When I wrote my edition on setting your stops against what could be a very difficult market through the summer, I set the stop loss on NIHK at $.09. The stock doesn’t look like it wants to collapse below that level, but nevertheless if you want to protect your principle, you should consider selling.
Here’s a chart:
Technically, I would like to have seen this stock hold the $.11 mark. That represents the 61.8% retracement level from the move up which began in early February.
A wise man once said ideas are plentiful, capital is scarce. Setting stop losses is tricky business. There are a million different theories on how to do it, and it is up to each individual. I set mine from a technical perspective. If an uptrend has changed to a downtrend, I sell and take my lumps. Others may choose to use a percentage. If you like the percentage method, I believe the percentage stop loss should be higher with a riskier stock.
Nevertheless, $.09 seemed like a reasonable level to me. It gave us a 20% cushion against the 61.8% retracement level. However, if you are a long term investor, and want to hang around in this one until sales start materializing from the Verizon relationship, please do so. On the plus side, the stock has been coming down on relatively light volume, so a news related volume surge should put this one right back to a reasonable level.
This looks like a great company and the verizon signing only improves it. How do you feel about this company for a short term and long term play?
Editor: Short term, I don’t know. The Verizon relationship is not yielding any results at this time. It would appear it will take some time to get traction. Longer term you are betting they can ramp up sales. The reason it is a good specultion- the size of the contracts they could get are so large if they can land a few big ones.
Does this company only rely on its technology of being able to turn on and off devices from a distance. If so, what stops any other competitor from coming up with a better product. If the deal with Verizon is successful, will that be it for NIHK, hence the one time deal with AT&T in 2003 where the stock shot up to $0.70 then trickled down to todays prices.
Editor: The hope is no- there will be a steady stream of new business from Verizon Wireless. Verizon is focusing on utilities. NIHK’s device gets installed on the meter, so if a big utility decides to deploy their units, and order could be hundreds of units up into the millions. That could happen- there is some competition as well. There are hundreds of utilities out there that could use their product. If there weren’t it wouldn’t be a $.10 stock. Here’s what people need to understand- the sales cycle to a utility on these devices is extremely long. They move slowly, and they evaluate for ever.
At .10 the stock currently seems like a good buy. What would you consider a reasonable estimate for the price of this stock for the next year? Is .20 a reasonable estimate?
Editor: It depends 100% on sales. If they can land a big sale or two, particularly sourced from their Verizon Wireless connection, I think $.20 will be a slam dunk. It’s a speculation- no telling what is going to happen.
A few firehouses in WA isn’t going to float this boat. Have you got any good word on this company? It seems as though almost anyone could benefit from having this capability to remote rather than send someone out to do the job. This should be a part of everybody’s toolbox. One trip to the site and you are done. Does NIHK even have a sales staff or are they waiting for the business to come to them.
Editor: The nickel and dime sales they are getting isn’t going to cut it. Unless things pick up with larger orders, I will probably be dropping this one and suggesting everyone take their loss and get out.
Why the abrupt drop in price? Do you feel that in the long term this can bounce back?
Editor: It probably will bounce as it is now doubt oversold at this level. I would guess a rebound is in the cards, which may in fact be a good selling opportunity.
Ok..If they don’t have the cash to buy stock. Wouldn’t it be a great idea for American Messaging buy them out. I think it would be a good fit.
Editor: Since American Messaging is private, it would have to be a cash buy out. I saw this happen with another company a couple of years ago, and it worked out very well for shareholders. It could happen down the road.Â
I know you staed that 0.10 would be a good price to sell this stock. How did you come up with that price? Do you think it will go higher and wait instead? Or sell at 0.10 and get back in at a lower price? Thanks
Editor: Simply based on recovering like it did last year when the company got some momentum. Heck, if you wanted to, you could sell it now at a nice profit. It’s trading at $.055- You could have bought all you wanted between $.035 and $.04- If you bought a $35 stock and it was trading at $55 a few days later you would think it was the greatest trade of all time. If the company can continue to deliver new sales it could trade much higher, but there would be nothing wrong with taking your profits here.Â
More news today. I think this is a great idae that will catch on.
