SPKL: Are We There Yet?
SPKL continues its pattern of trading very poorly on increased volume, and I’m getting a lot of emails with basically two questions- 1. Is there something wrong with the company?, and 2. Is it time to buy yet?
Those of you who have really been following this story know that I am uniquely intimate with this company. In fact, I was instrumental in helping them in the process of choosing to go public, and a lot of the pre public shareholders are personal acquaintances of mine.
Therefore, I can state with a great deal of certainty there has been no fundamental derailment at the company. In fact, just the opposite is true, the company is accelerating on every front- franchise sales, company owned store growth, and real estate acquisition. The only weakness of late has been the vacuum of new store openings in the last three months- This was simple a cycle issue, and new store openings will start to pick up again later this month.
However, the stock has been under pressure of late, and I am choosing to step back and see how low it wants to go. In my view, SPKL has become a victim of the new SEC regs related to shortening up the time frame for 144 filings. It used to be that investors had to hold shares for a year under Rule 144 before they were eligible to become free trading. As of February 15th, the time frame has been shortened to 6 months.
There have been a rash of filings of late, and I believe the recent weakness in the stock is related. I am monitoring the volume as it related to the filings, and will notify everyone when I believe the selling is about done.
In the interim, here’s a look at the current chart:
As you can see, the gap I have been looking for filled on Friday. As such the stock is close to being in position to turn back up. Almost there, but not quite. I would suggest giving it a few more days to a week.
Comments, questions, and in this case, complaints are welcome.
27 Comments
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That will take you to the web site for the show. The first half of the show is also available by Podcast- Through Itunes, I download the show into my iPhone everyday and watch in when I have the time. Fantastic stuff.
SPKL is slugging through a bit of excess supply right now. However, I believe it is pretty finite. Lots of good potential developments in the pipeline. In the next Bull Market for small stocks, this one will go on to make new highs.
Comment by bart — 4/24/2008 @ 11:48 pm
Its funny you mention Crammer in your cree blog. I took Lewis advice to get some help and e-mail mad money and ask about spkl esfs nihk tcgd and the otc journal in general and he said I would be better off burning my money it would be less painful
Editor: That’s funny. If you look back specifically in the OTC Journal’s content, I was suggesting a sell on a company called Global Epoint - I had started covering at $3- he said to buy it at $6.50- I rated it a sell at $7- we were out, he said it was going to $12. It’s has since collapsed. Same thing happened with DXCM- I had it at $16- He suggested it at $22- I sold at $24.50- he said it was going to $30. Today $7. This is all in the archives on the site- including coverage of Cramer mentioning these stocks.
However, the stocks you list there are microcaps- he doesn’t do anything with microcaps. Of course he is going to bash anything he isn’t involved with. Also, these are risky. However, my subscribers made more in the first run in SPKL than anything Cramer suggested- it was a triple if you sold when I suggested. NIHK tripled a year ago as well. TCGD is the only one on your list that has simply been a loser. Cramer covers mid and large cap stuff. He covers stuff you can get a million different opinions on. I cover stuff no one really follows yet. The hope is he will cover some of this stuff in a couple of years, when you knew about it far in advance. Far riskier. These kinds of stocks might not be for you if you only want larger cap stocks with institutional followings. If you really want some great information on stocks, watch Fast Money at 2PM Pacific. That is a show with really good information and very smart fund managers.
Comment by Anonymous — 4/23/2008 @ 12:36 pm
Lewis maybe you should start your own site.
No broker or dealer could have done any better. and if you invested in any of these companys last Apirl you lost money The highs where all after the fact they never came back just look at the charts There may have been a move up after the the presentation look at v2k .07 after the first day and thats it.
Editor: So what. Stop whining and look for opportunities. Today, you should buy CREE if you want to stop whining and start making some money. If you could just learn to buy cheap and sell high, you would make money. Small stocks I talk about- big stocks- doesn’t matter. Just buy them and sell them right and you make money. Did you buy SPKL when it filled the gap and reversed just as I predicted. It’s there in black and white and color to read.
