sorry for the rant… just frustrated i guess

thanx for the blog here.. very helpful…

Crockett.

Editor: As am I frustrated by the stock’s poor performance relative to the corporate achievements. I think people would buy the heck out of it if the stock could get momentum. Since it can’t, I’m sure there are those who will lose patience and sell. We’ll see what happens from here. The way this stock is trading right now, I would be in a hurry to buy more. I would look for another of those brief sell offs to add to a position. Right now, if one of the sellers chose to simply dump 1/4 million shares, the stock would probably trade down rapidly again.  

Editor: I have suggested to the CEO that they do one, but they have not done one yet. Since it is now pretty far past mid quarter, it seems unlikely they will take my suggestion. Therefore, I wouldn’t expect one at this point. 

Editor: You could easily be right about that. This idea may have run its course. I think it’s all about the numbers and time. If Q4 is as good as Q3, and the company continues to grow in Q1, it will inevitably go to $2 and higher. It’s just a question of the market chewing through the excess supply from the early financiers. If the company starts sliding backwards, it’s all over. The only thing I know for sure is that I’ll be around to see which way it comes out. 

Editor: Tough to say- you have a couple of things going for you, and a couple against you. For example, Q4 is seasonally their worst quarter of the year. During the Holiday season subscribers turn their attention elsewhere. Q1 is seasonally their best quarter. Therefore- I expect them to do extremely well vs Q4 ’05. If they can simply match the performance in Q3 ’06, I believe that would be huge. It seems to me you have to give them the benefit of the doubt after three quarters of outstanding earnings growth. I’m looking for Q4 to continue to suggest the stock is very undervalued at this $1.50 level. They should kick butt in Q1 ’07. The only number I could give you would be a guess at $7 to $8 million, and $3 million in profits once again in Q4.

Glad to see this turnaround… a loooong time coming…

Crockett

Editor: The Dinapoli 3×3 was breached back when the stock traded above $1.33- it’s trading nicely above that level right now, which is bullish. The next interesting level is $1.55-That’s the downtrend line drawn across the tops from the October high of $1.80. If it can get above that level, it could still bring $2 into the crosshairs.  The problem here continues to be supply from the old financiers. They appear to be pigs. If they would simply leave it alone I bet it would head to $2 in short order. If you’re a buyer, it’s heaven sent. If you’re looking for a better valuation like me, it’s a nightmare.

Editor: Just for future reference, this section is for comments on CPNE- answer to your question- no- they were involved in a “Rambo”- I don’t know where that one is. 

Editor: I believe the company simply needs to get its story out to a wider audience which now needs to include institutional investors. Clearly, between $1.50 and $2, there is supply. It’s market does not have enough volume to handle the supply at this time. If they continue to deliver the numbers as they have over the last 3 quarters, it is inevitable the institutional markets will “discover” this company. A couple more quarters of $3 million in profits, and someone will just buy the company for the cash alone. Another possibility- if the stock starts behaving better, momentum traders will come back in and bid it up. The company has some plans to start getting its story out to a wider audience.  

Editor: I believe a technical look at the stock is in order. I will post a new BLOG with a chart in the next day or two. Thanks for the suggestion. 

Editor: That is kind of strange- they only have a 5 day chart. http://WWW.Bigcharts.com is a very good resource for free charts. Here’s a link to the one year version: http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=cpne&sid=0&o_symb=cpne&x=0&y=0

The one year chart is fairly compelling. It shows a stock that has done very well and is simply in a consolidation phase. 

– these investor’s business model is to invest in startups and help guide them to profitability
– they have achieved their goals with CPNE and are no longer on the board
– they likely need to cycle capital into other projects that fit their business model
– they have already made plenty on their investment
– they are not necessarily selling all of their shares, they may be keeping some invested which would be a sign of confidence

Given that CPNE growth is sustained over 3 quarters (and looking good for the 4th quarter), is it really likely that they are hiding fundamental problems? Seems like the problems would have showed up by now. The selling creates problems for the PPS, but doesn’t necessarily reflect on the company’s fundamentals.

Editor: Dear Don: You have summed it up perfectly. I will probably use your observations in a future edition. People are making a lot of this insider selling, but as you point out, the early shareholders who took a lot of risk are simply doing what early shareholders do. There is nothing wrong or negative about this company we can learn from early shareholders selling. The issue is simple- can they sustain the current financial performance?, and can it continue to grow?- if so, this one will trade much higher at some point in the future. My concern is that this company is a “flash in the pan” and won’t be able to sustain this level of performance. BrandPartners comes to mind- that company had a couple of great quarters, the market loved it, then it completely bombed. However, in the case of BPTR, a lot of their earnings for a couple of quarters related to negotiated forgiveness of debt- CPNE on the other hand is simply generating tons of excess cash. That is powerful. A couple more quarters of performance equivalent to Q3 should put this stock much higher. We don’t see the next hard numbers until the end of March. That could be a problem for the stock. Q4 is seasonally the slowest- Q1 is seasonally the best. I believe the tale will be told by mid May, which is when we will see Q1 numbers- that would be a solid year of earnings. $5 is not unrealistic if they can keep growing. $.50 is not unrealistic if they go the other way. So far, I believe the company has earned loyalty until proven otherwise. You won’t find a better speculative idea in the microcap world.