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Hello Readers,
Since the last Newsletter, we closed two positions; one for a very nice gain and one for a loss.
Net List (9/5/11). Closed position 11/15/11 at $3.15 for a 75% GAIN.
Bridgeline Digital (6/5/08). Closed position 11/15/11 at 70 cents for a 77% LOSS.
This was our second rodeo with Net List and this time was better than the last; the stock rocketed on news of deals with IBM and HP. We finally closed Bridgeline Digital after what seemed like an eternity.
The last few weeks have been wild. Or, have they? Perhaps a 390-point drop in the Dow one day, followed by 300-point gains over the next few subsequent days, is now the norm. After all, markets are now at the mercy of ETFs fueled by high-frequency traders who over-react to anything and everything. So, what will likely get them fired up next? Putting aside that Europe is still a financial meltdown waiting to happen; our guess is that the next market fixation will be on the Congressional “Super Committee”, which, as we all know, is a bunch of crap. However, expect its actions, or inactions, to impact the markets.
Our Current Portfolio, which was massacred a few months back, has been almost holding its own. And, we repeat, small stocks took a major hit in late summer and it will take much longer for them to recover than mid-to-big cap stocks.
Here are the headlines since the last Newsletter about companies in the 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.
ECOtality (ECTY)(11/5/11). Achieves record quarterly results; balance sheet still looks real good.
BioDelivery Sciences (BDSI)(11/5/11). Provides business update. Initiates confirmatory pharmacokinetic study of BEMA buprenorphine/naloxone compared to suboxone. NDA submission results in milestone payment for company. BEMA fentanyl submitted for marketing authorization in Taiwan.
BioCryst Pharmaceuticals (BCRX)(10/20/11). Says that gout drug helps patients in trial. Balance sheet still looks okay.
MGIC Investment (MTG)(10/20/11). Reports 10/11 primary new insurance written of $1.4 billion.
Corcept Therapeutics (CORT)(10/5/11). Balance sheet still looks pretty healthy.
Keryx Biopharmaceuticals (KERX)(10/5/11). Announces highlights from Zerenex poster presentations. To present at Lazard Capital Markets conference on November 16, the day we post this Newsletter.
BioMimetic Therapeutics (BMTI)(9/20/11). Balance sheet looks to be very healthy.
Celldex Therapeutics (CLDX)(9/20/11). Initiates Phase 1 clinical trial of CDX-1127. Balance sheet still looks pretty good.
Glu Mobile (GLUU)(9/5/11). “Ignites” mobile gaming on Kindle Fire. To present at annual Citi U.S. Small/Mid Cap Conference on November 16, the day we post this Newsletter. Quarterly results show positive revenue growth, but losses could use some trimming; balance sheet still looks strong.
Synthesis Energy Systems (SYMX)(8/20/11). Quarterly numbers reflect positive movement; balance sheet still looks pretty good.
Nautilus (NLS)(8/20/11). Launches the CoreBody Reformer. Quarterly results okay; as is balance sheet.
Satcon Technology (SATC)(8/5/11). Quarterly numbers okay but could be better; balance sheet still looks good.
Antares Pharma (AIS)(8/5/11). Achieves record quarterly revenues; balance sheet still looks pretty healthy.
Cover-All Technologies (COVR)(7/20/11). Quarterly results could have been better; balance sheet still looks okay.
Somaxon Pharmaceuticals (SOMX)(7/5/11). Balance sheet still looks okay.
Galena Biopharma (GALE)(7/5/11). Presents positive NeuVax clinical trial results.
Opnext (OPXT)(6/20/11). Recent results not great; balance sheet still seems pretty good.
On Track Innovations (OTIV)(6/20/11). Extends its EasyPark solution to Lille, France’s fourth largest metro area with 1.1 million residents.
Gleacher & Company (GLCH)(6/5/11). Expands investment grade credit platform. Extends tender offer.
Idera Pharmaceuticals (IDRA)(6/5/11). Latest balance sheet looks good. Completes $9.5 million financing.
NeoStem (NBS)(5/20/11). Recent balance sheet looks okay.
MediciNova (MNOV)(5/20/11). Balance sheet still looks pretty good. To present at the Lazard Capital confab on November 16, the day we post this Newsletter.
Energy Recovery (ERII)(5/5/11). Recent numbers not good; balance sheet still looks strong. Company’s PX devices awarded for major expansion plant in Western Australia.
BioStar Pharmaceuticals (BSPM)(4/20/11). Releases quarterly results.
GSE Systems (GVP)(4/20/11). Recent numbers look pretty good; as does balance sheet.
