Over the last several years, I have periodically mused through a series of articles that I thought shares of Parlux (PARL) were mispriced given the underlying book value and the growth potential of newly licensed brands. I continue to hold that view.

Today, despite economic conditions, the difference between the share price of Parlux and its book value and future potential has never been greater. Book value continues to sit around $5.50 per share and the pipeline of new or upcoming fragrances has grown to include such notable names as Jessica Simpson, Josie Natori, Queen Latifah and Marc Ecko. Given the level of the disconnect between price and potential, I would be surprised, no stunned, if some party did not take advantage of the situation and propose to acquire Parlux. In reviewing various possibilities, Mr. Glenn Nussdorf quickly rises to the surface as perhaps the most viable candidate.

Alan Greenspan has called the recent bloodbath in the financial markets a once in a generation event. A quick scan of the Wall Street Journal shows that very few stocks have been spared the market's wrath.

However, until the last week, shares of Parlux Fragrances (PARL) had performed exceptionally well in the face of the mounting financial crisis. Unfortunately over the course of the last week, shares of Parlux Fragrances have been punished to the tune of 25% off the recent high to a closing price of $5.31 on September 17 due to the bloodbath the market has become. The recent price action brings to mind the adage "Buy when there is blood in the streets". Certainly, Wall Street has not been bloodier in quite some time.

How many times have you reflected on events in your life and thought, “If I had only done this, my life would be different?” Some people might think of different educational or career choices they might have made. Others may think of improving relationships, physical fitness or certainly their finances. Perhaps buying and holding shares of Dell (DELL), Microsoft (MSFT), or, more recently, Google (GOOG) or MasterCard (MA) would come to mind.

"Be fearful when others are greedy but be greedy when others are fearful" is one of Warren Buffet's most frequently repeated quotes.

After watching the market take its toll on shares Parlux Fragrances (PARL) this week, many investors are trying to determine whether to be fearful or greedy. During the first three days the week of January 14th, Parlux shares fell from $4.00 to $3.17 on volume of less than 500,000 shares. Unlike plenty of other companies reporting results and guidance below expectations, I am pleased to note that Parlux reported absolutely nothing. Mr. Market has for no apparent reason thrown the Parlux baby out with the bath water.

Cramer says that Europe wants to move over to another source for importing oil, fearing dependence on Russia will make them vulnerable. Europe is looking increasingly towards Kazakhstan. This will bring the western oil companies (Chevron (CVX) has 20% of oil in Kazakhstan) in, sending the price of oil fields up.

India and China are also demanding oil and both need a closer provider that can deliver oil and gas by pipes, not by tankers, which are becoming more and more expensive. Also, given the Chinese dependence on Iranian oil, one assumes that China would want a "Plan B" if something happens to Iran over the nuclear program. In the competition between these three areas, I believe India has the most to benefit from a Kazakhstan oil field.

Since I first wrote about Parlux (PARL), shares have fallen nearly 13% to just above $4.00. Of course this must mean that PARL's turnaround must have hit a few potholes in the road, correct? The answer is not that I can see.

PARL's recent 2Q earnings release exceeded analyst's expectations handily as they smelled mightily sweet to investors at $0.10 earnings per share. PARL's recent 10-Q filing shows a couple of factors that I did not anticipate. First, sales increased more than I expected due to increased sales albeit at lower margins to foreign distributors. Secondly, PARL was able to make deeper SG&A cuts than I expected. The benefits to these two factors are obvious: (i) diversification from the US economy and (ii) a reduced cost structure improves profitability and the chances for completion of a successful turnaround.

Parlux Fragrances (PARL) has been both a financial and emotional roller coaster for investors from 2004 to the present. Shares began in 2004 under $3 (split adjusted) and proceeded to rocket to a high of over $19 per share in early 2006 before falling back below $3 in August 2007. Today, shares trade at approximately $4.60 per share after bouncing off a recent low below $3. Various factors contributed to the decline in share price including: Sarbanes-Oxley compliance issues, negative publicity regarding the former CEO, failure to enter into new license agreements, significant insider stock sales, the sale of its Perry Ellis brand perfume and most importantly declining financial performance (which has recently improved – more on that later).

In August 2006, Glenn Nussdorf (a major investor in PARL customer Perfumania) requested (and subsequently received) permission to purchase 15% of PARL's outstanding common stock. Shortly thereafter, Nussdorf began an activist shareholder leading to the ouster of then CEO Ilia Lekach and the installation of Neil Katz as Chairman and CEO in May 2007. For more details on this wild saga, interested readers should review the most recent 10-K.