SAN ANTONIO, Oct 18, 2006 (BUSINESS WIRE) — Nighthawk Systems, Inc. (OTCBB: NIHK), a leading provider of intelligent wireless power control and emergency notification products, announced today that it has received an order from King County, Washington for its EA1 Emergency Alert units. King County has been upgrading its county-wide firehouse alerting system, and has purchased Nighthawk’s FAS-8 firehouse alerting systems over the past year. This most recent order is the first by King County for the EA1 units, which will be placed in the homes of firefighters.
Utilizing the proprietary Nighthawk board, the EA1 is a perfect complement to the FAS-8. It extends the reach of the 911 system operator past the firehouse into the homes and offices of volunteer firefighters, fire chiefs and other first responders. When activated, the EA1 will emit an audible alarm and activate the power outlet on the unit’s faceplate, so that a firefighter can be awakened to a lighted room. The unit is available with an optional strobe, and can also be utilized to deliver a message to a printer or sign.
H. Douglas Saathoff, Nighthawk’s Chief Executive Officer, stated, “We’re extremely pleased to receive this latest order from King County, and happy that they continue to use Nighthawk products throughout the county. Utilizing our core technology and proprietary firmware, we’re extending our reach in our targeted markets with new products that in turn extend our customers’ reach even further. We look forward to getting more of our emergency alerting units into homes and businesses to help deliver critical information where and when it’s needed at a moment’s notice.”
Editor: Nice- but I believe there could be much bigger stuff coming.Â
This is what you stated about usei.
I believe we have arrived at what I like to call the “Capitulation” stage. This is the point at which everyone who wants to sell either has or is going to. It’s absurd at this price, but it’s reality.
Here’s a quote from my last BLOG entry on the stock (9/13):
“Here’s what I can tell you with certainty. This stock will begin to trade well when you least expect it. When the frustration reaches maximum threshold- when you don’t believe the stock can ever go up- when you see several other stocks trading much better and wishing you had your capital elsewhere- you will sell out of frustration, and it will be much higher one week later.
I think this will happen to nihk. The pps is absurd and should be a lot higher.
Editor: I would like to see NIHK provide some follow on news in the near term to keep the momentum going.Â
This stock is really puzzling to me. I would assume it will go higher if sales start coming in from American Messaging. The thing that puzzles me is there are a lot of penny stocks selling a lot higher. A lot of them are in the developement stage or have no revenue at all. This company has products and revenues. Surprisingly it’s under 0.05? Very weird to me anyway.
Editor: They have to keep delivering developments right now to keep the momentum going- If they don’t keep delivering sales with American Messaging investors will lose interest. Watch them have a great year in ’07. A breakout year with some real numbers.Â
There has been a lot of talk about NIHK and why it hasn’t moved and won’t move. Investors are saying that Dutchess iskeeping this stock down because they are selling shares. I emailed the CEO a few times about this and he never returned my emails. I figured it was confidential and he could respond. Any ideas on this?
Editor: I don’t know if I would say the stock has not moved. The stock was right around $.03 on October 6th, and within a few days bounced off a high of $.06- that’s nearly a double in a few days. Right now, it has dropped back and is quietly trading just below $.05- Now, if this had been a $30 stock, and it traded to $60 in a few days, and ended up back just under $50, would you say the stock hadn’t moved? I don’t think so. You’re just frustrated because it is not moving today. Is Dutchess selling shares? – I would say that is highly likely, but I don’t know for sure. They don’t tell me their trading practices and I don’t want to know. However, I do know they have written checks to keep this company alive, and as such are entitled to a return on their investment. You would be better off looking at the company’s achievements- they need to deliver sales- that’s the key- sales. If you want to email the CEO and ask him about anything, ask him when they are going to deliver significant sales annoucements. Every time they do the stock trades volume and moves up. If they don’t start picking up the pace on the sales end, it’s not going back to its $.10 to $.12 level. That’s what you are really betting on. With Dutchess in there, it just might not move up as fast.
This is kind of interesting:
NIHK: Announces DoT Contracts; Management Comments on Company Happenings
Thursday , November 02, 2006 16:00ET
Wireless products are beginning to become more and more prevalent in society today. From the beginning with the advent of the cordless phone to one of the newest applications, wireless home entertainment speakers, being tied to walls or other devices is becoming a thing of the past.
One company benefiting from this type of technology is Nighthawk Systems (NIHK). The company’s website is http://www.nighthawksystems.com.