ThermoGenesis (KOOL)(4/5/11). Reports drop in sales and revenue; balance sheet still looks good.
Jamba (JMBA)(3/20/11). Recent numbers reflect revenue drop but earnings growth; balance sheet still looks good.
Oculus Innovative Sciences (OCLS)(3/5/11). Recent quarterly numbers show revenue growth and paring of losses; balance sheet could look a little better.
Network Engines (NEI)(2/5/11). Quarterly and year-end numbers look pretty good; as does balance sheet.
Real Goods Solar (RSOL)(1/20/11). Quarterly numbers reflect nice revenue growth; balance sheet still looks good.
Great Basin Gold (GBG)(1/5/11). Restructuring of Tanzania’s mining sector may crimp company’s margins. This stock, like many small mining stocks, has been a major disappointment in that its price keeps going down while gold keeps going up. The main reason is that hedge funds and ETFs are mainly buying the actual metal, right now, while ignoring the miners.
Sprint Nextel (S)(1/5/11). The usual umpteen news stories. Of note is that the Justice Department is bringing suit against the proposed AT&T merger.
Trident Microsystems (TIRD)12/20/10). We have placed this on the “Endangered List” as stock dives on bad earnings news.
Astex Pharmaceuticals (ASTX)(12/5/10). To present at the Lazard Capital confab on November 16, the day we post this Newsletter.
RELM Wireless (RWC)(11/5/10). Company posts pretty good earnings; balance sheet still looks okay.
Inovio Pharmaceuticals (INO)(10/20/10). Balance sheet still looks pretty healthy, but stock price drop is making us a little nervous.
ProPhase Labs (PRPH)(10/5/10). Posts pretty good earnings numbers; balance sheet still seems okay.
CombiMatrix (CBMX)(8/20/10). Balance sheet still looks okay.
Rexahn Pharmaceuticals (RNN)(7/20/10). Announces Phase II results for Serdaxin as treatment for major depressive disorder.
Alpha Pro Tech (APT)(7/20/10). Recent earnings numbers look real good; balance sheet still seems okay.
American CareSource (ANCI)(4/20/10). Sadly, we are also placing this one on the “Endangered List” as recent numbers fail to excite.
NovaBay Pharmaceuticals (NBY)(4/20/10). Recent balance sheet looks pretty healthy. Company’s Aganocide compound, NVC-422, featured in Drugs of the Future.
Novavax (NVAX)(4/5/10). Latest balance sheet still looks pretty good.
Cerus Corp (CERS)(3/20/10). Announces new supply agreement with French National Blood Service. To present at Stephens, Inc. Fall Conference on November 16, the day we post this Newsletter. Latest quarterly numbers show nice revenue growth and good earnings; balance sheet still seems strong.
Cytokinetics (CYTK)(2/5/10). Initiates second cohort of ongoing Phase II clinical trial evaluating CK-2017357 in patients with ALS.
CytRx (CYTR)(1/5/10). To present at the Lazard Conference on November 16, the day after we post this Newsletter. Balance sheet still looks very healthy.
Qualstar (QBAK)(10/20/09). Quarterly numbers not that good; balance sheet still seems to be okay.
Performance Technologies (PTIX)(7/20/09). Quarterly numbers look pretty good, as does balance sheet.
USA Technologies (USAT)(6/5/09). Quarterly report shows improved revenue and less losses; balance sheet still looks good.
U.S. Geothermal (HTM)(8/5/08). Secures $9 million cash grant bridge loan for San Emidio project.
Microvision (MVIS)(5/20/08). And here is another that we are adding to the “Endangered List”, since the stock keeps tanking.
GlobalSCAPE (GSB)(5/20/08). Stock gets a nice boost on decent revenue and earnings news; balance sheet still looks okay.
MOVE, Inc. (MOVE)(1/5/08). Quarterly results a little disappointing; balance sheet still looks strong.
XATA, Inc. (XATA)(9/20/07). Revenue holds steady but losses mount; balance sheet still looks good.
YM Biosciences (YMI)(11/5/06). Balance sheet still looks good.
Our picks for this Newsletter are a maker of Wi-Fi products and a maker of semiconductor equipment, both NASDAQ-listed.
