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Hello Readers,
Since the last Newsletter, we closed two more positions, one for a nice gain and one for a nasty loss.
MICROMET (4/20/08). Closed position 7/9/08 at $3.30 for a 65% GAIN.
VION PHARMA (5/20/05). Closed position 7/8/08 at $1.04 for a 96% LOSS. (price includes reverse split)
Ever since we picked Micromet in April, the stock pretty much went upward; then, in June, news of preclinical and Phase 2 starts on several of MITI’s drug candidates juiced the stock even more. Vion, which had been a huge disappointment, was closed for an expected ugly loss.
And so the market catharsis continues aided by high oil prices and persistent government meddling. Must we go on with this rant? Until there is a violent sell-off, the current lethargy will go on and go and on. Yes, we may see several days, or even a week, of bullishness in the market, but be careful, it is likely to be a head fake. We need the sell-off in order to get a better grasp of future entry points.
Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we first recommended them. And yes, as we said in the last issue, the Current Portfolio is the worst it has ever been.
Applied Energetics (AERG) (7/5/08). Will pay preferred stock dividend in cash rather than in common stock, so as to avoid dilution. Nice to see a company looking out for their shareholders. Is removed from the Russell 2000 index.
Neurobiological Technologies (NTII) (7/5/08). Dutton Associates gives the stock a “strong speculative buy” rating. CEO to retire at end of year.
MMC Energy (MMCE) (6/20/08). Receives final regulatory approval for the Escondido repowering project. Gets turbine financing from GE.
Bridgeline Software (BLSW) (6/5/08). National Insurance Crime Bureau selects BLSW iAPPS as SaaS platform for enterprise Web initiatives. Denver-based Indigo merges into Bridgeline.
Microvision (MVIS) (5/20/08). Joins Russell 2000 and Russell Global indexes.
GlobalScape (GSB) (5/20/08). Cited as a leader by Gartner. Introduces CuteSendlt.com
Kopin (KOPN) (4/20/08). Removed from the Russell 2000 index.
Biolase (BLTI) (4/5/08). Launches new Waterlase C100 all-tissue dental laser system; unveils broadened product strategy.
Rodman, Renshaw (RODM) (3/20/08). Closes public offering for SmartHeat, raising $5.67 million.
IncrediMail (MAIL) (2/20/08). Company and Google sign AdSense direct agreement.
Nanophase Technologies (NANX) (1/20/08). Sets earnings call for July 22.
Catalyst Pharmaceutical (CPRX) (12/20/07). Begins trial for addiction drug.
DigitalFX (DXN) (12/5/07). Schedules annual shareholders meeting for July 23.
Santarus (SNTS) (11/20/07). Increases credit facility to $25 million. Gets another U.S. patent covering Zegerid products. Is removed from the Russell 2000 index.
Continuecare (CNU) (11/20/07). Expands share buyback plan.
Orsus Xelent (ORS) (10/20/07). Plans to acquire 60% of an electronics manufacturing facility in Zhuhai, China for $14.4 million, which is probably what dropped the stock price. Terminates all negotiations with Lemon Times.
American Technology (ATCO) (10/5/07). Says increased LRAD-X sales should be a boost to 3rdQT revenue.
XATA (XATA) (9/20/07). Reports 278% year-over-year increase in third quarter XATANET system shipments.
Wave Systems (WAVX) (9/5/07). To complete $1.6 million stock offering.
A.P. Pharma (APPA) (8/5/07). Names new CEO.
Radcom (RDCM) (7/20/07). Earnings call slated for July 21.
Alliance Fiber Optic (AFOP) (7/20/07). Sets earnings call for July 23.
Heska (HSKA) (7/5/07). Slates earnings news for August 11.
Oncolytics (ONCY) (6/5/07). Treats 200th cancer patient in clinical studies with REOLYSIN.
Hana Biosciences (HNAB) (5/5/07). Marqibo receives orphan designation from European commission for treating adult acute lymphoblastic leukemia.
