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Hello Readers,
Since the last Newsletter, we have closed seven more positions, six for gains and one for a loss.
ABRAXAS PETROLEUM (10/5/01). Closed position 1/29/04 at $2.75 for a 56% GAIN.
HEMISPHREX (7/5/02). Closed position 1/29/04 at $3.85 for a 54%GAIN.
METASOLV (10/5/03). Closed position 1/21/04 at $3.60 for a 64% GAIN.
DISTRIBUTED ENERGY (9/20/03). Closed position 1/21/04 at $3.30 for a 50% GAIN.
CURON MEDICAL (12/20/03). Closed position 1/20/04 at $5.35 for a 67% GAIN.
DRAXIS HEALTH (3/20/00). Closed position 1/20/04 at $4.50 for a 50% GAIN.
VIEWPOINT (11/20/02). Closed position 1/20/04 at 91¢ for a 68% LOSS.
Abraxas finally got the value play it deserved when Peter Lynch (remember him?) bought about 9% of the stock. Hemispherex went on a tear from good news about two of its drug candidates. MetaSolv made a move shortly after the TELUS announcement. Ever since we pickedDistributed Energy, formerly Proton Energy, the stock had been making a climb an inch at a time, so, we thought it best to close it at the 50% mark. Curon appears to be the classic case of a stock taking off prior to earnings news, so, why wait for the news? After almost four long years, we were able to close Draxis, and it proves that in a great market some dogs have their day, providing you have extreme patience and that the company is still fundamentally okay. We closed Viewpoint, which was on the “Endangered List”, because it seems that not even a bull market driven by tech stocks could help this tech stock.
A Reminder: To learn which positions have closed between Newsletters, visit the Track Record page.
Yes, we are still outright wild bulls despite Alan Greenspan causing last week’s hiccup. Actually, we expect more of a selloff, soon, which could be healthy for the markets. Let things consolidate, and allow the recent profit takers to take the markets even higher.
Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we first recommended them.
Genetronics (GEB) (10/5/00). Announces two new U.S. patents in Electroporation Therapy and gives an update on its 2003 IP development. Last year, around this time, the stock had sunk to 22¢.
MCF Corporation (MEM) (1/20/01). Ranks in top ten for number of completed PIPE transactions in 2003.
CE Franklin (CFK) (5/5/01). Reports 3¢/share earnings for 4th QT.
Arotech (ARTX) (6/5/01). Armoring subsidiary awarded $1.1 million armored vehicle contract for Iraq.
VASCO Security (VDSI) (2/5/02). Opens U.S. sales and support headquarters in Boston, MA.
Generex (GNBT) (8/5/02). Receives U.S. Defense Dept. grant for further development of vaccine technology. Initiates feasibility study with Unihart Biotech for Peri-oral delivery of Oroferone. Asks shareholders to approve issuing up to 10 million shares at less than market price, which may be why the stock seems to be marking time right now.
Cyro-Cell (CCEL) (5/5/03). Decides to close stem cell subsidiary, following resignation of its management and board. Doesn’t seem to have had a major adverse impact on the stock.
Allos Therapeutics (ALTH) (6/20/03). Initiates Phase I study of RSR13 in locally advanced non-small cell lung cancer.
Art Technology (ARTG) (8/5/03). Settles $10.9 million real estate obligation for $3.3 million. Year-end results show drop in revenues year-over-year, but posts a profit for the 4th QT: balance sheet still looks okay. ATG Customer Experience Platform to power U.S. Army online marketplace.
Targeted Genetics (TGEN) (10/5/03). Gets FDA approval to begin clinical trial of TgAAC94 in rheumatoid arthritis.
Insmed (INSM) (11/5/03). Obtains patent rights for extreme insulin resistance from Fujisawa.
A.P. Pharma (APPA) (11/5/03). Provides clinical development update on its lead product candidate APF112. Says Phase II data expected by mid-year.
V.I. Technologies (VITX) (11/20/03). Raises its private placement value to $10 million from $6.6 million, which causes stock to sag a little.
Active Power (ACPW) (11/20/03). Year-end and 4th QT numbers about what was expected; balance sheet still looks pretty nice.
AVANT Immuno (AVAN) (12/5/03). Announces positive results of the adult portion of the cholera vaccine trial in Bangladesh.
SatCon (SATC) (12/5/03). Receives $900,000 order from FuelCell Energy.
Actuate (ACTU) (1/5/04). SEC formally closes probe, which is about time. Stock was downgraded by Pacific Growth Securities, and sold off. Cause? Good question. ACTU released year-end and 4th QT numbers, which don’t seem that bad, in fact, red ink was dramatically reduced compared to 2002; balance sheet still appears very healthy.
ImageWare (IW) (1/20/04) Announces EPI Builder SDK 6.3. IW to pilot biometric face finding project aboard new Carnival Miracle. To provide Portland, OR police bureau with data sharing and web-based investigative solutions. Florida driver system to include IW technology.
