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Hello Readers,
Since the last Newsletter, we have closed five more positions; two for gains and three for losses.
OREXIGEN THERAPEUTICS (2/20/12). Closed position 3/19/12 at $5.12 for a 68% GAIN.
CERUS CORP. (3/20/10). Closed position 3/20/12 at $4.50 for a 60% GAIN.
OPNEXT (6/20/11). Closed position 3/26/12 at $1.73 for a 19% LOSS.
XATA CORP. (9/20/07). Closed position 3/20/12 at $1.33 for a 56% LOSS.
World Heart (11/20/10). Closed position 3/30/12 at 29 cents for a 89% LOSS.
Since picking Orexigen Therapeutics about six weeks ago, the stock made a nice steady climb on no real blockbusting news, which works for us. Cerus finally reached our target, probably driven on news of strong quarterly sales from its blood system. We closed Opnext for a small loss when news broke that it was being bought out by Oclaro, which we think they got for a steal. And, after too many years of waiting, we finally closed XATA Corp. for a loss. Finally, we had to close World Heart for an ugly loss when they were acquired by HeartWave. In case nobody noticed, this is our first ever Newsletter where we reported more losses than gains on Closed Positions; there’s a first for everything.
Ever notice how when the markets start having a minor slide that Fed Chairman Ben rushes to the microphones to insinuate he’s ready to launch QE3? And, that is primarily why the markets keep marching upward. Despite all of the spin about a “fragile recovery”, the economic fundamentals still stink, and we suspect that the next round of quarterly earnings won’t put a lot of smiles on investors’ faces. And, oh yes, let’s not forget that Europe is still a ticking time bomb. But, there is still Chairman Ben. The problem will come when all of his excess liquidity becomes the problem.
Here are the headlines since the last Newsletter about companies in our Current Portfolio; dates in parentheses are when we first recommended them. We are not giving updates about companies on the “Endangered List” unless we feel the news to be highly significant.
Echo Therapeutics(ECTE)(3/20/12). Balance sheet still looks good.
Complete Genomics(GNOM)(2/20/12). Now accepts DNA obtained from saliva for whole human genome sequencing.
Geron Corporation(GERN)(2/5/12). To present at the AACR annual meeting on April 3.
A123 Systems(AONE)(1/20/12). Stock tanks as company has to recall defective batteries that led to Fisker shutdown. This isn’t good.
Navidea Biopharmaceuticals(NAVB)(1/5/12). To present at the Needham Healthcare Conference on April 3. Presents Lymphoseek Phase 3 data showing 0% false negative rate in Sentinel Lymph Node mapping in nine patients.
Nexxus Lighting(NEXS)(12/5/11). Full-year revenues increase by 66% and losses are pared; balance sheet still looks okay.
ECOtality(ECTY)(11/5/11). Partners with Regency Centers at nineteen locations nationwide. Selected as a 2012 New Energy Pioneer.
Synthesis Energy Systems(SYMX)(8/20/11). Extends strategic alliance with Coalworks.
Antares Pharma(AIS)(8/5/11). To present at the Needham healthcare confab on April 4.
On Track Innovations(OTIV)(6/20/11). Stock gets a nice bump upward as company sues T-Mobile over a patent infringement. Subsidiary launches its newly designed EasyPark parking information and payment system.
Gleacher & Company(GLCH)(6/5/11). Company delays filing annual report as mortgage unit is deemed in default.
Idera Pharmaceuticals(IDRA)(6/5/11). To present at the Needham healthcare conference on April 4.
Neostem(NBS)(5/20/11). Stock takes another hit as company files $6 million secondary offering priced at 40 cents a share. Let’s hope they pull it off.
MediciNova(MNOV)(5/20/11). Recent balance sheet still looks good. Completes enrollment in Phase 2 MN-221 trial treating patients suffering from acute exacerbations of asthma.
Energy Recovery(ERII)(5/5/11). Helps power up China with two million gallons of water per day. Egyptian armed forces tap into PX technology for country’s largest desalination facility.
Biostar Pharmaceuticals(BSPM)(4/20/11). Posts pretty good year-end numbers; balance sheet still looks very health, and, we have no clue as to why the stock is at current levels.
ThermoGenesis(KOOL)(4/5/11). Receives AABB accreditation for cord blood products customer in China.
Jamba, Inc.(JMBA)(3/20/11). Company says it is expanding into schools.
Real Goods Solar(RSOL)(1/20/11). Sees weak 1stQT and FY2012 sales.
Great Basin Gold(GBG)(1/5/11). Closes C$50 million secondary offering. Will release FY2011 results on April 3. We had expected this stock to be much higher, by now. The problem is that most ETF gold funds have not been buying gold stocks, for the most part, but, instead, have just been buying the metal.
Sprint Nextel(S)(1/5/11). The usual several dozen news stories and articles.
RELM Wireless(RWC)(11/5/10). Stock got a nice pop when the company was named to a contract issued by Department of Homeland Security.
Inovio Pharmaceuticals(INO)(10/20/11). Receives U.S. patent for SynCon H1N1 influenza universal vaccine.
Rexahn Pharmaceuticals(RNN)(7/20/10). To present data on novel anti-cancer small molecule RX-3117 at the AACR meeting on April 2, the day we post this Newsletter.
