Seeking Alpha

Mark Gomes'  Instablog

Mark Gomes
Send Message
Mark Gomes is one of the world's most experienced technology analysts, with over 20 years in the market. He is also a Masters Track & Field world record holder and U.S. Gold medalist (http://www.fasterthanforty.com/hello-world/). Currently, Mr. Gomes is the CEO of PTTResearch.com, Pipeline... More
My company:
PTT Research & Pipeline Data, LLC
My blog:
Poised To Triple
My book:
Faster Than Forty
View Mark Gomes' Instablogs on:
  • Techprecision Reports Q4 Results

    TPCSE just reported Q4 results. The results were consistent with what we discussed in our weekend update.

    The company also provided Q1 guidance and an update on measures they are taking to save the company from going under.

    The Q1 guidance wasn't very good ($7 million in revenue; down almost 30% versus Q4 and a loss of $0.8 million).

    The measures they outlined were more promising. Headcount reductions and expense cuts are expected to lower annual expenses enough to get the company back to profitability. Of course, that assumes that 1) its current visibility into revenue holds up and 2) it isn't forced into bankruptcy by Sovereign Bank.

    Overall, the press release reads well and provides hope for the company. This is juxtaposed against Friday's discouraging NT 10-Q filing with the SEC, along with the 10-K, which revealed some ugly truths about how bad things were allowed to get under former-CEO James Molinaro.

    Net-net, we now believe the odds of bankruptcy are about 20% (versus the 10% estimate we originally provided).

    See our weekend update for more and stay tuned for the earnings call today at 2PM ET.

    Tags: TPCS
    Aug 19 11:38 AM | Link | 13 Comments
  • Poised To Triple -- Portfolio Performance Update

    Here's a comprehensive and updated listing of our various portfolios, dating back to my first appearance on SeekingAlpha (in Jan 2009).

    Let's start with our Core Portfolio:

     

     

    CORE PORTFOLIO

              

    Company
    (click for article)

    Ticker

    Date

    Initial Price

    Current / Final Price

    Current / Final ROI

     

    Peak Price

    Peak ROI

     

    Current Classification

    Lionbridge

    LIOX

    1/20/2009

    1.23

    3.69

    200%

     

    6.21

    405%

     

    Tripled

    BroadVision (Long)

    BVSN

    2/8/2010

    12.64

    37.92

    200%

     

    44.75

    254%

     

    Tripled

    Broadvision (Short)

    BVSN

    2/8/2010

    44.75

    17.00

    62%

     

    7.81

    83%

     

    Covered

    RealNetworks

    RNWK

    2/17/2010

    16.23

    12.98

    -20%

     

    19.83

    22%

     

    Stopped Out

    IGOI (1:12 split)

    IGOI

    8/6/2010

    18.72

    56.16

    200%

     

    62.28

    233%

     

    Tripled

    Calix

    CALX

    9/19/2010

    12.45

    21.91

    76%

     

    22.97

    84%

     

    Sold

    Zhone Networks

    ZHNE

    10/24/2010

    2.01

    1.61

    -20%

     

    3.24

    61%

     

    Stopped Out

    Astea

    ATEA

    11/12/2010

    2.25

    6.75

    200%

     

    7.64

    240%

     

    Tripled

    Majesco

    COOL

    9/30/2011

    2.00

    1.60

    20%

     

    3.47

    74%

     

    Sold

    Seagate

    STX

    11/11/2011

    17.94

    39.20

    119%

     

    47.83

    167%

     

    Gold Mine

    Lions Gate

    LGF

    3/20/2012

    12.14

    33.68

    177%

     

    35.04

    189%

     

    Gold Mine

    Attunity

    ATTU

    4/27/2012

    3.36

    6.89

    105%

     

    8.29

    147%

     

    Wait Time

    Lantronix

    LTRX

    7/9/2012

    1.82

    1.69

    -7%

     

    2.45

    35%

     

    Sold

    Rainmaker

    RMKR

    9/23/2012

    1.04

    0.83

    -20%

     

    1.37

    32%

     

    Stopped Out

    Facebook

    FB

    10/29/2012

    18.06

    37.08

    105%

     

    39.32

    118%

     

    Gold Mine

    Himax

    HIMX

    3/4/2013

    3.44

    6.08

    77%

     

    8.19

    138%

     

    Gold Mine

    QAD Software

    QADA

    3/24/2013

    11.73

    11.85

    1%

     

    14.24

    21%

     

    Gold Mine

               

    Averages

        

    87%

      

    135%

      

    We have separated out the picks that ended up being acquired. Why? Because, incredibly, those picks actually weighed down our total performance! This is because they were taken out before they had a chance to triple (our ultimate goal).

