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Jeffrey Bash  

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  • Auxilio Goes National With Its $50 Million Contract Announcement [View article]
    Dallas, I do think they need to prove that they can deliverable reasonable profitability from this giant contract. However, given that this contract is just a larger number of facilities version of contracts that they have been implementing successfully for many years, I expect this to work out fine.

    They have publicly stated that the are in 120 out of 6,700 hospitals. As we both agree, this deal I suspect will finally give them the nationwide presence that will help lead to other large deals and rapid revenue growth. Although the low profit margin is the biggest minus here, potentially rapid growth of 5 year contracts is not reflected in the stock price. I agree with your view, "AUXO offers a high-visibility, high-percentage chance at returning multiple times on my investment."

    Incidentally, note the recent Form 4 purchases by insiders at $1.00 or less, including a 10b5-1 plan quiet period buying program (now) by Director Leonard.
    Mar 20, 2015. 04:05 PM | Likes Like |Link to Comment
  • Auxilio Goes National With Its $50 Million Contract Announcement [View article]
    I think "mature" embodies the idea that paper volume is not increasing, which the company actually disputes, as I covered in a comment on Dallas' original (linked) article. Of course, as Dallas points out, it is not mature with respect to Auxilio itself, which is bringing a unique approach.

    Dallas, the announcement referred to the $50M covering five years, not three. However, this one combined with the $18M one announced at the end of December, could see revenue up by about 30% a year from now and offers the potential of a more substantial increase in earnings after the implementation period. Few others offer that kind of potential from a company that typically has five year contracts and does not have to replicate sales every quarter.
    Mar 20, 2015. 09:08 AM | Likes Like |Link to Comment
  • Auxilio - Fundamentally Sound With Growth Catalysts Now In Place [View article]
    As of today, we can now say that Auxilio can get a stunningly large $50 million 5-year contract. While implementation costs will likely mean no positive impact from this deal on short term earnings, this deal plus the $18M one from December may mean sales a year from now are 30% higher than in Q4 2014 (and earnings much higher). This deal also suggests to me that the company has reached the big time in its market and being in only 120 facilities out of a potential market of 6,700 is indeed just the start.

    The stock was temporarily overpriced a year ago at $1.72 and underpriced late last year at 81 cents. That is characteristic of volatile, inefficiently priced, microcap stocks that have little following. The stock today returned to the middle of that range, where it belongs until it can show whether it can turn such large contracts into earnings. If is succeeds the stock should exceed $2.00 in 2016.
    Mar 18, 2015. 10:55 PM | Likes Like |Link to Comment
  • John Hussman: What Does That Difference Mean? [View article]
    "Selsick estimates the relationship between the Shiller-16 and subsequent 16-year total returns in the S&P 500, and arrives at a 16-year estimate of prospective nominal returns of 4.94% annually."

    " .....every market cycle in history .... has ended at valuations consistent with historically normal long-term expected returns of about 10% annually.

    What I think Hussman fails to address is what if interest rates, because of poor economies worldwide, are destined to be subnormal for a generation, or more, as they have been in Japan. Why in the world should a correction in the market bring prospective stock returns to 10% if competing fixed income rates remain low? Prospective returns of 6-7% after a correction would be more consistent with both low rates and the Shiller-16.
    Mar 9, 2015. 01:43 PM | 1 Like Like |Link to Comment
  • Friday's Sell-Off: Assessing The Damage And Opportunities [View article]
    Insurance stocks such as PRU, MET, LNC did exceptionally well on Friday. For a long time, a significant move up or down in 10-year Treasury rates has been accompanied by a corresponding move in the insurance stocks - so they have been underperforming for quite a while as rates have declined. Improvement as rates rise is logical, as higher rates increase the return on insurance company assets and enable them to better meet obligations - as in all the pension obligations Pru has taken on in recent years. However, I agree with the author and am not persuaded that longer term rates are due for a major, sustained increase.
    Mar 7, 2015. 11:06 PM | 1 Like Like |Link to Comment
  • The U.S. Stock Market Is At Its Most Overvalued Level In History [View article]
    I prefer a different way of looking at things. In my opinion, the Fed with its ZIRP has forced competitive devaluation of FORWARD returns of virtually all asset classes to have relatively small expected future returns. Given that interest rates have little economic reason to rise much, I think that absent some Black Swan event, like a terrorist attack here, we could stay in this situation for some time. However, I also think that Hussman may be right that average forward returns for an extended period may not exceed 2%.