FSI INTERNATIONAL, INC. (NASDAQ: FSII) – $2.43. Twelve-month hi-low has been $5.41 – $1.70. Located in Chaska, MN, with around 350 employees, this maker of semiconductor equipment has 38.86 million shares outstanding, $96.76 million in total current assets, $115.6 million in total assets, little long-term debt, and $21.7 million in total liabilities. Institutional ownership is about 56%. One analyst rates the stock a “strong buy” and two as a “moderate buy”. www.fsi-intl.com
At first glance, FSI International, Inc. looks to be pretty boring, and it probably is, but there are some “buts” that make it worth placing the company into the Current Portfolio. The company has a pile of money; it is showing revenue growth and earnings, even though EPS is down; and the stock price has dropped because, over the last few months, the company has not lived up to analysts’ future expectations. Well, boo-hoo on the last one.
Founded in 1973, and public for over twenty years, FSI makes and markets equipment used in fabricating microelectronics, such as advanced semiconductor devices. It provides surface conditioning technology services to manufacturers of integrated circuits (ICs). FSI supports surface conditioning equipment that uses wet, cryogenic, and other chemistry techniques to clean, strip, or etch the surfaces of silicon wafers, and supplies refurbished microlithography products that are used to deposit and develop light sensitive films. It provides various technologies, including batch spray processing systems, single wafer cleaning systems, CryoKenetic processing systems, immersion processing systems, and resist processing systems. FSI also offers system and subsystem upgrade packages, spare part kits, individual spare part components, robot refurbishment and replacement, and support services.
Some of the brand names that FSI is known for are ORION Single Wafer Cleaning System, ANTARES Single Wafer Cryokinetic System, ZETA Batch Spray System, MERCURY Semi-Auto Batch Spray System, MAGELLAN Batch Immersion System, and the POLARIS Micro Lithography Cluster.
For the FY ending 8/27/11, revenue was $96.88 million with $8.23 million in net income compared to the previous FY revenues of $90.98 million and $13.02 million in net income. The company’s guidance for the current QT fell shy of expectations, but FSI expects revenues to increase significantly during the next QT, which will be their 2ndQT for FY2012.
Too often the market over-reacts to minor downward blips, and this seems to be the case with FSI. With the stock at near the bottom of its trading range, this “boring company” may be worth a shot.
Our 24-month target for the stock is $4.00 to $4.50.
For more information, contact FSII’s Benno Sand at 952-448-8922; benno.sand@fsi-intl.com
ANADIGICS, INC. (NASDAQ: ANAD) – $2.50. Twelve-month hi-low has been $8.20 – $1.92. Based in Warren, NJ, with nearly 600 employees, this provider of semiconductor solutions has 67.81 million shares outstanding, $116.24 million in total current assets, $202.27 million in total assets, little debt, and $24.41 million in total liabilities. Institutional ownership is about 54%. Two analysts have the stock as a “buy”, five as a “hold”, and one as a “sell”. www.anadigics.com
And, yes, Anadigics, Inc. is another one of those so-called boring companies that we are including in the Current Portfolio. It has had several lousy quarters, but now feels it can turn things around, and it has a pile of cash to help it reach its goals. In this economy, cash is king.
Founded in 1984, and public for over fifteen years, Anadigics provides semiconductor solutions to the broadband wireless and wireline communications markets. With its patented InGaP-Plus process, its products include radio frequency (RF) power amplifiers (PAs), tuner integrated circuits, active splitters, line amplifiers, and other components. The company’s RF power amplifier products enable mobile handsets, data cards, and other devices to access third generation (3G) wireless networks using international standards, including wideband code division multiple access (WCDMA), high speed packet access (HSPA), code division multiple access (CDMA), and evolution data optimized (EVDO). In addition, the company provides RF power amplifiers for the fourth generation (4G) wireless services, including long term evolution (LTE) and worldwide interoperability for microwave access (WiMAX). Their Wi-Fi___33 products enable connectivity for wireless mobile devices and other computing device and its cable television (CATV) products enable fixed-point, wireline broadband communications over cable modem and set-top box products, CATV infrastructure, and fiber-to-the premises (FTTP).
For FY2010, ending 12/31/10, revenue was $216.7 million with $1.26 million in net income. During the first nine months of the current FY, ending 10/1/11, revenue was $116.31 million with $33.74 million in losses (OUCH!). So, obviously, Anadigics has had a really bad year, but the last QT revenue increased nearly 5% sequentially, and the company feels that it new product introductions will be the driving force behind future growth.
This is another “snorer” that looks to be a turnaround, and it has the cash to help it to that.
Our 24-month target for the stock is $4.50 to $5.00.
For more information contact ANAD’s Kristina Panek at 908-668-5000, ext. 5330; kpanek@anadigics.com
Look for the December 5, 2011 Newsletter to be posted on 12/1 or 12/2.
Happy Thanksgiving,
George