Bittersweet Bite Out Of the Apple

In some ways Apple has been the best idea I shared with you in 2007. As the stock breaks through the $200 barrier, which was my original price target (now ratcheted up to $225 two BLOGS ago), I have formally changed the price target/SSL to $225 and $175 respectively.

AAPL’s charge through $200 is bittersweet for me as I wrestle with the next dilemma. As I previously disclosed, I still own 10 Jan 130 calls at $12.30- about a $12,300 investment. As the stock breaks through the $200 barrier, that investment is currently worth about $71,000- that’s about 7 times my money since the middle of August- one of the better trades I have made in a long time.

Here’s the problem- these options are going to expire the third Friday in January, and I want to keep a long term position in Apple- one that can appreciate with the next two waves of growth- specifically the dramatic growth of iTV along with dramatic growth in MAC sales.

Have you heard the term “Halo Effect”? Apple has it. Everything the company does is angelic. The positive vibes emanating from several of their product lines (iPhones and iPods) are carrying MAC sales up with it. iTV will follow next year. Did you read what happened today? Rupert Murchoch signed on to provide movies to iTunes from Time Warner. Why fight the rising digital tide in entertainment distribution?

Here’s the chart, dating back to my first edition on the company in August. I’m definitely tooting my horn on this one a little, but I’ve earned the right:


Nothing but good calls and a fun ride on this one. I hope you were on board.

So, what now? I’d like to have some kind of position in this stock for the next couple of years, but it’s awfully tough to buy up here. Between now and the third Friday in January I have to either sell my calls or exercise the option, which might not be a bad idea.

I’m not sure how to do it yet. I will continue to hold on to the options into January as I believe there could be another leg up as the volume of AAPL products sold during the Holiday Season pushes the stock a bit higher. I believe the big surprise will be in MAC sales, where the success of the iPhone combined with the positive reviews of the new Leopard Operating Systems are fueling demand. As a percentage of the overall PC market, MACS have the most upside, and they are now becoming more main stream.

What to do stay invested in AAPL? A very high class problem, but none the less still a problem. I’ll let you know.

Comments and questions are welcome.

eFood, Like A Homing Pidgeon, Goes Back to the Coup

It seems there is a magical force in the Universe to which all things gravitate. I am writing this today to inform you EFSF has succumbed to the forces of gravity, and headed just where I thought it might head in a year end tax selling blow out (see the last BLOG on 12/14). That’s what a lot of these kinds of stocks do when shareholders have been disappointed by a shortfall in anticipated results.

Without further ado, here’s the chart. I’ve blown it up and extended it to make the gap as identifiable as possible. Look at the two green horizontal lines that delineate the gap, and its subsequent filling earlier today.


The stock has now officially completed a round trip from the level it was when I first wrote about the company.

That gap you see on the left side of the chart was created the first time I wrote about the stock.

Like a homing pigeon, the stock has flown back to its coup. Vacuum filled. Nature happy.

Fundamentally, all I can say is the company is improving. Technically, now is the time to swoop in and grab this stock if you are a buyer. You know all the facts about the company. I have certainly covered them over, and over, and over again. Don’t construe this to be my recommendation you should buy the stock today. There is a lot of controversy and disappointment, and you can read all about it in the archives. I’m saying now is the time if you are a buyer.

If you like the company and you want to own more stock, set aside your fears. Despite already owning 1 million shares which become eligible to be free trading next month, I might jump into 100k for a trade in the am. Since I own a lot, this would just be a trade for me. You might think a bit more long term depending on your goals.

Comments and questions are welcome.

Titan Capitulates To Tax Selling: What Now?

Titan has simply been atrocious in the past six trading days, absolutely falling off a cliff with seemingly no bottom in site. What the heck is going on here?- like you, I am concerned with the free fall. This thing is really bothering me.

I hope you are reading all of the commentary- not just some of it. Now is a good time to draw your attention to my warning that these kinds of things would happen in this nasty market environment.

I refer back to the November 10th edition, entitled “WOW”. This was a huge down day in the markets:the turning point which kicked off the sub-prime meltdown.

In that edition I talked about the importance of sticking with your SSLs (suggested stop loss) in a down market depending on your personal preference. To me, it is simple. If you hold the stock below either my SSL or your own personal SSL, you have decided to become a Warren Buffet like long term investor.

In conjunction with that edition, I updated all the SSLs at, and set the SSL for TTGL at $1.73. Today, TTGL closed at $1.18- far below the SSL.

If you really are a long term investor, this should not concern you. You should only be concerned with fundamentals. If you are not long term and worried about the drop, you should have been out. If you got out, you should be looking to get back in.

I believe the problem here is simple- TTGL is evolving from a small following of retail investors to an institutional story, and the company has not been effective, or not tried to be effective at getting its message out to an institutional audience.

