It looks to me like CPNE finally made a bottom this week and is ready to begin a serious rebound phase.
In the spirit of full disclosure, I started buying the stock today for my personal and corporate account, and will probably continue to do so. As I write this, so far I have picked up 5,000 at $1.36 in the personal, and 7500 in the corporate at about $1.345.
The stock looks really good to me- as I have been saying all along, something needed to change, and it looks like the change is here.
I don’t know if anything is going on behind the scenes beyond the sellers running out of stock and the buyers bringing the momentum back, but the stock is sure charging up the charts on strong volume.
Here’s the chart I put together- there are no retracement levels because the stock blew them all away, but there’s a couple of other indicators:
The white line is the 10 day moving average – it broke above today which is very short term bullish.
The next line- the blue line- is the downtrend line from the top at $3.40 back in late January. I believe the stock will blow through that today, signalling a trend reversal.
The yellow line at $1.66 is the 50 day moving average. A break through that would confirm everything.
I am buying as I believe the drubbing is over. I am often wrong, but there you have it.
Comments and questions are welcome.
First of all…..Great work Larry. Us share holders appreciate your comments, charts & calls.
Two Points
There was a massive attack to drive our stock down over the past few weeks. It was also convenient timing to drive our share price down during the quiet period.
(WHEN MANAGEMENT COULD NOT SUPPORT/ BUYBACK OUR STOCK)
This was a effort to accumulate a load of shares at bargain prices.
I personally think something big is brewing and these guys know it.
Maybe a Merger brewing, or a joint venture with a heavy weight.
Bottomline – If there is a major shorter out there …….
MAY YOU GET YOUR ASS BURNED! and loose your shirt.
If you watched LEVEL II today
You will notice that Market Maker EDGX is usually the highest bidder. (95 percent of the time today)
These guys are
Direct Edge ECN LLC JERSEY CITY, NJ 201-356-1714
A few of Duchess’s board members are from Connecticut. (Duchess owns around 3 million shares.)
Maybe Duchess or Efund are heavy shorters and are now trying to recover.
Seams like Duchess or Efund have some sort of ties to Direct Edge.
Just a thought
Editor: I appreciate your comment, but I don’t agree. I just think there was a big seller, and whoever it was spooked everyone into selling who didn’t have major intestinal fortitude. I have the advantage of personally knowing the Dutchess guys, and meeting the eFund guy. The eFund guy has been very lucky on this deal- he ended up with a boatload of stock he did nothing to earn. If I am guessing, he is your seller. Just a guess. Nevertheless, the way the stock is behaving, I am guessing something has changed.
How does someone end up with millions of dollars worth of stock they do nothing to earn? Sounds like a good deal to me. Sign me up. Of course I’m being cynical but the recent technical action remains a mystery.
Editor: I’m just following the way the stock trades at this point. The last two days have been very encouraging for a bottom and a turn.
With the “quiet period” over CPNE releases a timely press release with some good information and progress to strengthen their business model. I suspect management team is angry with the low PPS and are eager to get the PPS up to levels that this company deserves and has earned.
Perhaps another round of a stock repurchase that they pointed to earlier this year?
Having lasted this long I added to my position!
Scott
Editor: Perhaps- I can’t say what’s going on behind the scenes. The company clearly needs to get more “transparent”- that’s the only way they are going to get long term participation and belief.
“The eFund guy has been very lucky on this deal- he ended up with a boatload of stock he did nothing to earn. If I am guessing, he is your seller. Just a guess. Nevertheless, the way the stock is behaving, I am guessing something has changed.”
This sounds alot like you with you deal on EFSF. You got a million shares and did squat for EFSF and the promotion of it. You still sound negitive on it. What ever happened to your .75 target or better yet it will bust through .50.Man Im glad I sold at .49 will you were pumping it.
Editor: Yeah- after nine years of doing this and spending hundreds of thousands on advertising, I got lucky. You are simply an idiot. First of all, you can’t tell the difference when someone is telling the truth, or hyping. I won’t say the stock is trading great- you know why? Because it’s not bozo. When it starts behaving better, I will. Furthermore, if the company doesn’t deliver positive fundamental developments and deliver real sales, I will tell everyone to get out and watch the damn million shares become worthless long before I ever “pump” the stock in a vacuum of non performance. Clearly, this newsletter is not for you. The next time you receive an addition, simply hit the unsubscribe button and go elsewhere. My $.75 target still stands, but there are SSLs as well moron. I am not a “blind faith” or pay me to promote guy. The company needs to earn it.