The company is a provider of intelligent wireless power control products that enable simultaneous activation or de-activation of multiple assets or systems on demand. Nighthawk’s installed customer base includes major electric utilities, internet service providers and fire departments in over 40 states. Nighthawk’s products also enable custom message display, making them ideal for use in traffic control and emergency notification situations.
Knobias spoke with H. Douglas Saathoff, Nighthawk’s Chief Executive Officer, about the company’s products and other recent happenings.
“The device is pretty simple,” explained Saathoff, “It’s comparable to walking into a room and switching on or off a light switch, except our product extends our customer’s reach.”
The device he was explaining is the PT1000. It is the company’s intelligent remote control board that uses paging signals for activation. With a new easy wire terminal strip, the PT1000 can easily be integrated into any OEM equipment or industrial remote control system.
On Thursday, the company announced that it had received orders for its PT1000 remote control boards from the Connecticut and Oregon Departments of Transportation. It was noted that both organizations would utilize the PT1000 to wirelessly activate flashing beacon signs, which are commonly used in conjunction with highway advisory radio systems and weather related alerts.
“The PT1000 can communicate with 8 things at once. It uses alpha numeric paging that can also be used to push a message to the road signs on the side of the road,” noted Saathoff, “The value proposition comes from the product being used in lieu of deploying humans to switch on or off devices or changing the message these devices display.”
The company also has other customers besides the departments of transportation of varying states.
“Our largest customers are the electric utilities,” said Saathoff. “The product can be used to control power to air conditioners, hot water heaters, or even entire houses. The utility can then decide to cut off groups of devices, houses or even neighborhoods for whatever reason they choose at the touch of a button.”
One disruptive technology that could become a competitor in the market of electric utilities is Broadband over Power Lines or BPL. The technology uses already existing power lines to provide houses with not only electricity, but also internet connectivity. With the addition of a network running through the utilities lines to each customer, the collection of usage amounts of electricity can be accounted for in real time instead of deploying humans on foot to read meters on the end of each and every house.
But Saathoff noted, “The technology is having some problems.” It is also expensive to reach some houses because of repeaters and other hardware pieces needed to sustain strong internet signals.
Saathoff also noted the company’s revenues are beginning to become more even in terms of repeat and new business.
“We are about 50% new business and 50% repeat business. Its why I don’t have a problem with a 2 unit sale because I know that there is a 90% chance that they will be back with a 50 unit or 100 unit order later after they realize the applications of the devices and their ease of use,” said Saathoff.
The company also noted the addition of Reggie Rippetoe, a proclaimed wireless device expert to serve as Director of Engineering and Product Development.
“Reggie has years of experience and can hopefully help us garner some contracts with some potential customers that need customized product,” finished Saathoff, “We started as a company with a solution to a problem. Because of our expertise, companies are now coming with problems and looking to us for solutions.”
In any event, the company is certainly a name to watch over the coming months because of the huge market that they have entered. The proliferation of failed wireless applications and devices has become almost too hard to track for many, but this seems to have some staying power. With a continued commitment to increasing top line numbers as well as the expansion of the traction gained with some of the DoT contracts; this name could easily become a wireless success story in the near future.
With the 3rd quarter earnings out today and looking good. Where do you think we will go from here with the pps?
Editor: I will look it up, but as I recall I had an SSL at $.03, and a price target of $.10 to $.12- That still stands. The improvement in numbers is good, but they really need to start delivering larger and more comprehensive orders. They have put the right people in place, and the right infrastructure. Now, they need to deliver the goods.
This stock has become a real dog. I thought for sure the American Messaging hook up would produce more results. Only one contract so far. I am really wondering about this company now.
Editor: I will have a year end update on this one next week. Right now, my SSL of $.03 stands- they have to get the sales going. It is up to them.
TheStreet.com has a rating on NIHK that has a date of 3/2/07. It’s also available as a 5 page PDF that has more information. I found the PDF while on TD Ameritrade’s site. Shortened version: http://tools.thestreet.com/tsc/quotes.html?pg=qcn&ref=tscsearchbox&symb=nihk&x=12&y=18
This is the link to the PDF. Not sure if it will work if you are not a TD Ameritrade customer.
https://research.ameritrade.com/wwws/common/pdf.asp?feed=20034&docTag=NIHK
Editor: Thanks for the contribution.