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Happy 2004!
Let’s begin this year with a totally outrageous idea: The markets are just starting to heat up. Yes, all of the pundits and gurus have applauded Dow 10K, NASDAQ 2K and the Russell 2000 at about 560. Big deal. Weren’t the markets grossly oversold to begin with? Everyone is now asking just how much juice is possibly left? We sense there is a lot more room left on the upside, so much so that the giddiness of 1999 and early 2000 may be repeated by the end of 2004. What makes us so outlandishly bullish? Plain and simple, big and small investors alike are climbing a “wall of worry”, the fear of being left behind. Caveat: Terror attacks or Fed tightening could tank things.
We have not closed any positions in nearly six weeks, but that is sort of indicative of our history. We have these lulls, then BAM!, we’ll close 10 to 15 positions over a month or two. Have patience.
Here are the headlines since the last Newsletter about companies in the Current Positions. Dates in parentheses are when we first recommended them.
MCF Corp (MEM) (1/20/01). Announces executive changes.
Hauppauge Digital (HAUP) (2/5/01). FY2003 reflects 19% sales increase, but also a loss; balance sheet still looks reasonably healthy.
Arotech (ARTX) (6/5/01). Awarded new $5.2 million U.S. Army battery contract. Three cheers for Defense spending!
ViroLogic (VLGC) (7/20/01). Sixteen months ago this one was under a dollar because of FDA hassles. Stock just had another nice pop as company presented data using new hepatitis C virus drug resistance assay.
Airspan Networks (AIRN) (1/20/02). Serbian telecom places first orders for deployment of fixed wireless access technology. Polish phone company buys from AIRN’s three complementary product lines. Completes acquisition of Nortel’s fixed wireless access business.
Hemispherx (HEB) (7/5/02). Expands applications for Alferon through new manufacturing pact with Aplicare.
Generex (GNBT) (8/5/02). Prepares for “pivotal” Phase III study for Oralin.
ATG Technology (ARTG) (8/5/03). Offers retailers tools for managing holiday excess warehouse inventory. Teams with other companies to launch E-commerce website for FranklinCovey. Kana Response 8 moves to J2EE.
Distributed Energy (DESC) (9/20/03). Awarded two contracts for regenerative fuel cell development with NASA and the U.S. Missile Defense Agency.
V.I. Technologies (VITX) (11/20/03). Stock roared back from the damned thanks to Mad Cow. Company has claimed that is lead drug candidate is effective against Mad Cow, but this is based on non-clinical studies. But, hey, whatever works.
SatCon (SATC) (12/5/03). FY2003 numbers not great and stock took a slight jab. A few days later, company announced $2.2 million in new contracts.
Sirius Sat. Radio (SIRI) (12/20/03). We’ll be closing this one very soon for a nice gain, or it may be closed by the time you read this. Over the last ten trading days, SIRI has been the flavor of the day. It’s received a lot of TV time and press.
Orthovita (VITA) (12/20/01). Files to sell 10 million common shares, which could put downward pressure on stock.
JMAR TECHNOLOGIES, INC. (NASDAQ: JMAR)- $2.75. Twelve-month hi-low has been $2.55 – 76 cents. Based in Carlsbad, CA, with about 120 employees, this nanotech play has 62.97 million shares outstanding, $6.34 million in total current assets, $12 million in total assets, and $6.7 million in total liabilities, of which $517,000 is long-term debt. Institutional ownership is around 3%. One analyst rates the stock a “moderate buy”. http://www.jmar.com
Over the years, we’ve had some pretty good luck with nanotechs, even if their balance sheets weren’t quite that impressive. JMAR Technologies, Inc. seems like a good bet, and the Department of Defense (DOD) has even thrown a few dollars into the pot.