editor, by “transparent” are you meaning that they sort of need to grow up? like you don’t see larger companies issuing press releases for every little thing that happens, is this what you are talking about with CPNE?
many thanks,
Dave
Editor: By “Transparent”, I mean they need to implement a regular schedule of information flow that the company adheres to which gives investors a sense of the number of paying members on a regular basis. If investors knew for a fact that the company was having a good Q2, I believe the stock would have traded much better. They used to regularly announce membership numbers, and no longer do so. If the market had some comfort there wasn’t a hiccup at the company in the last month or two, I don’t believe the stock would have gotten clobbered as badly. If by growing up, you mean they need to become more professional in their approach to information disclosure, then yes. That is what they need to do.
So, whats going on with this stock. Is something brewing, it either seems like its going to implode or explode. Whats your call?
Editor: Hmm- last week’s rally sure came to a screeching halt. I still think there could be something going on- if nothing else, the sellers are sure exhausted. Let’s see what happens from here. I believe it is a buy.
From my experience stocks tend to test their bottoms and in my opinion this is what is going on here. Closing above $1.50 on the last uptrend would have confirmed the uptrend but there it is. We are bound to try the $1-00-1.10s and in my opinion we won’t stay there long. If we breach through that, I think we’ll test the $1.00, but again I think we won’t. Still not in the stock but will buy heavily if we rebound on volume from where we are or from the $1.10s. Strong fundamentals always prevail and this is a sound and growing company with 80% margins.
Editor: Sounds very reasonable. A double bottom is always technically more bullish than a stop and reversal. Stock feels like it’s firming to me again, but there’s just not telling with this one.
What are you doing with the shares you bought at $1.35 range? The charts to me look pretty bearish, what do you think?
Editor: I am just holding for the time being. I believe the stock is very oversold, and could bounce quite easily.
After following this stock for a while I tend to think that some scam is going on here. The management doesn’t seem to mind seeing their stockprice falling continiously. Only some irrelevant news about upgrading a call center and crap like that. No numbers, no earnings estimates, no news about major deals, nothing.
No major investment bank or analyst is following the company. Why, if it should be a real bargain with P/E below 5? Is the management just too dumb to contact some investment bank and/or fund managers? Any Harvard Business school student of 1st year would be able to handle things better than they do.
No, I think there is a good reason why all of that is not happening. I think there is nothing a professional fund manager would be interested in, otherwise some small cap funds would buy in at this level. I think next quarterly numbers will be a desaster. And it seems the insiders know about the shit behind the scenes and keep on selling. Since the stock broke the uptrend at $2 it goes down like in a chart book. If things would be positive, managers and all of their buddies would be heavily on the buy side, wouldn’t they?
Is there anybody out there among the OTC readers who has treid their services? The health plan, the shopping discounts, the software- and business education stuff? If yes, do you think it is a good value for money? Would be interesting to hear some opinions about that.
Editor: Great value or scam or floundering business? That’s what everyone wants to know. The way the stock has traded, combined with the company’s reluctance to defend itself, suggests there could be the kind of problem you are suggesting. On the other hand, you cannot argue with the numbers- unless you believe the audits are fraudulent (nearly impossible with Sarbox in place), the company has been a cash generating machine. Does their service have value? That has always been the tricky part with this one. Clearly, they are selling the dream. However, there are a few companies that have been prospering for many years selling the dream at much higher revenue run rates. I am currently a holder of a substantial amount of stock. Lately, I have not been a buyer, but might consider it if I had more available funds. Even if the company has had some sort of hiccup, 5 consecutive quarters of outstanding corporate performance puts me in the mood to give them the benefit of the doubt. If something negative has happened, it is already fully priced into the stock. Their reluctance to defend themselves is puzzling and a little disturbing, but that’s the way it is. You have to make your own call on this one.
Would you know exactly when the Q2 numbers are coming out for this company? I am expecting a nice surge in share price based on those numbers and at the current level of 1.15 if they deliver the goods as they have been consistently doing it should be a nice trade.
DH
Editor: Mid August would be the deadline. In the past, they have gotten them out within three weeks of the end of the quarter, but last quarter they used the whole time.
