Some good examples in my stocks with earnings this week:
TRID: they beat expectations (Trident Microsystems Reports Second Quarter of Fiscal Year 2008 Results) but then said that 2008 was going to be a challenge. In my mind that was not news. That is why the stock had dropped from $23 to $5. But in happy hour trading, they were down 5% and started off today down 5%. But then the smarter money came in and they ended up 3.6%. One item that caught my eye and in line with recent theme was that they increased cash by about 16%.
WSTG: Had a very unexciting quarter (Wayside Technology Group, Inc. Reports 2007 Fourth Quarter Results and Declares Quarterly Dividend). But while it was lower YoY in revenues, the wheels didn't fall off as much as they had the prior quarter and they were actually up sequentially. Again, they have about $4 of cash per share backing up their $11 price and a nice 6% dividend. They did show that they were competing and that they were not going to just go away quietly. Based on that, the stock rose about 9%.
MSTR: reported this evening after the bell. You know when the headlines is touting record revenue for the year, rather than focusing on earnings/income and/or quarterly stuff, it probably isn't great news (MicroStrategy Announces Record Revenues of $351 Million in 2007). I am a little worried that they're not watching expenses very closely in what seems to me to be a downturn. But I am on risk for another 8 months.
One reason I am more bullish is how my tacking portfolios are faring. I set up two tracking portfolios of stocks under $10 per share... the kind of companies that had been trashed. One was set up in mid-December and one on January 11th. Here is how the December one has done:
| Symbol | Shrs | Price Paid | Trade | Gain | |
|---|---|---|---|---|---|
| ALOY | 1,269 | 7.88 | 7.70 |  $228.42 | 2.28% |
| CHCG.OB | 2,342 | 4.27 | 3.09 | $2,763.56 | 27.63% |
| GVHR | 1,942 | 5.15 | 7.02 |  $3,631.54 | 36.31% |
| HLYS | 1,550 | 6.45 | 6.39 | $93.00 | 0.93% |
| IWV | 1 | 87.11 | 80.66 | $6.45 | 7.40% |
| KG | 936 | 10.68 | 10.62 | $56.16 | 0.56% |
| NOOF | 2,008 | 4.98 | 4.44 | $1,084.32 | 10.84% |
| PBH | 1,258 | 7.95 | 7.72 | $289.34 | 2.89% |
| TGIS | 1,546 | 6.47 | 7.10 | $973.98 | 9.74% |
| VPHM | 1,145 | 8.73 | 9.47 | $847.30 | 8.48% |
| WSTG | 998 | 10.02 | 10.99 | $968.06 | 9.68% |
| Total (USD): | - | - | - | $1,899.63 | 1.90% |
You can see this one is up 1.9% while the benchmark is down 7.4%. Now the January 11th portfolio:
| Symbol | Shrs | Price Paid | Trade | Gain | |
|---|---|---|---|---|---|
| BVSN.OB | 5,464 | 1.83 | 1.60 | $1,256.72 | 12.57% |
| CHCG.OB | 2,564 | 3.90 | 3.09 | $2,076.84 | 20.77% |
| DBRN | 980 | 10.20 | 12.75 | $2,499.00 | 25.00% |
| FTD | 1,018 | 9.82 | 12.89 | $3,125.26 | 31.26% |
| HLYS | 1,613 | 6.20 | 6.39 | $306.47 | 3.06% |
| HIRE | 1,049 | 9.53 | 8.55 | $1,028.02 | 10.28% |
| MTEX | 1,842 | 5.43 | 6.70 | $2,339.34 | 23.39% |
| NOOF | 1,961 | 5.10 | 4.44 | $1,294.26 | 12.94% |
| PBH | 1,379 | 7.25 | 7.72 | $648.13 | 6.48% |
| SIMG | 2,457 | 4.07 | 4.67 | $1,474.20 | 14.74% |
| WSTG | 1,124 | 8.90 | 10.99 | $2,349.16 | 23.48% |
| WON | 6,536 | 1.53 | 1.74 | $1,372.56 | 13.73% |
| IWV | 1 | 81.48 | 80.66 | $0.82 | 1.01% |
| Total (USD): | - | - | - | $8,457.46 | 7.04% |
Again, up 7.04% with the benchmark down 1%.
I saw ZZ, a company that has done nothing but go down since their IPO and been on the list regularly went up over 26% today! I read the article (Sealy fourth-quarter profit drops to 18 cents a share) and it didn't sound all that great... but they had dropped too far and they are still making money and should be positioned when the economy picks up. I might be looking at SCSS, which has also dropped a ton and closed today at 8.19.
Based upon all my analysis of cash and the fact that I think we've hit bottom and are comin back up, I did add two new MFI holdings this week... my first new money in a long time.
PRLS is the one I am really excited about. I started to buy them at the beginning of the week and it took all week to fill my order. They have a market cap around $40m. They have $22m in cash. Finally, they have proposed to sell Intellectual Property to Kyocera in what seems to me to be a stealth buyout (Peerless Systems Signs Definitive Agreement to Sell Intellectual Property and Other Assets to Kyocera Mita Corporation in $37 Million Cash Transaction). Now simple math would tell you that $22m in cash plus $37m in cash is more than their market cap of $40m. It isn't quite that simple as they'll have to pay taxes and fees. But they "conservatively" think they'll have at least $45m in cash after this transaction. Kyocera makes up about 45% of their revenues, so profit going forward would likely diminish. They would transfer 30 of their 99 employees to Kyocera (see the stealth buyout?). Peerless could still still their IP to other OEMS. They said they expect to still be making money post the transaction. Finally they strongly intimated that they have some other deals to unlock value planned. I suspect PRLS could go up sharply after all this cash shows up in their financial statements, kind of like how NPLA went from $1 to $3 quickly last summer. PRLS closed today at $2.34. Of course you should do your own due diligence. I read everything, examined their financial statements and listened to their conference call.
The other stock I bought is SIMG. I have to admit, I rarely do well on anything to do with semiconductors (see LRCX, OVTI, TRID (so far) & IVAC). Hopefully I am buying SIMG at the right time. On November 2nd, they dropped from $6.05 to $4.50 (about my price) after their earnings (You Haven't Missed the Silicon Image Boat).
OK, I have rambled long enough. Tomorrow I'll post my charts and tables.
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