Comment by rob — 4/22/2008 @ 1:32 pm
I’m betting on a re-test of the lows if .85 doesn’t hold. The only thing that will mess up my trade, and it is a good thing for all longs, is if they start up with their store opening PRs. What do you think? Are we close to any major market store openings? Thanks, Sir.
Editor: I suspect there will be some new store openings in the near future.
Comment by Lewis — 4/21/2008 @ 10:30 am
Thanks for taking time for those who could not attend the call.
Are there any big sellers or 144s lined up? I know it is a tall question. Thanks.
Editor: I know of some very small ones, but I don’t know of any size out there. The one seller who was responsible for the drop from about $1 to $.70 sold 300k in pretty short order. The real barrier to higher levels is simply the current anemic volumes in micros in general. As the market improves, micros should start behaving a bit better. On the big plus side, the investors in the $6 million investment in December have, for the most part, been rock solid. There has been one small seller - he invested $.5 million and is halfway out. The remaining $5.5 million is very happy with where the company is headed, and currently none of those folks have expressed the slightest interest in rotating out at these levels.
Comment by Lewis — 4/19/2008 @ 1:40 pm
Conference call Wednesday with CEO Marc Geman was most appreciated. I hope you will be able to do this in the future. I thought he handled questions very well and the callers were really knowledgeable.
Any new picks in the pipe line?
Editor: Yes- glad you liked the call. Marc will be doing them quarterly, and they will always be open to questions and answers. Yes- there are some new ideas coming. I haven’t really done much as we were all just slugging it out through the bear market. I am very excited about one I will be covering in the next couple of months- the company is solving the pollution problem in China, and their growth is just breathtaking.
Comment by Ron — 4/17/2008 @ 6:15 am
This may be a redundant question: Are we in for a bunch of stores, like NY, going from under construction to open?
Are you doing a blog on the conference call?
Thanks so much in advance.
Editor: I will no doubt do some commentary in some way on the conference call. There are a number of stores due to open in the near future, but I don’t believe the NY location is one of them. However, I believe it is under construction right now. I’ll be enjoying lunch at the new San Diego store next Monday- it is opening for friends and family tomorrow- to the public on Monday.
Comment by Lewis — 4/16/2008 @ 5:55 pm
I would like to know which of the two SPKL or VT2 would be the best investment right now? Thanks for your insghit.
Editor: At this particular time, I believe SPKL offers more short term upside. The stock has a much wider following, trades much greater volume, and the chart just looks outstanding. V2K on the other hand, hasn’t developed much of a following yet, and the story is not being embraced by investors. Given a couple of quarters of positive performance, people will probably start to understand V2k, and the whole personality of the stock will change. Long term, I can’t say which will be better. They both have great business models and strong long term potential. V2k is probably in a less competitive market, rather inefficient market, and doesn’t take as much lead time and capital to move. SPKL is more recognizable, but has longer lead times is expansion is more capital intensive.
Comment by Verland Henderson — 4/16/2008 @ 1:47 pm
Rob, if you want to invest, I recommend having someone else do it for you. Someone who knows how/when so sell. Perhaps mutual funds or hire a money manager through your broker/dealer. Best of luck.
Is this CEO call on Wednesday, 415 Eastern going to be a one time thing or a regular occurance? May I suggest that they hold this call after each quarterly earnings report? Thanks so much.
Editor: I don’t know why it wouldn’t be. It was put together last minute, and we need to find a better service to host it, but I suspect it will be on a go forward basis. If it is well attended and people like the information, I am quite certain the company will make it a habit.
Comment by Lewis — 4/14/2008 @ 5:12 pm
comment to Lewis if you listened to Larry and bought efsf cpne ttgl tcgd nihk there is no way you made money oh and here another good one emigma software. Larry is a seller he doesn’t care if the company make it as long as he makes this money thats why spkl is dead in the water now they took all the money out of the company. nobody jump into that blind to go idea.