Any thoughts on CPNE’s inclusion on the RegSHO list?
http://www.nasdaqtrader.com/aspx/regsho.aspx
Editor: I can tell you the CEO believes his stock is being shorted. I followed the RegSHO list when it first came out, but was unable to draw any parallel to being on the list and price movement. Here’s the problem- the DTC allows the open fail to delivers to stay out there forever. They do nothing to close the loopholes in the system. I would guess there was probably a lot of selling of shares in the registration statement prior to its going effective. Now that it is effective, the shorters will simply deliver the shares. However, the stock is starting to perk up, which suggests there could be some sort of short interest being covered.
Usually don’t post only read, but it has been quiet on the board with no commentaries about CPNE. Good news, serious volume, and Q2 completed. What are your thoughts on everything that has gone on as of late? Is it going to be the same, sell on good news and major disappointment again. Or possibly something new.
Editor: I think the company had some sort of minor hiccup in Q2- nothing major. For some reason I don’t understand, the company put out no disclosure on the state of their business, and the market assumed the worst. The stock was simply going down because it was going down. I believe it is a great buy right now, and seasonality is no doubt a factor. Remember, you could have bought this stock in the $.50 range last summer- all you wanted through the July time frame into August. Then it was a fantastic 6 months. This could be deja vu all over again. The market is irrational on this one, but the market can stay irrational for long periods of time.
Regarding your comment, “the market is irrational on this one”. What are your expectations for eps for Q2 and the remainder of the year? I appreciate you sharing your opinion, however it would help if you provide a basis for your comment.
Editor: The only basis I have for making any predictions is trailing numbers. Based on trailing numbers, it would seem the company will generate at least $.40 per share in earnings. However, anecdotally, there is evidence Q2 was not as good as Q1- the only hard evidence to suggest this is the Alexa ratings, which suggests traffic has slowed at Online Supplier. That, and the horrendous performance of the stock price. If you subscribe to the theory that the stock tells you what is going on at the company before the company does, you have to assume something has gone awry. I believe the numbers aren’t going to be any where even remotely close to where the irrational market thinks they are, and the stock will turn around and run up on numbers that might not be quite as good as past quarters.
We had two bottoms already, $1.07, $1.11 and if $1.13 hold, that would be very bullish. If we break $1.30, we will break the upper resistance of the descending triangle that started on April 15th, and we should go test to 50-MA at $1.39, which is a gain of 23% from where are now. Purchased my shares at $1.14 with a stop loss at $1.05.
Editor: I believe you are positioned to make a great return on this one. The lows are getting higher. Now we need some major event to take it back up. Believe it or not, I feel that if the company announces something negative in Q2, the stock will go up. The market has priced in a worst case scenario, and if the market can quantify it as not too bad, the stock will bounce nicely in my view.
Today, trading in the range of 1.05-1.07… Scary. If the stock dips below $1, it will really not be a good sign. When are we expecting Q2 news? At some point, people will be compelled to take their losses and get out. If it dips below $1 for several days, i may be compelled to do so.
Editor: I guess so. This is just a mess. Too bad. I am a big believer in preservation of capital, even if you end up being wrong. If that is your risk threshold, then stick with your discipline.
Reading lots of messages from folks saying that Efund is selling, well, I don’t think they are. Reason I say that is that I called Commerce Planet and they returned my call and told me that they filled an amendment to be able to sell their shares but it is still in the process of being granted, hence, it is retail selling, not Efund. I am quoting Commerce Planet. I have placed a call today after reading messages saying that they were the catalyst for the fall, but in my opinion, the catalyst for the fall is first the wrong idea that some large hedge fund was selling five million shares, which is innacurate, second that their business plan was going down the drain, again false, they are just targeting more credit worthy customers, and finally that they will have a temporary drop in revenues b/c of their focus on a stronger customer base, well yes but also less refunds so I don’t see why everybody is panicking here. Only thing that blows my mind is that the company does not release a PR addressing these issues. Not suprised to see momos panicking and selling and talking about bankrupcy. We’ll know a lot more in less than four weeks now. Thanks for the cheap shares below $1.15, pulled my stop and holding until earnings. And yes, I know the drill, invest what you can afford to loose. I think I’ll be well rewarded for doing my little DD. Good luck to all.
Editor: They did have a hiccup in revs in Q3 which was disclosed rather obscurely. I found it and will publish on it. Bottom line- the market has priced this thing as if there is a real problem- Q3 will not be as good as Q2- however, it will still be an enormous improvement of Q3 ’06. I think the market has priced in a worst case scenario, and when the “bad news” comes out, the stock will go back up- why? because the market has sold it down worse than the event. You are right about one thing. They should have simply put it out in the form of press release for everyone to read. I can assure you the stock would have gone back up.