    The acquired picks were as follows:

     

     

    ACQUIRED PICKS

              

    Company
    (click for article)

    Ticker

    Date

    Initial Price

    Current / Final Price

    Final ROI

     

    Peak Price

    Peak ROI

     

    Current Classification

    Voltaire

    VOLT

    1/22/2010

    6.10

    Acquired

    43%

     

    8.73

    43%

     

    Acquired

    Novell

    NOVL

    5/21/2010

    6.06

    Acquired

    8%

     

    6.53

    8%

     

    Acquired

    Magma Design

    LAVA

    8/15/2010

    2.77

    Acquired

    158%

     

    7.15

    158%

     

    Acquired

    Occam Networks

    OCNW

    8/15/2010

    5.41

    Acquired

    82%

     

    9.84

    82%

     

    Acquired

    Pervasive Software

    PVSW

    3/20/2011

    5.36

    Acquired

    48%

     

    7.93

    48%

     

    Acquired

               

    Averages

     

    11 months

      

    68%

      

    68%

      

    You'll notice that these picks were actually very strong performers. The average return was 68% in 11 months. No complaints!

    FYI, overall, 23% of our Core picks have been acquired. 36% have at least doubled at their peak (41% if we include the acquired Magma Design). 18% have been retired as triples. Thus, 59% of our Core picks have turned into doubles, triples, or buyouts. 32% have been closed out for various reasons, including the dreaded stop-out (we usually wave the white flag if our pick sustains a 20% loss), but still averaged a +13% return (profit).

    Next, here's our highly volatile Speculative Portfolio:

     

     

    SPECULATIVE PORTFOLIO

             

    Company
    (click for article)

    Ticker

    Date

    Initial Price

    Current / Final Price

    Current / Final ROI

     

    Peak Price

    Peak ROI

     

    Current Classification

    Meetme (Quepasa)

    MEET

    11/12/2010

    6.58

    8.82

    34%

     

    15.45

    135%

     

    Sold

    Cereplast

    CERP

    5/8/2011

    4.92

    3.94

    -20%

     

    5.30

    8%

     

    Stopped Out

    Atrinsic

    ATRN

    7/24/2011

    3.26

    2.61

    -20%

     

    6.15

    89%

     

    Stopped Out

    Pixelworks

    PXLW

    6/3/2013

    3.24

    3.93

    21%

     

    5.30

    64%

     

    Speculative

    TechPrecision

    TPCSE

    7/11/2013

    0.40

    0.36

    -11%

     

    0.65

    63%

     

    Speculative

               

    Averages

        

    1%

      

    71%

      

    True to their moniker, these speculative issues have taken investors on a wild ride. Most have provided peak returns in excess of 60%, but their current / final returns have been an unimpressive 1%. This demonstrates two things: 1) investors must be nimble with these and any other speculative stocks 2) investors must be very careful in deciding how much to invest in speculative issues. We discuss how to address both of these points via the Methodology section of PoisedToTriple.com (it's a must read for anyone who wants to make money in my picks!).

    In stark contrast to our wild Speculative names, here are our seasonal Spring Small-Cap Portfolios:

     

     

    SPRING SMALL CAP PORTFOLIOS

            

    Company
    (click for article)

    Ticker

    Date

    Initial Price

    Current Price

    Current / Final ROI

     

    Peak Price

    Peak Return

     

    Current Classification

    Bacterin International

    BONE

    5/4/2011

    3.40

    3.71

    9%

     

    4.90

    44%

     

    Closed

    Harvard Bioscience

    HBIO

    5/4/2011

    5.48

    5.32

    -3%

     

    5.78

    5%

     