ECtel (ECTX) (5/5/07). Earnings call set for August 5.
Ore Pharmaceuticals (ORXE) (4/20/07). Files IND application with the FDA. This is on the “Endangered List”.
VocalTec (VOCL) (4/20/07). Company and Deutsche Telekom announce solution for international VoIP interconnection. This is on the “Endangered List”.
TTI Team Telecom (TTIL) (3/5/07). HOT Telecom chooses TTIL to expand service assurance solution for VoIP services.
UQM Technologies (UQM) (2/5/07). Announces 1stQT electric and hybrid electric vehicle propulsion system orders of $2.62 million.
Endologix (ELGX) (1/20/07). Earnings call set for July 24.
CardioTech (CTE) (12/20/06). Receives FDA approval for export of second graft size for CardioPass clinical trial.
Lantronix (LTRX) (12/5/06). Implements restructuring plan.
Proxim Wireless (PRXM) (11/5/06). Enables Stephouse Networks to provide WiFi and WiMAX service to the City of Portland, OR as an alternative to MetroFi. Selected by Televersa Online for WiMAX network in Germany. This stock keeps falling like a rock and we may soon place it on the “Endangered List”.
Hydrogenics (HYGS) (9/20/06). To supply electrolyzer and fuel cell for renewable hydrogen and demonstration center. Will also supply 20 fuel cell power packs to Concurrent Technologies for integration into material handling equipment. Regains NASDAQ compliance on minimum bid rule.
TVI Corp (TVIN) (9/5/06). Receives $7.56 million follow-on order from the National Guard. This is on the “Endangered List”.
Advanced Life Sciences (ADLS) (7/20/06). Added to Russell Microcap Index.
ThermoGenesis (KOOL) (4/5/06). FDA approves MarrowXpress device.
The Inventure Group (SNAK) (3/5/06). Added to the Russell Microcap Index.
Lipid Sciences (LIPD) (2/20/06). Wins third patent for its core technology.
MIND C.T.I. (MNDO) (2/5/06). PhonEX-ONE Telecom Expense Management certified for Cisco Unified Communication Manager, strategic win in financial sector. Gives updates on company held auction rate securities.
8×8 (EGHT) (1/20/06). Sets earnings call for July 31. Releases iPhone version of Packet8 mobile talk application. Awarded new VoIP patent.
Digital Angel (DIGA) (12/20/05). SARBE unit receives $2.4 million order to supply personal locator beacons to the Swiss Air Force. Announces restructuring program for its animal ID business. This is on the “Endangered List”.
Westell Technologies (WSTL) (10/20/05). CEO resigns and stock takes a bigger tumble. This is making us nervous.
Zi Corporation (ZICA) (8/5/05). Signs Decuma license with ZTE. Wins contract with Kyocera. This is on the “Endangered List”.
B.O.S. (BOSC) (1/5/05). Announces $1 million private placement and a change in board composition.
Nova Measuring (NVMI) (11/5/04). Pushes optical CD boundaries with Nova T500 stand-alone platform.
Our picks for this Newsletter are a health services company and a well-known brokerage firm that we were familiar with some years back, both trade on the NASDAQ.
HYTHIAM, INC. (NASDAQ: HYTM) – $1.98. Twelve-month hi-low has been $9.01 – $1.11. Located in Los Angeles, CA, with about 160 employees, this health services company has 54.4 million shares outstanding, $38.34 million in total current assets, $58.48 million in total assets, and $24.29 million in total liabilities, of which $2.35 million is long-term debt. Institutional ownership is around 50%. Three analysts give the stock a “strong buy” and one has it on “hold”. www.hythiam.com
With its good-looking balance sheet and multi analysts lined up behind Hythiam, Inc. the company seems to be one of those “what’s not to like?”. Of course, helping to fan our opinion is that it is carving a niche in a rapidly-expanding business, or, should we say, problem.
