Since the last Newsletter, we closed three positions; all for gains.
ZAGG, INC (2/20/10). Closed position 8/24/10 at $3.79 for a 52% GAIN.
CARDICA (7/5/10). Closed position 8/18/10 at $2.50 for a 53% GAIN.
TTI TEAM TELECOM (3/5/07). Closed position 8/17/10 for a 18% GAIN.
ZAGG took a nice turn upward after posting some very good quarterly numbers, which is what stocks are suppose to react to. Cardica’s shares soared after the company reported a licensing deal worth $12 million upfront with Intuitive Surgical, along with an equity investment of about 1.25 million shares of stock. We closed TTI Team Telecom for a minor gain after it was officially bought out by TEOCO.
And so, we still keep playing ping pong within a very narrow trading range, which, given all of the bad economic news, is probably not a good sign for the market’s future direction. Our fear, for now, is that we may be facing the Japanese-style market of the last twenty years. That would mean less liquidity going into equities. The major underlining problem is that our national leadership stinks, on both sides of the aisle. They need to stop screaming at each other and start speaking with one another.
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.
CombiMatrix (CBMX)(8/20/10). Names new chief executive.
U.S. Home Systems (USHS)(8/20/10). Reports sale of Woodbridge facility.
Banner Corp (BANR)(8/5/10). Names new CEO.
NAPCO Security (NSSC)(7/5/10). Gets Underwriters Laboratories okay for new Gemini GEM-C Series Systems.
Aastrom Biosciences (ASTM)(6/20/10). Balance sheet still looks good. News about various clinical stages on certain drug candidates.
Clearfield (CLFD)(6/5/10). Launches “the Fiber Color Pages”.
Willdan Group (WLDN)(5/20/10). To present at the Wedbush Clean Technology conference on September 15.
American Caresource (ANCI)(4/20/10). Adds three new clients to portfolio.
Cerus Corp (CERS)(3/20/10). Buys back Asian marketing rights for blood safety system.
Achillion Pharmaceuticals (ACHN)(3/5/10). Announces $50 million private placement.
Uranerz Energy (URZ)(11/20/09). Implements shareholder rights plan.
BioClinica (BIOC)(7/20/09). To present at seven various confabs over the next several months.
Oilsands Quest (BQI)(10/20/08). Announces review of strategic alternatives, which usually means a company needs more money so as to implement its plans.
Identive Group (INVE)(10/5/08). Releases upbeat quarterly numbers; balance sheet still seems to be okay.
U.S. Geothermal (HTM)(8/5/08). Construction permit approved for Phase 1 of San Emidio Project.
Applied Energetics (AERG)(7/5/08). Enters into teaming agreement with L-3 Interstate Electronics Corp.
Energy Focus (EFOI)(6/5/08). Gets additional $410,000 in DOD funding. Awarded $2.8 million in lighting retrofit contracts.
Bridgeline Digital (BLIN)(6/5/08). KMWorld Magazine names iAPPS product suite as a “Trend Setting Product of 2010”. Janey Montgomery Scott selects iAPPS Content Manager and iAPPS Analytics.
Microvision (MVIS)(5/20/08). Secures $60 million committed equity financing facility. Gets some good product mentions in several top publications.
GlobalScape (GSB)(5/20/08). To present at the Rodman & Renshaw global investment conference on September 13.
Biolase Technology (BLTI)(4/5/08). Company releases some uneasy news. We have placed this on the “Endangered List”.
Hollywood Media (HOLL)(1/5/08). Recent numbers show some revenue growth year-over-year but losses widen; balance sheet still okay.
Linktone (LTON)(11/5/07). To announce 2ndQT results on September 7.
LRAD Corp (LRAD)(10/5/07). Sets record date for spin-off of HSS business in tax-free distribution to stockholders.
XATA Corp (XATA)(9/20/07). Company’s turnpike RouteTracker solution now available for Verizon wireless enterprise customers.
American Fiber Optic (AFOP)(7/20/07). We just closed this position at $9.00 for a 14% loss and will soon add it to the Track Record page; company just did a 1 for 5 reverse split.
Urologix (ULGX)(2/20/07). Releases okay FY numbers but recent QT showed some weakness; balance sheet still seems okay.
Endologix (ELGX)(1/20/07). Receives CE mark approval for expanded line of Powelink products and PowerFit aortic extensions. Enters development pact and exclusive license for balloon expandable stent technology.
8×8 (EGHT)(1/20/06). Virtual Office Pro receives PC Magazine Editors’ Choice Award. Increases share repurchase program to $3 million.
Our picks for this Newsletter are another small biotech and a communications provider; both NASDAQ-listed.
