PARL closed at $5.88, down $.65 last week.
We think the stock price will continue to vacillate for a while until we get some positive news. Even a 10Q filing might cause this one to spike up.
Down 12%. BUY.

OB-abies (Bulletin Board Listed Stocks)

ARI Networks (ARIS.ob-Recommended 8/19/2006)
Buy price $2.06, Valuation $5.28 (was $5.28, $5.21)
Closed at $2.10, unchanged last week. This stock is still illiquid, so price moves are fairly meaningless at this point. Thankfully, ARI went back to sleep as far as trading volume goes last week--less than 20,000 shares traded all week. Not a bad week to "sit-out". Earnings due March 8th after the market close. Hoping for some revenue growth here. No very concerned with the bottom line as long as any loss is not BIG.
Now up 2% so far. HOLD. Still a Huge valuation gap here.

Lion Inc. (LINN.ob-Recommended 4/15/2006)
Buy price $.36, Valuation $.62 (was $.66 and before that-$.79)
Closed at $.27, down $.01 last week. Still trading at only 44% of our current valuation. Earnings due March 8th, after the close. Unfortunately we are not expecting great things here.
Down 25%. 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 $2.54 and 2.88)
Closed at $1.60, unchanged last week. There was a 30,000 share bid sitting there on Friday at $1.58, but after trading about 5,000 shares the bid "went away". But it shows there is decent buying interest out there. We managed to snag a few shares at $1.51 on Wednesday. Has $.44 in cash per share also. We are now stuck in the $1.60-$1.70 range. Maybe we will see north of $2.00 this year.
28% gain so far. HOLD.

Avatech Solutions Inc. (AVSO.ob-Bought November 28, 2005)
Buy price $1.19, NEW Valuation $3.29 (was $2.69, $3.36, $3.81)
Stock closed at $1.75, up $.05. Price keeps creeping up, even in a crummy market like last week.
Now up 47%. HOLD.

CTI Holdings (CTIG.ob-Recommended 2/25/2006)
Buy price $.27 ask, Valuation $1.13 (Was $1.05, $.82)
Ask price fell $.03 to $.30. Closed at $.30. Cash is (was) $.24 per share. Ten weeks ago CTI announced the purchase of Ryder Systems LTD. an international provider of electronic and on-line billing solutions and developer of VoIP business applications. Nine weeks ago they filed an 8-K, with details of the financing they got to fund the $11 million purchase--but still no details of what they bought.
Now up 11% so far (based on ask price). HOLD until we see what we just bought.

INYX Inc. (IYXI.ob-Bought January 3, 2006)
Buy price $1.91, Valuation--over $3.00)
Closed at $2.40, up $.10 last week. Well no announcemnt on the "attractive cash offer" by the end of February as promised. There seemed to be some anticipation of it last week as the price rose as high as $2.55, but nothing happened and then the market crashed. Hopefully the offer will come, and it will be attractive by our standards and be at least $3 per share--so we can book at least a 50% gain on this one. Bank debt is now scheduled for repayment by March 31, 2007 and they have arranged financing for their latest acquisition.
Up 26% HOLD.