    If one subscribes to this view, then neither the S&P 500 nor 10-year Treasuries at 2% adequately compensate an investor for event risk or any other kind of risk. That argues for an investment strategy that is unsuitable for most investors - a large cash position plus investments in individual obscure stocks which you believe are inefficiently underpriced based on sufficient special personal knowledge/expertise.
    Feb 19, 2015. 09:43 PM | 2 Likes Like |Link to Comment
  • John Hussman: A Better Lesson Than 'This Time Is Different' [View article]
    The market is looking very ragged and the price of oil and Treasuries suggest economic performance and earnings may not meet forecasts. Furthermore, I would not bet against a contraction in valuations this year because oil, Russia, terrorism, European economy, market volatility, etc are all more troubling than a year ago.
    Jan 14, 2015. 09:49 PM | 1 Like Like |Link to Comment
  • Auxilio - Fundamentally Sound With Growth Catalysts Now In Place [View article]
    sandiegosam, the biggest issues with Auxilio are the long sales cycle, that it is a low margin business and the stock is obscure with most shareholders having held for years.  They finally got sales to a level that covered fixed overhead so it could be profitable and have a sound balance sheet - limiting downside risk and financing needs.  Given their small penetration of the opportunity and the fact that they now can get $18 million multi-year deals with major players, it seems likely that there will be further growth which will see stock price performance as well. The Delphiis security acquisition looks like it could add upside to both results and valuation, but it is still early there. Finally, presenting at conferences like LD Micro may help to attract new eyes to the stock.

    (I can no longer comment on the other company, as I am now on its Board.)
    Jan 8, 2015. 10:41 AM | Likes Like |Link to Comment
  • John Hussman: The Line Between Rational Speculation And Market Collapse [View article]
    Flash, I think the tripling of the stock market is not the result of strong economic growth but of competitive devaluation of forward returns of competing asset classes (by raising prices) engineered by central banks. I do not know what will cause it, but I agree with your conclusion that the day will come when preservation of capital will become paramount and the stock market will have no friends.

    I find Hussman's commentary quite interesting. However, I wonder how many who ever invested in his funds fully understood that they could be buying into the strategy followed for years now.
    Jan 1, 2015. 09:05 PM | Likes Like |Link to Comment
  • Auxilio - Fundamentally Sound With Growth Catalysts Now In Place [View article]
    Celestial, I addressed this extensively with management on the last CC, the transcript of which is available on SA. It appears that it could be a few percent per year, mostly from internal consolidations - typically more than offset by picking up additional facilities within a hospital system. In my opinion, only being in 120 facilities out of 6,700 dwarfs this effect until they are an order of magnitude larger.

    Also, at the recent LD Micro conference they had a slide titled - "Debunking the Myth of Less Print Volume in Health Care - Hospitals are printing more, not less." It seems they believe paper volumes are not going down with respect to providing health care. In particular, with respect to Electronic Medical Records, they said that easier access to information drives print volumes.

    That said, I like the Delphiis acquisition in and of itself and, perhaps, as a hedge with respect to this paper volume issue.
    Dec 30, 2014. 09:05 PM | 3 Likes Like |Link to Comment
  • Auxilio - Fundamentally Sound With Growth Catalysts Now In Place [View article]
    Interesting article. Some points:

    1. Auxilio is not a $32M revenue company but more like a $44M company. (The former was a 9 months' number.)

    2. I believe it is not a "zero net margin" company and the related points are somewhat overstated. Results for the first nine months were reduced some by the bad winter and low equipment sales (which are lumpy). Q4 last year was virtually identical to Q3 and that could repeat this year, especially since equipment sales are expected to catch up in Q4 per the last CC. I think of the company as more like a 5% net margin company now, which would grow if Delphiis gets traction and as fixed SG&A gets spread over a larger base (from growth in the core business).