Peerless Systems (PRLS) (1/20/04). Extends length and reach of Adobe PostScript with new license pact. Announces Everest family of MFP controllers.
Our picks for this issue are two companies that should benefit if 2004 proves to be a great year for the technology sector.
CROSSROADS SYSTEMS, INC. (NASDAQ: CRDS) – $3.15. Twelve-month hi-low has been $3.81-$1.00. Based in Austin, TX, with about 120 employees, this maker of networking and communications devices has 24.3 million shares outstanding, $37.27 million in total current assets, $40.8 million in total assets, little debt, and $5.61 million in total current liabilities. Institutional ownership is around 16%. One analyst rates the stock a “moderate buy”, one as a “hold”, and one as a “strong sell”. http://www.crossroads.com
If you believe, as many do, that 2004 will be a great year for the technology industry, then Crossroads Systems, Inc. may be worth a shot. However, don’t expect its stock to see the $142 it hit in February 2000, which now seems like a lifetime ago.
Founded in 1994, Crossroads develops and manufactures enterprise data routing solutions for open system storage area networks (SANs). Their storage routers and storage solutions enable protocol-independent connectivity at gigabit speeds and provide manageability for a wide range of storage devices, making it easier and more cost effective for companies to store, retrieve, and protect the integrity of their data. The company’s products are distributed through partners such as ARROW, Bell Micro, DLT Solutions, Info-X, Promark, and TidalWire, and are in solutions from companies such as HP, StorageTek, and EMC.
At the end of January, Crossroads, through a neutral test environment staged by the University of New Hampshire, validated the interoperability of its Internet SCSI (iSCSI), which the company feels gives it a solid foundation to introduce new products. In December, 2003, Crossroads entered into a technology agreement with privately-held NexQL to jointly develop advanced data management solutions. At the beginning of that month, CRDS and Hitachi entered into a cross-licensing pact covering access control technology. During October, Crossroads and StorageTek released fifth generation networked storage connectivity for mid-range tape libraries; and the company also announced an agreement with EMC for server connectivity to networked storage.
For FY2003, ending 10/31/03, revenue was $33.14 million with $6.45 million in losses compared to FY2002 revenues of $33.98 million and $25.5 million in losses. It should be noted that during 2003, product revenue dropped but royalty/other revenue rose nicely. It also appears that CRDS has significantly slowed the flow of red ink, though more needs to be done.
Given the current climate for tech stocks, Crossroads has a good feel about it. Keep an eye out for new products that may stem from the validation of the interoperability of the iSCSI.
Our 24-month target for the stock is $5.50 to $7.00.
For more information, contact CRDS’ Andrea Wenholz at 512-928-6897; info@crossroads.com
ANALYSTS INTERNATIONAL CORP. (NASDAQ: ANLY) – $2.98. Twelve-month hi-low has been $3.70-$1.15. Located in Minneapolis, MN, with about 3200 employees, this software and services consultant has 24.2 million shares outstanding, $66.98 million in total current assets, $103.6 million in total assets, little debt, and $34.52 million in total liabilities, of which $3.5 million is deferred long-term liability charges. Institutional ownership is around 43%. http://www.analysts.com
And here’s another one that could get a nice bounce, if, indeed, 2004 proves to be a good year for the technology industry, although, in all candor, Analysts International Corp. does lack glitz; however, we like the balance sheet.
Founded in 1966, and trading on NASDAQ since 1976, ANLY is an information technology (IT) consulting and services firm offering solutions or projects primarily in custom software application development, and traditional supplemental IT staffing under client or company management. The company operates through several business groups: Sequoia Services Group, which it completely acquired this past December, provides business solutions and network infrastructure services; Managed Services Group provides clients with single-source staffing or vendor management services of programmers and other software professionals; and IT Supplemental Resources, which provides high-demand resources for supporting a client’s IT staffing needs.
With over 40 offices throughout the U.S. and affiliates in Canada and the U.K., ANLY has a client base of over 1000 in nearly every conceivable area. The company also has strategic alliances with nearly 20 top service providers such as Cisco, IBM, Oracle, HP, and Microsoft.
ANLY hasn’t had any recent major developments, but last October the company entered into two strategic partnerships that could brighten its future. The first was with eWork whereby the two companies will develop and launch an internet-centric platform for workforce and career management in the IT industry. Next was a pact with iTouch Dimensions where ANLY will provide certain services to automate a range of government and local functions such as licenses and permits.
For FY2002, ending 12/28/02, revenue was $426 million with a net loss of $21 million (ouch!). During the first nine months of FY2003, ending 9/27/03, revenue was $248.68 million with a net loss of $1.04 million.
As we said above, there’s nothing sexy about ANLY, but should 2004 be a blowout year for the tech sector, then the company could ride the wave.
Our 24-month target for the stock is $5.50 to $6.50.
For more information, contact ANLY’s Cindy Klund at 952-838-2947; marketing@analysts.com
Look for the February 20, 2004 issue to be posted on 2/16 or 2/17. Thank you,
George