NovaBay Pharmaceuticals(NBY)(4/20/10). Provides financial results. Signs option agreement with Virbac Animal Health for Aganocide compounds.
Novavax(NVAX)(4/5/10). Presents results from Phase 1 RSV study.
Cytokinetics(CYTK)(2/5/10). To present at the Needham life sciences conference on April 3.
CytRx(CYTR)(1/5/10). To present at the AACR annual confab on April 2, the day we post this Newsletter.
Qualstar Corp.(QBAK)(10/20/09). CEO stepping down.
GlobalSCAPE(GSB)(5/20/08). Reports record annual revenues; balance sheet still looks good.
YM BioSciences(YMI)(11/5/06). Canaccord Genuity initiates coverage on company.
Our picks for this Newsletter are two providers to the semiconductor industry, both trading on NASDAQ.
AXCELIS TECHNOLOGIES, INC. (NASDAQ: ACLS) – $1.70. Twelve-month hi-low has been $2.69 – $1.00. Based in Beverly, MA, with about 1000 employees, this provider to the semiconductor industry has 107.12 million shares outstanding, $212 million in total current assets, $269.24 million in total assets, little debt, and $54.69 million in total liabilities. Institutional ownership is around 52%. One analyst rates the stock a “strong buy” and one as a “buy. www.axcelis.com
For the last three years, Axcelis Technologies, Inc. has shown pretty strong revenue growth and in 2011 recorded a profit. At current stock price levels, and with a strong balance sheet, it seems to be a natural choice for the Current Portfolio.
Founded in 1995, and public for almost a dozen years, Axcelis makes and services ion implantation, dry strip, and other processing equipment used in fabricating semiconductor chips. Its customers include all of the twenty largest semiconductor manufacturers in the world and more than 3000 of its products are in use worldwide. The company offers a line of high energy, high current, and medium current ion implanters for various applications, such as a line of single wafer implanters, known as Optima platform, comprising the Optima XE, the Optima HD, and the Optima MD. Axcelis also offers dry strip tools, including the Integra RS, which comprises paired-chamber process modules. In addition, the company provides aftermarket services and support, such as spare parts, equipment upgrades, maintenance services and customer training.
As of a year ago, the ion implantation business accounted for approximately 84% of company revenues with the remaining 16% of revenue derived from its dry strip and other processing systems.
For FY2011, ending 12/31/11, revenue was $319.41 million with net income of $5 million, compared with 2010 revenue of $275.2 million and $17.57 million in losses, with FY2009 revenue of $133 million and $77.47 million in losses.
From the above numbers, it’s easy to see the positive progression of the company over the last three years. Axcelis isn’t sexy, but, at some point, others may see the same things we see.
Our 24-month target for the stock is $3.00 to $3.25.
For more information, contact ACLS’s Jay Zager at 978-787-9408; jay.zager@axcelis.com
MATTSON TECHNOLOGY, INC. (NASDAQ: MTSN) – $2.77. Twelve-month hi-low has been $3.30 – 93 cents. Located in Fremont, CA, with about 380 employees, this provider to the semiconductor industry has 58.43 million shares outstanding, $101.52 million in total current assets, $113.84 million in total assets, little debt, and $53.7 million in total liabilities. Institutional ownership is around 34%. Two analysts rate the stock a “strong buy”, one as a “buy”, and another as a “hold”. www.mattson.com
Mattson Technology, Inc. is another one that has shown good revenue growth over the last few years while paring its losses nicely. Throw in the strong balance sheet, and we have good reason to add this one to the Current Portfolio.
Founded in 1988, and public since 1994, Mattson designs, manufactures, and globally supports semiconductor wafer processing equipment used in fabricating integrated circuits (ICs). Its customer base includes foundries, memory and logic device manufacturers. Its dry strip products include the SUPREMA strip system that incorporates its inductively coupled plasma (ICP) technology photoresist process module, and vacuum-based productivity platform for processing of sub 30nm devices. The company’s rapid thermal processing (RTP) products include the Helios and Helios XP systems for conventional annealing applications, and the Millios System for millisecond anneal applications. Its etch products comprise the paradigmE and Alpine that feature a proprietary Faraday-shielded ICP with etch bias control to provide process on-wafer performance. The company has recently begun expanding into the latter two markets and expects them to enhance its revenue and profitability.
In mid-February, Mattson expanded its etch position of the paradigmE Etch System for advanced foundry production when it announced that a leading semiconductor maker had accepted the system for producing advanced logic chips.
For FY2011, ending 12/31/11, revenue was $184.94 million with $17.95 million in losses compared to FY2010 revenue of $138.33 million and $33.4 million in losses, and FY2009 revenue of $42.7 million and $67.04 million.
Mattson appears to be on a nice turnaround, judging from the above numbers. Like Axcelis, there isn’t much sexy going on here, except the numbers, which can be important, or so we’ve heard.
Our 24-month target for the stock is $4.25 to $4.50.
For more information, contact MTSN’s J. Michael Dodson at 510-657-5900.
Look for the April 20, 2012 Newsletter to be posted on 4/16 or 4/17.
Have a Happy Holiday,
George