Trading on NASDAQ for nearly a decade, JMAR claims to be the world’s leading developer of collimated laser plasma lithography (CPL), a next-generation nano-based microchip technology. Microchip patterns are formed by passing light through a filter, casting an image of a microelectronic circuit pattern onto a semiconductor. Since smaller features projected onto the wafer produce a more powerful chip, this patterning process, known as lithography, is the key to improved chip performance. To produce smaller features, shorter wavelength is needed. JMAR’s X-ray technology produces light at a wavelength more than 100 times shorter than sources used today.
Over the last five years, the DOD has provided nearly $70 million in R&D contracts to JMAR to develop a LPP X-ray lithography light source for production of high performance communications and radar chips. JMAR’s LPP technology is also applicable to producing Extreme Ultra Violet (EUV) light sources for next-generation lithography and has created a portfolio of intellectual property that could produce a superior light source for the industry.
JMAR has three operating divisions. The Research Division, in San Diego, performs basic laser and laser-produced plasma research; Systems Division, in Burlington VT, does product engineering and production of lithography steppers and other products; while the Microelectronics Division, in Sacramento, is involved in semiconductor production and process development services.
Last month, JMAR reported that it has realized sub-100nm imaging at its facility in Vermont using its integrated CPL X-ray source and wafer exposure system. The work was done under DOD contracts. In August, the company inked a new five-year DOD contract for development of new foundry processes.
For FY2002, ending 12/31/02, revenue was $18.38 million with $11.5 million in losses. During the first six month of FY03, ending 9/30/03, revenue was $13.7 million with $2.87 million in losses.
This is a case of “what’s not to like?”. With the DOD as JMAR’s main sugardaddy, the company seems well-anchored.
Our 24-month target for the stock is $4.50 to $5.50.
For more information, contact JMAR’s Dennis Valentine at 760-602-3292.
ACTUATE CORPORATION (NASDAQ: ACTU) – $3.15. Twelve-month hi-low has been $4.33 – $1.20. Located in South San Francisco, CA, with about 500 employees, this application software developer has 61.4 million shares outstanding, $67.15 million in total current assets, $103.6 million in total assets, little debt, and $56.27 million in total liabilities. Institutional ownership is around 70%. Six analysts have the stock as a “hold”. http://www.actuate.com
Nothing like starting the new year off with a small tech like Actuate Corporation that appears to have a pile of money and continuously upgrades its technology.
Founded in 1993, Actuate bills itself as the world leader in scalable business intelligence applications. The company’s information application platform (IAP) is the foundation on which Global 9000 organizations (those with annual revenues over $1 billion) and packaged application software vendors create reporting and analytics applications that scale to empower 100% of their user community inside and outside the firewall. These applications include business performance management dashboards, information portals as well as business analytic, enterprise reporting, and spreadsheet reporting applications. In sum, the company’s main product is Actuate 7, a recently-upgraded IAP that is both scalable enough to deliver information to the total user population and flexible enough to build applications that meet diverse information requirements across users.
With subsidiaries in seven other countries, Actuate has over 2200 corporate customers such as Bank of America, American Express, J&J, Merck, the U.S. Army and Navy, FDIC, Australia Post, Boeing, IBM, Dell, Verizon, NTT, AOL, and Time Warner. It also has over 300 OEM partners.
Last month, Actuate announced several key developments. It introduced Actuate Analytics, a product that should extend ACTU’s appeal to potential users by providing them with a self-service method of extending beyond web reports and spreadsheets into multi-dimensional analysis. The company also introduced Actuate 7 at this time, which also reduces hardware, software, and maintenance costs.
For FY2002, ending 12/31/03, revenue was $109 million with $25.5 million in losses. During the first nine months of FY03, ending 9/30/03, revenue was $77 million with $3.4 million in losses. ACTU appears to be stemming the flow of red ink.
Like JMAR above, this, too, seems to be another case of “what’s there not to like?” We definitely like the company’s 2200+ customer base.
Our 24-month target for the stock is $5.00 to $6.00.
For more information, contact ACTU’s Karen Ackerman at 650-837-4545; kackerman@actuate.com
Look for the January 20, 2004 issue to be posted on 1/16 or 1/19.
Happy 2004,
George