Founded in 2000 and public for nearly five years, Hythiam provides behavioral health management services to health plans, employers, labor unions, and individuals seeking substance dependence treatment through a network of licensed and company managed healthcare providers. Hythiam engages in research, developing, licensing, and commercializing physiological, nutritional, and behavioral treatment programs. The company offers its proprietary PROMETA treatment programs for treating alcohol, cocaine, and methamphetamine dependence by integrating various therapies. The PROMETA treatment program includes medically directed and supervised procedures designed to address neurochemical imbalances in the brain that may be caused or worsened by substance dependence.
Hythiam also provides training, education, and various administrative services to assist physicians, healthcare providers, and facilities with staff education, marketing, and administrative support. In addition, the company manages medical practices and treatment centers that offer the PROMETA treatment programs, as well as other treatments for substance dependencies.
At the end of June, Hythiam released study results that showed patients on its PROMETA drug reduced cravings for methamphetamine compared to those on placebo. By the end of the 30-day study, 42% of PROMETA patients had two consecutive clean urine tests compared to 27% of placebo subject. Then, in early July, a similar study demonstrated statistically significant improvement in patients with symptoms of alcohol withdrawal.
For FY2007, ending 12/31/07, revenue was $44 million with $45.46 million in losses – UGH! During the 1stQT of FY2008, ending 3/31/08, revenue was $11.33 million with $10.71 million in losses. At the beginning of 2008, Hythiam announced a major streamlining of its operations that it expects to bear fruit by the last quarter of this year. Good idea.
We hate to use the term “growth industry” here, but Hythiam seems poised to benefit from it.
Our 24-month target for the stock is $3.50 to $3.75.
For more information, contact HYTM at 310-444-4300; info@hythiam.com
E*TRADE FINANCIAL CORPORATION (NASDAQ: ETFC) – $2.50. Twelve-month hi-low has been $23.63 – $2.08. Located in New York City with about 3500 employees this brokerage firm has 473.1 million shares outstanding, $53.19 billion in total assets, and $50.48 billion in total liabilities, of which $8.4 billion is long-term debt. Institutional ownership is around 47%. Eight analyst have the stock as a “hold”, two as a “moderate sell”, and one as a “strong sell”. www.etrade.com
Some years back, we recommended E*TRADE when it was on the NYSE and did pretty well with it. Now, that it has been kicked in the teeth, along with most of the financial sector, it may be worth another shot. Yes, the company held those subprime mortgages, which has almost brought it to its knees, but the brokerage side still seems like it is a decent business model.
Founded in 1982 and public for nearly a dozen years, E*TRADE offers financial solutions to retail and institutional customers worldwide. It provides retail investments and trading, which include automated order placement and execution of equities, currencies, futures, options, ETFs, mutual funds, and bonds, as well as quick transfer, wireless account access, extended hours of trading, quotes, research, and advanced planning tools. It primarily provides services through its web site at Etrade.com. The company also offers various banking and financial services that include checking, savings, sweep, and money market accounts; CDs; mortgage, home equity, and credit cards; and various other loans. It also provides advisory and asset management services to retail clients.
For FY2007, ending 12/31/07, revenue was $3.56 billion with $1.44 billion in losses. During the 1stQT of FY2008, ending 3/31/08, revenue was $928 million with $91.2 million in losses.
At the end of June, the company announced it had cut its debt by almost $96 million. Earlier this week, in mid-July, E*Trade sold its Canadian unit for $442 million, which should help ease its mortgage problems. Of course, we’ll know a lot more on July 22 when ETFC releases its 2ndQT earnings. We’re thinking that most of the bad news should be behind the company.
Our 24-month target for the stock is $4.25 to $4.75.
For more information, contact ETFC’s Adam Townsend at 646-521-4406; adam.townsend@etrade.com
Look for the August 5, 2008 Newsletter to be posted on 8/1 or 8/4.
Thank you,
George