ACADIA PHARMACEUTICALS, INC. (NASDAQ: ACAD) – $1.08. Twelve-month hi-low has been $6.60 – $1.00. Based in San Diego, CA, with about 25 employees, this biotech has 38.3 million shares outstanding, $38.31 million in total current assets, $39.17 million in total assets, and $36 million in total liabilities, of which $22.84 million is long-term portion of deferred revenue. Institutional ownership is around 36%. One analyst rates the stock a “strong buy” and two have it as a “hold”. www.acadiapharm.com
Over the last year, its stock has taken a thumping, but Acadia Pharmaceuticals, Inc. has maintained a good cash position while seemingly progressing with its drug pipeline. Trading at nearly its twelve-month low, this looks like it may be worth a shot because its main drug candidate getting a second chance in another clinical trial.
Founded in 1993 as Receptor Technologies, and public for over six years, Acadia focuses on drug treatments for central nervous system disorders. It maintains two wholly-owned subsidiaries, one based in Sweden and the other in Denmark. The company is developing a portfolio of four product candidates, including pimavanserin, which is being developed for three separate neurological and psychiatric indications in collaboration with Biovail. These indications include Parkinson’s disease psychosis that is in Phase III development; adjunctive therapy for schizophrenia, which is in Phase III planning, and Alzheimer’s disease psychosis, for which Acadia is planning to initiate a Phase II feasibility study.
Acadia also has other products under development, including a product candidate in Phase II development for chronic pain; and a candidate in Phase I development for glaucoma, both in collaboration with Allergan, as well as a program in IND-track development in collaboration with Meiji Seika Kaisha.
At the end of July, Acadia announced initiation of a new Phase III trial with pimavanserin for Parkinson’s Disease Psychosis. In September, 2009, a Phase III came up sort on the drug’s efficacy, but the company is optimistic about this new trial the uses a refined study design. Pimavanserin is a small molecule that can be taken orally as a tablet once a day.
Acadia is typical of many small biotechs in that it has little revenue and major losses. For example, during the quarter ending 6/30/10, revenue was $2.29 million with $4.29 million in losses.
The bet here is that Acadia can make some breakthroughs on its new clinical trial for the lead drug candidate and/or on its other pipeline drugs.
Our 24-month target for the stock is $1.80 to $2.00.
For more information, contact ACAD’s Thomas Aasen at 858-558-2871.
ORBCOMM, INC. (NASDAQ: ORBC) – $1.86. Twelve-month hi-low has been $3.23 – $1.64. Headquartered in Ft. Lee, NJ, with about 100 employees, this communications provider has 42.6 million shares outstanding, $94.66 million in total current assets, $177.54 million in total assets, little debt, and $18.91 million in total liabilities. Institutional ownership is around 31%. One analyst rates the stock a “strong buy” and another as a “moderate buy”. www.orbcomm.com
Maybe it’s time to go into outer space and Orbcomm, Inc. can certainly qualify. Besides that, the company has been growing its subscriber base, has an impressive list of major customers, and a pretty nifty balance sheet.
Founded in 2001, and public for just under four years, Orbcomm, a satellite-based data communication company, operates a two-way wireless data messaging system optimized for narrowband data communications. Its system consists of a network of 29 low-Earth orbit satellites and accompanying ground infrastructure. The company’s system enables its customers and end-users, including business and government agencies, to track, monitor, control, and communicate with fixed and mobile assets located worldwide. It also offers terrestrial-based cellular communications services through reseller agreements with cellular wireless providers. It targets commercial transportation, heavy equipment, fixed asset monitoring, marine vessels, and the government and homeland security markets.
At the end of June, Orbcomm counted more than 539,000 billable subscriber communicators, an 11.6% increase over the second quarter of 2009. Some of its major customers include Caterpillar, Hitachi Construction Machinery, Hyundai Heavy Industries, Volvo Construction Equipment, the U.S. Coast Guard, U.S. Navy, U.S. DOT, U.S. Customs and Border Protection, and IHS Fairplay.
For FY2009, ending 12/31/09, revenue was $27.56 with $3.44 million in losses. During the first six months of the current FY, ending 6/30/10, revenue was $15.25 million with $3.77 million in losses. The company is on pace to beat both its top and bottom lines from 2009.
We like that Orbcomm seems to be growing nicely in subscribers and in revenue while paring its losses.
Our 24-month target for the stock is $3.25 to $3.50.
For more information, contact ORBC at 201-363-4900.
Look for the September 20, 2010 Newsletter to be posted on 9/16 or 9/17.
Have a safe holiday,