This down market has led to selling pressure and a vacuum of buying- now I believe the stock is being knocked down by tax selling. The real problem- no buyers.

Here’s a fact- this company made $9 million in positive cash flow last fiscal year- earnings are just an accountant’s opinion; cash flow is a fact.

Here’s another fact- this company should deliver over $700 million in revs this fiscal year, and it is trading at a market value of $64 million- ouch!!!!!!

Let’s look at a longer term chart, and you’ll see my reason for concern:


This chart tracks the stock on a weekly basis since the company embarked on its ambitious growth path. As you can see, it’s hasn’t been straight up the whole way.

After delivering splendid price appreciating in 2006, the stock took a breather in the first half of ’07 before making its next leg up. Throughout that entire time, there was never a sell off as vicious as this one.

On the other side, the left leg up was steeper than the past rise, so there could be an equal but opposite reaction.

I don’t believe we have another CPNE here (if you followed that one) as this company has a much solider business model and adds real value to its customers. This one is not a house of cards.

In light of the new volatility, this could prove to be a great January effect stock as soon as the tax selling abates.

There’s another possibility that is unique to TTGL. Those of you who have really dug into the details know this company’s financial statement continues to be plagued by ghosts of past loan sharks. There are warrants. Some of these funds are under very heavy pressure these days, and there could be a renegade former financier with a need for “cash at any cost”. Just a thought. Their weakness could be our opportunity.

My initial thought- don’t touch this stock now. Wait for the selling to be over. Then, buy this stock towards the end of next week after all the tax sellers have finished doing their damage if it stabilizes. This one could rebound beautifully after we get past next week. Just a guess, but I wouldn’t be surprised to see them announce a restart of their stock buy back program.

Comments and questions are welcome.

eFoodSafety Quarter: Time To Leverage the Assets

It’s all about monetizing assets. EFSF has assets- their products are their assets. They don’t appear on the balance sheet, but they are there. If they want their stock to trade much better than it currently is, they have to monetize those assets- or at least make investors believe they are going to monetize those assets.

Current quarterly numbers came out yesterday morning, and there were no big surprises. Quarter over quarter, revenues were up very nicely over the same quarter one year ago, and the company is continuing to do a nice job managing its cash.

Between cash and receivables, they still have over $900k, and liabilities are less than $100k. Who ever heard of a public company with less than $100k in liabilities?

Also, top line revenues are growing nicely- albeit not fast enough for shareholders, but nevertheless at a healthy clip. The top line, thanks to Cinnergen sales, was up from $198k to $327k- an increase of 65%- S&P 500 companies never deliver this kind of growth.

My conclusion- I still see this company as a kind of option that won’t expire on some very good products. They have a good portfolio, and they need to figure out how to monetize that portfolio to benefit their shareholders.

I believe steps are being taken to move in that direction starting next year. If they line up the right sales force, it will be interesting to see if the market is willing to give the company the benefit of the doubt before the sales roll in, or if the market needs to see the numbers come.

I’m not trying to defend their snail’s pace to market, I’m just pointing out some of the positives. I get enough negative feedback on the company, so I’m looking at the other side.

Considering the anemic sales history vs what we were led to expect, the company could be in far worse shape than it is. They can manage slow progress very well.

I want to be around to see how they manage prosperity.

The chart remains about the same:


I still believe this stock is a screaming buy if it comes back and fills the gap you see circled at the left side of the chart. For that to happen, it would have to trade down to $.18.

It has tried to get back there, but doesn’t seem to want to trade below $.20. It might never do it.

The lack of sales is already priced into the stock. The detractors are vocal, and have gotten their message to the company.

I believe there is lots of upside when everyone is so negative. Tax selling may force this one to stay in this range or go down a little for the remainder of the year.

It’s an accumulation right now- a screaming buy- even for a trade, if you see $.18.

Planet Projections: Investors are From Missouri On This One Now

CPNE has simply lost all its credibility as a public company, and I believe it will take some time to restore, if ever.

I read yesterday’s press release concerning Q4 ’07 and the outlook for ’08. My initial thought- this is the first honest and useful information out of this company in many months. Kudos to the new management team for ushering in a new era of disclosure for investors.

If I’m reading this information correctly, they plan to evolve up to an ecommerce company, in the business of providing a full slate of ecommerce related services to businesses requiring a web presence.

Perhaps, by moving in this direction, they will evolve from a “selling the dream” to individuals who don’t really have businesses, to servicing a more established business by facilitating its internet persona.

New CEO Tony Roth appears to give a pretty good look at the immediate future, admitting they will lose $1 million on $4 million in sales in q4. A refreshing change.

It would appear they are exorcising the past management’s mistakes in pretty short order, taking their lumps, and moving on. Lots of “one time” and perhaps “non-cash” expenses.

