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NASD Regulation
3370 Goes Into Effect Today: Illegal Naked Shorts on the Run |
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For those of you who have been following
this issue, I have an update. If you see some Bulletin Board stocks begin
to trade a little crazy, it may be the result of this new regulation.
I have reported on this issue in
four previous editions, and I have learned a new rule went into effect
today which appears to be the answer to a problem which has plagued the
microcap market for many years.
Illegal naked short sellers have
been able to funnel trades into US markets through Canadian Brokerage firms
to the detriment of many investors. US brokerage firms are regulated by
both the SEC and the NASD. Canadian firms are not.
NASD Regulation 3370, entitled "Affirmative
Determination Requirements" places the responsibility on the US Brokerage
firms to determine if sellers who are non NASD member (coming from outside
the US) can actually deliver the securities they are selling. If they cannot,
the trade cannot be executed on their behalf.
The new NASD rule went into effect
today, and rumor has it that illegal naked short sellers are scrambling
to find a home for their positions. I don't believe they will be forced
to cover existing shorts, but for future trading the loophole has been
closed. Look for this to have a very positive effect on many microcap stock
values. If you want to read the rule, simply click
here.
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Market
Comment: COMP Breaks Out- Look Out Above |
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For those of you who like to read
the technical tea leaves, today has been a very constructive day for the
long argument. In last weekend's edition we published a chart and described
three possible scenarios for the short term in the market. I thought it
was most likely the COMP will retest the recent low before breaking above
the resistance line you see in red on the chart.
Instead, the market broke out above
the downtrend line today, suggesting a trend reversal and an end to the
correction we have been mired in since the end of January.
Tomorrow will be a crucial day. The
market is waiting with bated breath for tomorrow's employment numbers.
If the market likes the report, look for the COMP to challenge this year
high of 2157 over the next month or so. If the market does not like tomorrow's
report, this may end up being a big head fake, and the double bottom might
still be at hand.
Tomorrow will be interesting.
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Cam
Commerce Solutions (NASDAQ: CADA); Profit Alert |
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Cam Commerce broke out to
a new multi year high today. The company, normally extremely stingy with
news flow, put out a press release prior to the open which lit a fire under
the stock.
If my first of six (including today)
editions on the company, which was published on February
28, 2003, I pointed out the company was leveraging its relationship
with its 10,000 customers and evolving into a business with a recurring
revenue model. I love companies with recurring revenue models. That day
the stock closed at $4.30. As you can see from the chart, it touched off
the $15 level today. Net gain: 240% over 13 months.
Here is an excerpt from the first
edition on CADA:
"They have stopped focusing sales
efforts on new systems installations; mostly low margin hardware. Instead,
they are focusing on upgrading the existing systems of their 10,000 current
customers, and ongoing recurring revenue service contracts."
"CAM Commerce currently has 1500
customers using their X-Charge product for credit card processing. They
receive a fee for every credit card transaction performed on X-Charge.
Based on current run rates, this high margin revenue will come in at about
$1.5 million this year, which is twice last year's rate, and half what
they expect next year. Management estimates this customer base would be
worth approximately $4 million if sold in the open market."
Based on today's news release, it
seems like I had this one right a year ago, and the market is finally figuring
it out. The X-Charge product is on fire, the company has evolved beautifully.
As I have also pointed out in past
editions on this company, insiders have been buying. Insider selling can
be a negative or neutral indicator. Insider buying is always bullish.
On March 16th, CEO Geoffrey Knapp
purchased an additional 2750 shares at $10 per share, adding to the numerous
other insider buys this gentlemen has made.
My original price target for this
stock was $12. In my last update on the company I suggested there
was nothing wrong with taking your profit at $12, but in light of the recent
financial performance higher levels could be in the cross hairs.
In light of today's news out of the
company, I now believe $20 is attainable. Accumulate on pullbacks.
Here is the complete text of today's
news release for your review:
| Press Release Source:
CAM Commerce Solutions, Inc.
X-Charge New Business
at Record Levels
Thursday April 1, 6:00
am ET
FOUNTAIN VALLEY, Calif.,
April 1 /PRNewswire-FirstCall/ -- CAM Commerce Solutions, Inc. (Nasdaq:
CADA - News) announced today that both the number of new X-Charge payment
processing applications received and the estimated dollar value of the
new applications set new company records for a single month in March. The
previous record set last month in February was 153 new processing applications
representing approximately $48.5 million in annual processing. In March,
the company received 208 applications for new processing accounts representing
an estimated $74.7 million in annual processing volume. While not all applications
will necessarily result in active payment processing accounts, the company
anticipates the vast majority will.
The company also announced
that 11 new X-Charge resellers brought their first customers live in March,
putting the total number of resellers with at least one live customer account
processing with X-Charge at 66. Of the 208 new applications for $74.7 million
in estimated processing volume in March, resellers accounted for 97 of
these customer applications for approximately $35 million in annual processing
volume, up from 62 applications for $14.8 million in estimated processing
in February.
"We experienced strong
growth in our X-Charge business in March, driven by our reseller channel
and sales of our Point of Sale systems," said Geoff Knapp, CEO of CAM Commerce
Solutions. "While we don't expect month to month growth to be this strong
every month, we do expect a continuation of the upward trend as new resellers
integrate X-Charge into their own software packages and existing resellers
ramp up their sales efforts of X-Charge payment processing services."
About CAM Commerce Solutions
CAM Commerce Solutions,
Inc. provides total commerce solutions for traditional and web retailers
that are based on the Company's open architecture software products for
inventory management, point of sale, sales transaction processing, accounting,
and payment processing. These solutions often include hardware, installation,
training, service, and payment processing services provided by the Company.
You can visit CAM Commerce Solutions at www.camcommerce.com.
Important Information
The statements made in
this news release, including those relating to the expectations of profitability
and economic climates, are forward-looking and are made pursuant to the
safe harbor provisions of the Securities Litigation Reform Act of 1995.
Words such as "will," "should," "believe," "expect," "anticipate," "outlook,"
"forecast," "optimistic," "feel," "potential," "continue," "intends," "plans,"
"estimates," "may," "seeks," "would," "future," "bright," "projected",
and other similar expressions that predict or indicate future events or
trends, or that are not statements of historical matters, identify forward-looking
statements. Expectations concerning financial results for future quarters
are not actual results and are based upon preliminary estimates, as well
as certain assumptions management believes to be reasonable at this time.
Investors should not rely upon forward looking statements because they
are subject to a variety of risks, uncertainties, and other factors that
could cause actual results to differ materially from our expectations,
and the company expressly does not undertake any duty to update forward-looking
statements which speak only as of the date of this news release. The performance
of any one quarter may not be indicative of future performance, particularly
given prevailing market and economic uncertainties. In addition to the
factors set forth elsewhere in this release, the economic, competitive,
technological, and other factors identified in CAM Commerce Solutions'
filings with the Securities and Exchange Commission could affect the forward
looking statements contained in this news release.
--------------------------------------------------------------------------------
Source: CAM Commerce
Solutions, Inc. |
Charts Provided Courtesy
Of TradePortal.com |
