Earlier today I published the BLOG you see below. Late in the day I learned CPNE filed a registration statement relative to the well publicized transactions of block purchases made in February.
Investors may interpret today’s filing negatively, but it really isn’t. It changes nothing about this stock, and fulfills the company’s commitment as specified in the February 13th news release concerning the institutional buyers who bought blocks at $1.90. If you want to know who they are, just read the selling shareholders list in the prospectus. Jeff Feinberg of JLF Partners is considered a top hedge fund manager. I am going to take the liberty of assuming Feinberg did not buy this stock at $1.90 to sell it at $2.10.
Nearly all the other shares contained in this registration statement were eligible to be free trading under Rule 144, 144k, or some other exemption with the normal restrictions on officers and directors.
You can also see the exact number of shares each of the insiders sold to the funds. Better to have the funds buy it at $1.90 than have it hit the open market. It raises the cost basis.
If the sells off at the open on Monday, hold off on any purchases. If it doesn’t, the BLOG below applies. It might sell off a little early, then come right back.
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Technically, Commerce Planet became a bit of a mess over the past two weeks, and now it’s time to start looking at the possibilities.
First and foremost- you probably want me to comment on why the stock dropped so far and so fast. First let me remind everyone that this stock has a history of volatility. For those of you who have been following the situation since I pounded the table at $.50 last summer, you have seen this stock make wild swings. It’s almost becoming the norm.
I believe there are several reasons the stock has been so sloppy- 1.- the market climate- the big correction flipped off the “microcap switch”, and buyers are now in hiding. 2.- Recent 144 filings- old shareholders has recently filed to sell a bunch of stock- I don’t believe they are all sellers, but I do believe their filings precipitated a binge of selling. These folks are reasonably close to the company, and they know how well CPNE is doing.
So- the big sell off panicked others into selling- no buyers around thanks to the big correction- hence a sub $2 price momentarily.
Also- technically I thought $2.25 was a prudent SSL- so many investors with more of a trading mentality might have exercised some discipline- if you did so, you did the right thing. There was no telling how far it might have dropped.
For the time being, the stock seems to like the $2 level. It has been a big, nasty resetting of the bar, but it was inevitable there would be a correction.
Is this the bottom?- is it time to start accumulating again? I looked at the chart today, and here’s the first technical indicator that jumped up and grabbed me:
Here’s the long term uptrend line going back to the first big break out on Q2 numbers last July. As you can see, the stock came back to its long term uptrend line nearly perfectly. This chart is bullish for accumulating CPNE today.
However, in the back of my mind I can’t get away from the feeling the NASDAQ Comp could have another 140 points to drop before we get really healthy again.
Here’s your worst case scenario chart:
If the uptrend line breaks convincingly, I believe we could see a full 61.8% retracement of the move which began last July at $.50. That move down would take us to the $1.64 level- believe it or not.
Conclusion- I don’t think the stock is going to make another big leg down from its current level. I believe the stock is a very strong buy right now, especially in light of its recent firming on very light volume.
However, if it does break the downtrend line convincingly, look for $1.65 or so.
On the fundamental side, I still believe Q1 is going to be very strong. Beyond Q1 I don’t have much of a feeling.
If you sold CPNE at $2.25 or higher, now would be a great time to jump back in. The stock is stable and drifting up. In addition to extreme volatility, this stock has a history of trading up into earnings releases- the market should start pricing in Q1 right now.
Comments and questions are welcome.
There is a new filling out..
I am German, therefore my english is not very good. The filling shows exactly the last transactions from the old shareholders, maybe you could help me and the other retail investors if these changes are good or not.
Here is the filling:
http://www.sec.gov/Archives/edgar/data/1028070/000135448807000325/filing_532.htm
Thank you in advance and thank you for the outstanding work!
Regards, Frank
Editor: Frank, thanks for bringing this to my attention. I didn’t catch it. Please re read BLOG for more info.
SO what does this last SEC filing mean??
Editor: Not much- please re read blog posting. The stock might sell off on Monday, but this is no big deal.
Dear Editor, I’m glad you showed the ‘uptrend’ line, I was about to bring this point up. I think this is the most important point to focus on, all stocks move up and down, the important thing is the overall trend towards more profitable company. How many shares are you still holding of CPNE?
Editor: About 210,000- Frankly, I’d like to not sell any, but I need the money.
My gut instinct says that quarter 1 isn’t going to be the big deal we hoped. On the chat boards, people have been throwing up some charts that show sharp drops in order inflow in most sectors of the economy that would use CPNE’s technology. If I can locate those again, I’ll post them here. So, I am very suspicious that the failure to announce February’s results really means that CPNE has been adversely affected by this drop off. Remembering that north of 70% of revenues is new business, not repeat business, also makes me suspect this scenario. I sure do hope I’m wrong for the sakes of all the folks here who are still long. But, I sold out at $2.40 and $2.20 with a good profit. Am standing aside for now until we get real numbers. I’m willing to give up some of the rise to be sure the good business results are continuing.
BD
Editor: If you have concerns, always better to be out in my view. I don’t know what Q1 numbers are going to be, but I do have faith they will be good. It’s Q2 I’m not so sure about.
Here’s the bit from the other board, Investor Village
http://www.alexa.com/data/details/traffic_details?url=onlinesupplier.com
As you can see the traffic was flying in december and january and that is why the new memberships bumbed up.. It is a #’s game.. As you can see since the 2nd half of February the traffic #’s declined a good amount.. This means alot less new memberships and that is why they are not putting a press release stating the feb numbers.. Also, the business model to me is one that is doomed. The service they offer is not amazing by any stretch of the imagination and I bet you many people do not renew thier membership. Now, if the traffic #’s were to go high again you will see the stock price move up again..
New Poster:
If you take a look at the 1 or 3 year Alexa graphs for CPNE, you see a lot of volatility, but no correlation between CPNE revs and Alexa page views. For instance, traffic was flat, or even declined, from April – October, but revs and subscriptions went through the roof. Biodigger may have a point about general market conditions, but CPNE’s traffic rank is more sensitive to advertising campaigns than it is to subscription rate, IMHO.
And that spike over the last couple of months, that just ended, was insanely huge. There will most likely be some good numbers coming out of that, if anything.
New Poster:
Perhaps the traffic spike late in the year is related to Christmas-related retail activity and common to many retail web sites?
http://www.alexa.com/data/details/traffic_details?url=bestbuy.com
http://www.alexa.com/data/details/traffic_details?url=amazon.com
http://www.alexa.com/data/details/traffic_details?url=sportsauthority.com
http://www.alexa.com/data/details/traffic_details?url=brookstone.com
http://www.alexa.com/data/details/traffic_details?url=xbox.com
http://www.alexa.com/data/details/traffic_details?url=bathandbodyworks.com
Editor: Useful for those who want to look at the data.
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You wrote “I am going to take the liberty of assuming Feinberg did not buy this stock at $1.90 to sell it at $2.10.” But I understand that some of the Hedge fund managers who are heavily leveraging the Yen carry trade get forced to liquidate some of their holdings to raise cash when yen strengthens. Wonder how much of that affects the microcaps
Editor: I’m sure it does effect some micros- not as widespread as in larger caps. From what I hear of Feinberg, I believe this is a pretty small percentage of his funds.
Did the company close up shop?
Editor: The stock is sure behaving like they did, but I hear business is robust. This one certainly is crazy. Going to write something better on it this afternoon.