Editor: you are either a new subscriber, or just don’t pay attention to the facts- in which case you should probably be out of the market. TCGD is the only one you wouldn’t have made a huge return in. Look at the charts bozo. EFSF first at $.18- went to $.46- TTGL- first at $.85- went to $2.25- CPNE- first at $1 to $2, then from $.30 to $3.50- NIHK has rocked twice from the $.05 level- first to $.15, secondly to $.24. It’s all there in the archives and on the charts. Every edition and all the price movements are there in black and white for all to see. I don’t mind it when people complain that they haven’t made money. But, when you have your facts just dumb ass wrong, I take a little offense.
Comment by Rob — 4/11/2008 @ 12:21 pm
looks to be close to the end of the selling.
Editor: This one is probably going to perk up pretty soon.
Comment by andrew — 4/10/2008 @ 12:28 pm
where is this company going? the stock fell out of sky there is no info and no volume. it seem that nobody is interested anymore
Editor: I suspect it will rematerialize at some point in time.
Comment by rob — 4/10/2008 @ 10:39 am
Anonymous: you don’t have a sell discipline and that is why you are losing money. I bought the same stocks you did. I traded the same stocks you mentioned. I made money all every trade but a few…which I stopped out down 7%. Learn when to sell and you won’t be posting these things any more. Good luck.
Is there any plans for the CEO to do a letter to shareholders? Thanks.
Editor: There are a number of ideas in discussion.
Comment by Lewis — 4/9/2008 @ 9:17 am
buyit
Editor: Probably a great idea.
Comment by Jim Ardito Old School — 4/9/2008 @ 4:33 am
no I not blameing anyone I just point out that if you follow any of larrys picks they all end the same way. cpne ttgl tcgd nihk now spkl He gets paid to push these stocks. There is a old saying fool me once blame on you fool me twice blame on me I have been fooled 5 times so the blame is on me. so I guess I’m the only one who doesn’t let to lose money
Editor: If you followed all those companies- with the exception of TCGD with still hasn’t hit its stride, you can track the stock price to corporate performance. When the companies did well and generated growth and earnings, you made money in the stocks. CPNE, the second time around, went from $.30 to $3.50 in 8 months. Then, their numbers went south. I didn’t run the company. Sooner or later, I’ll find a few that don’t sabotage their own success. I have personally invested about $400k in SPKL- the last investment of $102k is now about $.10 above the market. I could be wrong, but so far the company is doing everything right. Also, lately I have been providing trading ideas in larger caps- 6 for 6. I do this because the microcap market is dead right now. Not sure what you could complain about there. Kind of interesting- people point out that we get compensated for the size of the audience and the content when stocks are doing poorly. When the ideas are doing well, no one seems to care.
Comment by Anonymous — 4/8/2008 @ 9:33 am
I rode the stock up at two dollars and watched it roll back to .74. The information given was right on target if you got out a 2 you made some great money in a two month period. And you can still get in now. If your like me and see a long term play it is their too. The exciting part is we are seeing the makings of a new type of Italian Mcdonalds business model for the new century. If this was fifty years ago we would not believe 15cent hamburger would make billions and become a house old name. The problem with this new type of inverstor is it is about themselves and not about the company. Let the have some room to grow and stay out of the way for some old school guys to ride the new business model into the 21fst. century. Grey balls.
Editor: As far as price movement, I believe it is important to realize the price as been affected by three major factors- 1. the unrealistic high the stock went to in that first two months- remember, I suggested it was a sell over $1.50- 2. The nasty Q1 bear market, and 3. the recent change in SEC regs, shortening the 144 holding period, allowing an excess supply of shares to hit the market. What this all equals is opportunity. I believe, on a short term basis, the stock is oversold, and is due to bounce. On a longer term basis, the next two or three years of growth is built into the company already- they have 36 stores open, but 130 franchises sold. That’s 94 to open- and it’s going to take a few years. Plus, more new franchises will be added. The move to a healthier and more interesting fast casual theme is happening, and SPKL will get its fair share of the movement. If the company ends up with 500 stores, you will make a lot of money from this level.