    3. If they were to get a very large new customer that should not require debt financing. They should have about $5M cash on the balance sheet at the end of 2014. The comments on the last CC about "investment" in new business in my opinion refers more to converting cash to receivables, rather than some actual loss requiring financing thereof.

    4. Per the last CC they are in 120 hospitals out of 6,700 total. I believe that their 3-5 year goal is to reach $100M in revenues, of which 10% or more would be from the Delphiis security division. At stated 35+% gross margins, Delphiis could, if successful, become worth the current price of the stock all by itself.

    5. Their competition is typically in-house services or suppliers of equipment like Xerox. They can clearly compete against the former more cheaply and, because they are unique in being agnostic about equipment used and focused on reducing paper, they can compete well versus the latter (which are neither).

    6. In my opinion, the company will eventually grow to a size which will appeal as an acquisition to a large company supplying services to hospitals, like an Aramark, which Auxilio Director Leonard and major AUXO stock buyer used to run. Such a large company should have a shorter sales cycle and be able to grow the (acquired) company faster.

    7. I like both Management and the Board and have met with CEO Joe Flynn.

    Bottom line, I have been very bullish on the stock ever since it pulled back to the $1.00 range and believe that over the next several years it will outperform 90% of the market.
    Dec 30, 2014. 03:45 PM | 3 Likes Like |Link to Comment
  • John Hussman: Hard-Won Lessons And The Bird In The Hand [View article]
    The German Weimar Republic in the 1920's experienced an exchange rate going from about 4-5 marks per dollar to 4+ trillion marks per dollar. Interestingly, its stock market, representing some claim on real assets rose from 126 to about 27 million. It has occurred to me that the race to the bottom by almost all countries - with Japan getting press now, but with the USA just being a little less bad - may be contributing to the performance of our market. I wonder if Hussman has considered this?
    Dec 2, 2014. 02:05 PM | 1 Like Like |Link to Comment
  • John Hussman: These Go To Eleven [View article]
    Given Hussman's view, this old quote seems apt: "The market can stay irrational longer than you can stay solvent."

    However, I think that it would have been rational to expect that QE would drive prospective returns on all asset classes down to those from the bond market - competitive devaluation of opportunity, so to speak. It seems that we are now even overshooting that standard as the USA now looks like "the best house in a bad neighborhood".
    Nov 21, 2014. 01:17 AM | Likes Like |Link to Comment
  • John Hussman: Air-Pockets, Free-Falls And Crashes [View article]
    Stormin77, he may have been right on valuation relative to the past - and I appreciate his analysis a great deal - but he totally missed the idea that the Fed's persistent interference could lead to all assets being priced to have similarly lousy expected forward returns of about 2-3%, which is what has happened. Being half right is not good enough when you take dogmatic actions which give very poor results.
    Oct 13, 2014. 04:39 PM | 1 Like Like |Link to Comment
  • John Hussman: Dancing Without A Floor [View article]
    I disagree with some things quoted. I do not think the Middle Class is in good enough shape to support a robust American economy. I also think that we have the "Japanese disease" - low rates for years on end which do not result in more than low growth. Therefore, I am not in the camp that rates have much upside risk if/as the Fed unwinds its balance sheet or lack of QE much more than psychological significance to the stock market.

    Also, anyone who thinks 335 points down today, following two 275 point swing days, will not cause at least a correction is a wishful thinker. The market has moved sideways for more than three months. That means a balance between supply and demand. This volatility will withdraw demand and increase supply. In my opinion, a three year uptrend line is now being broken and the only issue is whether this is just a scary correction or the bull market is over. Either could change the one "cheery" aspect of the economy, increase caution about business and consumer spending, offsetting the favorable impact of lower energy prices.
    Oct 9, 2014. 11:13 PM | 1 Like Like |Link to Comment