    Closed

    Glu Mobile

    GLUU

    5/4/2011

    3.82

    4.70

    23%

     

    5.75

    51%

     

    Closed

    interCLICK

    ICLK

    5/4/2011

    7.02

    6.85

    -2%

     

    7.02

    0%

     

    Acquired

    TowerStream

    TWER

    5/4/2011

    4.20

    5.30

    26%

     

    5.70

    36%

     

    Closed

    P.A.M. (Short)

    PTSI

    5/4/2011

    11.01

    9.45

    14%

     

    9.40

    15%

     

    Closed

    Averages

     

    1.3 months

      

    11%

      

    25%

      
               

    Media General

    MEG

    3/17/2013

    5.50

    9.95

    92%

     

    10.60

    93%

     

    Acquired

    Perfumania (Short)

    PERF

    3/17/2013

    5.91

    5.08

    8%

     

    5.25

    11%

     

    Closed

    PDI, Inc (Short)

    PDII

    3/24/2013

    6.08

    4.85

    32%

     

    3.82

    37%

     

    Closed

    LCNB Corp

    LCNB

    4/14/2013

    16.98

    19.75

    24%

     

    22.28

    31%

     

    Closed

    Palmetto Bancshares

    PLMT

    4/25/2013

    11.98

    12.36

    14%

     

    15.95

    33%

     

    Closed

    Averages

     

    2.9 months

      

    21%

      

    41%

      
               

    Berkshire Bancorp

    BERK

    6/19/2013

    7.96

    7.72

    1%

     

    7.56

    5%

     

    Closed

    Intevac

    IVAC

    6/19/2013

    5.36

    5.98

    6%

     

    4.91

    8%

     

    Closed

    MTR Gaming Group

    MNTG

    6/19/2013

    3.55

    3.67

    6%

     

    3.15

    11%

     

    Closed

    eGain

    EGAN

    6/23/2013

    7.63

    11.30

    15%

     

    8.95

    17%

     

    Closed

    Marketo

    MKTO

    6/23/2013

    20.88

    39.39

    7%

     

    22.99

    10%

     

    Closed

    Planet Payment

    PLPM

    6/23/2013

    2.85

    2.34

    -5%

     

    2.90

    2%

     

    Closed

    Averages

     

    6 days

      

    5%

      

    9%

      

    These portfolios have been absolutely electric. Not only has our hit rate been a stellar 14 for 17 (84%), the average returns have been almost unbelievable. The first portfolio returned 11% in 1.3 months (162% annualized). The second one delivered 21% in 2.9 months (120% annualized). The third one only returned 5%, but did so in only six days (1,845% annualized). We plan on continuing this tradition next spring.

    Overall, you can see that we've had great success with our picks. If you peruse my complete library of SeekingAlpha articles, you'll find many more write-ups that pertained to non-official picks. These have contained a similarly successful mix of winners (like CSOD, DATA, SWHC, and RGR) and losers (like ARBA and BBRY). The key to staying up-to-date on all of our official and unofficial moves is to joining us at PoisedToTriple.com, where we offer the most comprehensive service.

    Stay tuned!

    Mr. Gomes is the CEO of Pipeline Data, LLC and Poised To Triple Research. He is also the editor of the PTT Insider, a free investment newsletter available at PoisedToTriple.com. His real-time postings can be found on Twitter (@PoisedToTriple). He (and PoisedToTriple) can also be found on Facebook.

    Investors are strongly encouraged to read the Stocks To Triple Instruction Manual to learn how Mr. Gomes maximizes gains on his investment ideas.

    Aug 18 5:57 PM | Link | 1 Comment
  • Poised To Triple Update

    In this update, we'll fill you in on the recent performance of our portfolio. Almost all of our picks have been doing incredibly well. We'll also analyze the news on one of our picks that isn't doing as well as the rest.

    Starting with the good news, it has been a banner summer for Poised To Triple. After delivering 34% returns with our spring picks, the attention turned to our Core Portfolio. Fruitfully, that basket has jumped 18% since our last update, raising our total return to 97%.