Comment by Jim Ardito Old School — 4/8/2008 @ 7:54 am
Anonymous poster is a person who blames others for everything. In this case, for his anoymouse sell discipline.
This stock is like all stocks in a bad a stock market AND it is a new company. In any market, the most risk inclined assets gets sold off more severely. Greater risk, less reward. However, now, the stock has been compressed to within technical and fundamental reason. It is a buy, plain and simple for risk tolerant investors, I believe. I am thrilled by your coverage, involvment with the company (completely disclosed in the disclaimers) and I AM A BUYER YESTERDAY AND AGAIN THIS MORNING UPON THE OPEN.
Editor: I am not convinced the sellers are exhausted yet, but we are getting close.
Comment by Lewis — 4/8/2008 @ 6:03 am
He can’t spell, either. Clearly mentally challenged. Takes all kinds, I guess. Too bad he knows how to run a computer, sort of. In another era he would have stewed in his own juice and nobody would have known how challenged he was.
Pls let us know when you think the selling is done. I want to buy more but am keeping money in reserve.
BD
Editor: I plan to jump in for a fairly substantial buy. However, I will give everyone the heads up through the BLOG before I jump in. The time is coming near.
Comment by Biodigger — 4/7/2008 @ 12:40 pm
Who cares what the stock is doing right now? The company is attempting to grow and will have to deal with these normal issues. These are microcap stocks, not GE or IBM. There is risk in them, but if you read the editor’s comments on these stocks, you can make money. He is very thoughtful in that regard. There is no magic formula here. On SPKL, I bought about 10K shares when it was announced, and took all my profit off the table around $2.00. I am back in with almost 10K shares and will hold for now.
Read and watch carefully so you don’t look so goofy with your whiney comments. The editor makes full disclosures and covers the risk accordingly.
Editor: Thanks for the comment. I’m simply trying to give everyone some insight on the supply/demand dynamic. We are close to a great bottom and great buying opportunity.
Comment by A. McKnight — 4/7/2008 @ 12:35 pm
On Feb. 27th, the company expanded its corporately owned stores by 4, purchasing them from franchisees in the Denver area. Do you have any information surrounding the
circumstances…
My initial reaction to this news was negative in that why would they sell their franchises back so soon after recently opening them
Were the franchisees “forced” to sell?..or
Were these stores profitable?
Any insights you could provide would be appreciated.
Thanks
Mark
Editor: I cannot tell you if the stores were profitable under the franchisees. Under federal law, the franchisees are not required to disclose if they are profitable. Also, under the UFOC (uniform franchise offering circular), which is the document the FTC requires the company provide to franchisees, it is illegal to make any profitability claims on the individual franchise stores. The company can disclose information on its non-franchisee stores. The company knows if the franchisees are happy and doing well. Here’s what I can tell you- none of the three stores was managed very well by the individual franchisees. They are doing far better under the company’s direct management. There could be more moves along these lines. They were not forced to sell. The company cannot do that. However, it is turning out to be the right move. Apparently, Mike Neil, the 17 year veteran from Jason’s Deli, has these stores running very well.
Comment by Mark — 4/7/2008 @ 12:06 pm
What a pile of horse manure from this Anonymous poster. You’ve done a great job on SPKL, anyone who followed your cues had an opportunity to make money, and lots of it.
Editor: Thanks for pointing that out. I am trying to help everyone understand the supply/demand dynamic as derived from the public filings. I also have a good feel for who believes long term, and who doesn’t. We are close to a turn around.
Comment by Don — 4/7/2008 @ 11:21 am
I was wondering how long you could go on replying to Assnonymous.