If you buy into the corporate performance projections for next year, the stock is probably a buy right now.

Personally, I wouldn’t touch it- yet. The market cast its vote on the news by leaving the stock near its low, and no bids are appearing.

If they can deliver in ’08 under this new management team with a new business direction, the stock could be a lot higher. In light of recent history, I believe investors will be from Missouri on this one for a while.

Ever seen a Missouri license plate- they call themselves the “SHOW ME” state. That’s the market’s view on CPNE for the time being- SHOW ME, then I’ll believe.

On the plus side- if they can really move in this direction, and have thousands of real businesses paying them a monthly fee that recurs indefinitely, the next version of this company could be the real deal.

Comments and questions are welcome.

eFoodSafety: Thoughts and Musings

EFSF- more news on the path to the retail shelves for the product they believe could be applied transdermally as a potential preventative measure and/or therapy for MRSA Staph.

They announced the company would be going into a laboratory, and using a “Gold Standard” test to determine its efficacy.

Test results will be the first step- assuming a positive result, the path to the store counter would have to be next. However, it strikes me that they would have to show it works in an actual human application somehow, which might be tough. We’ll see how it all pans out. It’s another opportunity in the portfolio of IP that “could” turn into something big.

On to the main topic- the one of concern to the followers of this company- when are they going to generate more robust sales?

Disciples seem to have a very short fuse on this issue these days. Most of the emails of BLOG comments I receive are centered around that issue. Investors tend to be viewing the recent slate of product developments almost as a kind of slight of hand- a distraction if you will to avoid the main issue.

Here’s what I know- the company is moving in the direction of superior distribution for its existing products. They are in CK41′s back pocket nearly daily- putting their best foot forward to get that moving. They are pushing forward on several other fronts that might prove very fruitful.

In the meantime, considering the current microcap market malaise, and the current level of shareholder unhappiness, this issue might be plagued with a bit of tax selling this year.

I’ve had a number of questions about last year’s January gap. Here’s the chart:


I’ve had to expand the chart considerably to show a daily going back that far, but nevertheless you can clearly see the gap.

On Jan 10, ’07 the stock closed at $.18. On Jan 11, the stock opened at $.21, and never came back. Chartists call this a “gap”, and the theory is that all gaps eventually get filled. The whole in the chart acts like a kind of a vacuum to suck the stock back to that level, fill the gap, and start over.

I don’t believe there’s any logic to it. I do believe opportunistic traders will pounce on the stock if it ever does come back and fills that gap.

In the absence of any robust news on sales and/or a return to a healthy microcap environment this year, there is always the chance EFSF could “fill the gap”, at which point it would be a fantastic trading opportunity to go long.

I would guess the chances are worse than 50/50 for this drop for two reasons. 1. If investors wanted to make tax sales on this stock, they have probably done so already, and 2. I believe micros are going to pick up in short order.

Nevertheless, if this stock does fill that gap this year, I would pounce with reckless abandon. 2008 is a new year, with lots of new opportunity for achievement.

I’ve rarely seen a microcap company with so many potential blockbuster opportunities in its pipeline. I’m just asking for one big success.

Comments and questions are welcome.

Nighthawk: Can the Stock Be Far Behind the Company?

Let’s see- NIHK recently announced its highest revenue quarter in four years. Then it announced the single largest order in its history. Then, it announced it would be shipping the hi-def hospitality industry set top boxes in December, which means the December quarter will also be the a new record high top line.

Sounds like NIHK is really getting its act together on the fundamental side. CEO Doug Saathoff is talking about a new day for NIHK in 2008 as the company finally plows through the excess supplies of stock, generated by 4 years of losses as they have been building the company.

Where’s the turning point? When does the company stop creating excess supplies of stock? When does the stock break out, and generate the big run NIHK fans have come to expect on an annual basis?

They say timing is everything. The timing on the last serious of events out of NIHK has been bad from a market point of view- we had a great run in equities Sept through mid Nov, been since then investors have been very reluctant to reach into their pockets and start bidding for oversold stocks. The “headline” shock is pervasive everyday.

For those who are becoming impatient with the stock and are wondering why it didn’t trade better on a 2 million share day- I suggest you look at the past patterns in previous runs- the volume simply needs to be higher. Here’s the chart:


Look at the huge spike from last March- note- it was accompanied by many days where the stock traded 9 million shares plus.

We need a more microcap friendly market tone for a repeat of this performance. Everyone has their hands in the pockets, afraid to jump in right now.

If you sell the stock right now it’s more of an overall market call than a call on the company. The company is doing great.

If you have the intestinal fortitude to wait it out for another month, past the tax selling and the daily sub prime shock which is winding its way down, you are in for better days in my view.

In this market, we won’t get the big run. Most of the damage is done, and the next market is coming.

Comments and questions are welcome.