     

     

    CORE PORTFOLIO

            

    Company

    Ticker

    Date

    Initial Price

    Peak Price

    Peak Return

     

    Current Price

    Current Return

    Current Classification

    Seagate

    STX

    11/11/2011

    17.94

    47.83

    167%

     

    39.20

    119%

    Gold Mine

    Lions Gate

    LGF

    3/20/2012

    12.14

    35.04

    189%

     

    33.68

    177%

    Gold Mine

    Attunity

    ATTU

    4/27/2012

    3.36

    8.29

    147%

     

    6.89

    105%

    Wait Time

    Facebook

    FB

    10/29/2012

    18.06

    39.32

    118%

     

    37.08

    105%

    Gold Mine

    Himax

    HIMX

    3/4/2013

    3.44

    8.19

    138%

     

    6.08

    77%

    Gold Mine

    QAD

    QADA

    3/24/2013

    11.73

    14.24

    21%

     

    11.85

    1%

    Value Stock

    Averages

        

    130%

      

    97%

     

    Our Speculative Portfolio has provided more excitement (each of our two selections peaked with 60%+ returns), but has since settled back (5%, with an average holding period of just under 2 months) for reasons we will discuss.

     

     

    SPECULATIVE PORTFOLIO

           

    Company

    Ticker

    Date

    Initial Price

    Peak Price

    Peak ROI

     

    Current Price

    Current Return

    Current Classification

    PixelWorks

    PXLW

    6/3/2013

    3.24

    5.30

    64%

     

    3.93

    21%

    Speculative

    TechPrecision

    TPCSE

    7/11/2013

    0.40

    0.65

    63%

     

    0.36

    -11%

    Speculative

              

    Averages

        

    63%

      

    5%

     

    As a reminder, we label a company "speculative" if it has yet to fully-establish itself (in our view). As always, we urge investors to read and heed our methodology section to gain an understanding of how to approach speculative picks. In short, the rule of thumb is to invest 10% of your portfolio into a basket of speculative picks (in other words, invest about 1/10th of what you would in an established company).

    Our Methodology section also discussed the importance of keeping an eye on a stock's risk and reward. If a stock rises fast (as most of ours have this summer!), they are usually bound to take a rest (pull back a bit). Accordingly, it is usually best to take some profits off the table and wait for the next opportunity to make some more money…in other words, buy low / sell high.

    Indeed, the entire stock market has pulled back in recent weeks. Those who have been taking profits are now sitting on lots of cash. Soon, that cash can be used to buy some of the stocks that are now going on sale.

    Legally, I cannot advise you on exactly what to do, but I practice what I preach. Reading my Methodology section only takes a few minutes, but will arm you with the knowledge I have used to make millions. Also, we will soon roll out new services that will give you more direct insight into when to buy and sell.

    Now, on to the bad news…

    ___________________________________

    On July 11, we added TechPrecision (TPCSE) to the Poised To Triple Speculative Portfolio. This is a specialized manufacturing company with many unique capabilities. This has attracted many customers and upcoming opportunities.

    However, as we stated in our initial piece, "the company got ahead of itself" and required "a few months of breathing room (from its creditors) to ramp its projects up". We believed (and still do) that if the company escapes the risks to its status as a going concern (a.k.a. bankruptcy), the profitability of its new projects should enable the company to stand on its own, start growing, and start paying down its debt.

    The company had a book value of over $10 million, so we reasoned that TPCS's bank simply needed to understand the near-term nature of its situation.

    Unfortunately, some new filings with the SEC show that things have not worked out for them so far. The first filing (an NT 10-Q) revealed that its bank "has not agreed to waive the non-compliance". As a result, the bank has the right to ask for full repayment of the debt upon 60 days of written notice. To this point, the bank not chosen to do so, but its refusal to waive the non-compliance increases the odds of a negative outcome (and obviously decreased the odds of a positive one). We'll discuss our revised odds at the end of this article.

    The second filing was a 10-K. This is also known as an annual report. We highly advise an investor to read the 10-Ks for any and every company they are invested in. They're a great source of insight into the business.

    By dissecting and analyzing the contents of TPCSE's 10-K, we believe the company will report disappointing Q4 results on Monday. Specifically, the Wall Street estimate calls for $11.6 million in revenue. The actual number will be closer to $10 million, with a net loss of $1.1 million. Making matters worse, the NT-10-Q stated that Q1 will result in a further loss of $0.8 million.