Editor: Indefinitely. I will reply to any and all legitimate questions, and show both positive and negative comments. You are not required to disclose your contact information, but if you’re going to have a viewpoint, it’s not a bad idea to identify yourself.
Comment by andrew — 4/7/2008 @ 10:09 am
That may be so but a intimate relationship with the company and re public sale to friends sounds let insder trading to me D@#k oh sorry Larry
Editor: Not true- the filings of 144 shareholders are public information- just difficult to find and hard to track. I am doing it for you, and hypothesizing what is going on. This is meant to help everyone understand the supply demand dynamics, and act accordingly.
Comment by Anonymous — 4/7/2008 @ 9:28 am
I understand the point of veiw the person who left the last comment had unfortunately. As someone who bought a stock on news that it was going to be the next great stock but I rode it down to .03 I was bitter, but I failed to do my homework on the stock. I wanted to blame the news for hyping a bad stock. Having said that the fundamentals on SPKL have’nt changed and if you read all the blogs here, in my opinion they are right on about where this stock is going all along. SPKL is doing all the right things a company should do so I believe this is a great buying oppertunity.
Editor: I can’t control what people do, I can only control the information flow to loyal guys like you. To that end, I share as much as I can as honestly as I can. If everyone just wants to hear a rosy picture and buy, buy, buy, I can do that as well. Sometimes, reality is not what people want to hear, but in the long run it’s best to tell it like it is, and ask people to act accordingly.
Comment by Joe I — 4/7/2008 @ 9:02 am
so as I see it you and your friends solded your share you had at .06 made the stock go down made money and now will buy back in at the lower price,and the rest of us who lost out will have to hope it go’s back up because we are not insides. I hope everyone is catching on as to the way you do bussiness
Editor: Excuse my language- by you are an f’ing idiot. Most of the comments I receive that are basically stupid I answer with a certain professionalism. In your case, I’ll break my rule. You are a complete moron. If you like the company, you should recognize that their need for cash is an opportunity for you to buy some cheap stock. If you don’t like the company, get out. If you think that’s the game, why not be a buyer. I have no control over what other shareholders, whether new or old, do with their shares. On a scale of 1 to 10 for stupid comments, a 15. You win the prize. Like a typical stupid investor, you get all excited when stocks are running up and everyone wants to buy. When stocks get cheap, psychologically you get spooked and sell at the bottom. Typical.
Comment by Anonymous — 4/7/2008 @ 5:35 am
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At least I still have interest in the company it”s the only blog this month look at the volume nobody else does
Editor: It’s setting up for a move in June in my opinion- hopefully up- we will see.
Comment by Anonymous — 5/9/2008 @ 7:12 am
will the price of this stock stay a this level until June when you and friends start selling off the 6 millon dollar december financing? Then the price will fall again nothing about this in two weeks???
Editor: Geez- what a stupid comment. First of all, I do know most of the investors in the December financing, with the exception of Enable fund, the single largest investor. Secondly, I don’t know where you get the June target. The shares underlying the convertible preferred have been free trading since mid January when the registation statement for those shares went effective. However, you would have to have had the brains to look at the SEC filings to know that. Thirdly, to date, there have only been a few conversions out of that financing- all the same guy who has very few shares left. I can’t disclose who it is, but suffice it to say the largest blocks, including two board members, have given no indication of any interest in selling. These investors, including myself, can sell anytime they want, but that has been the case for months. Congratulations, one of the least informed comments I have read in months.
Comment by Anonymous — 5/5/2008 @ 9:52 am
Just for information, do you have a website where we can ‘contact’ the ‘Fast Money PM Pacific’ you mentioned in an earlier answer to somebody else, I can’t detect it up to now.
Kind regards,
On SPKL, I believe they will indeed deliver some real and great results an so the stock will - some day - have to follow.
Bart
Editor: Go to http://www.cnbc.com/id/15838499 .