    We believe there is a silver lining here. First, the company generated $1.1 million in cash flow from operations in Q4 and $1.8 million for the year. This was only partial offset by capital expenditures of $268K and $395K, respectively. On the surface, the balance sheet doesn't resemble that of a near-bankrupt company. Even with the non-compliant long-term loan reclassified as a current liability, its current ratio remains well above 1. Further, the company disclosed that its backlog was $19.2 million as of the end of July, up from $16.4 million at the end of March.

    From a business standpoint, we have witnessed signs in the marketplace that the solar market is on the mend. More importantly, TPCSE's largest customer, Mevion received $55 million in funding to accelerate the deployment of its red hot S-250 proton beam cancer therapy device. TPCSE is the manufacturer of the S-250 and therefore an important part of Mevion's growth plans. This was evident in the 10-K, from which we calculated that Mevion represented $2.7 million in Q4 revenue for TPCSE. This was a nice jump from the $4.95 million it represented during the first 9 months of the year.

    To us, this may be the most critical part of TPCSE's business. Earlier this year, Mevion awarded a 5-year, $115 million contract to Techprecision to be the exclusive manufacturer of the S-250. To the best of our knowledge, as long as Techprecision remains a going concern (not bankrupt), it holds a very lucrative and long-term deal with one of the world's hottest private medical-equipment vendors.

    But that may not be enough. Accordingly, if we were running Mevion, we would strongly consider bailing TPCSE out (while simultaneously seeking another manufacturing partner, in the event that TPCSE fails to continue as a going concern). Fiscal Q1 (June) reportedly resulted in a net loss of $0.8 million, dropping its book value below $10 million for the first time in recent memory. Also, its revolving credit line was non-renewed, forcing the company to repay the outstanding balance. Investors should also consider that $0.5 million of its cash is locked up in China, where it may not be able to be repatriated to assist in the company's current dilemma.

    THE BOTTOM LINE: Netting out the good news and the bad, we strongly believe that TPCSE's situation has worsened since our last update. The bank's refusal to waive the company's non-compliance puts it at a higher risk of going under. To alleviate the current situation, the company likely needs to raise money very soon.

    The most likely way for this to happen may be to sell shares of stock, which would dilute its existing shareholders. Thus, even if TPCSE successfully avoids bankruptcy, the stock's potential will have been greatly impaired.

    To update our odds of success and failure, we now believe that the odds of bankruptcy have increased from 10% to 20%. The odds of a dilutive event (raising cash via a stock offering) is 20%The odds of becoming a ten-bagger have decreased from 10% to 1% (but has a more tangible chance of becoming a five-bagger). The remaining % represents a number of scenarios in which the company remedies its loan non-compliance and remains in business.

    ___________________________________

    Overall, we would love to experience this year's combination of wins and losses. Most all of our calls have been winners…and our losers have consisted of unofficial picks (like Blackberry) and TPCSE. Consistent with our Methodology, TPCSE (a Speculative pick) should only represent 1% of an investor's portfolio. Thus, even if it goes bust, it will only knock 1% off of this year's sizable returns. I will personally be glued to Monday's 2:00 call to determine if our odds require further revision.

    Looking ahead to the rest of the year, there are reasons to feel cautious about the stock market. To mitigate these concerns, I have increased the amount of cash I hold. I also purchased shares of TWM, which goes UP when the stock market goes DOWN (and vice versa). At present, I own $1 worth of TWM for every $10 of stock I own. I have also placed similarly-sized bets against Oracle (ORCL) and Angie's List (ANGI).

    If the market continues to fall, I'm very confident that I will make money on TWM and my bets against ORCL and ANGI. That knowledge makes me feel very comfortable with holding each of the stocks in our Poised To Triple portfolios.

    Since many of you have asked, my "favorite" at current levels is ATTU, but I continue to like them all (with the possible exception of TPCSE -- more on that after they report Q4 results).

    Stay tuned for more!

    Tags: ATTU, FB, HIMX, LGF, PXLW, QADA, STX, TPCS
    Aug 17 8:59 PM | Link | 6 Comments
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.