Ampex Corporation: Lowering Estimates And 12 Month Price Target Due To Deferral Of New Licenses; Strong Buy Rating Reiterated
Richard W. West, CFA
October 18, 2005. After reporting a stronger than expected second quarter (beating our estimates for the 2nd quarter and six month period ended 6/30/05), Ampex Corporation (Nasdaq: AMPX) has announced only one additional licensee in the third quarter ended 9/30/05; Samsung Electronics. We had expected further announcements in the third quarter of additional license agreements by some of its existing 13 licensees. With the absence of additional license agreement announcements in the third quarter, it appears that Ampex is experiencing a slowing in their negotiations, as Sony and the 12 other licensees are apparently keying on or deferring to the April 11, 2006 date and they are reticent to start paying additional run rate royalties until that time. We are lowering our 2005 Q3 and Q4 EPS estimates, and adjusting our 2006 estimates to reflect this deferral. For the 12 months from June 2006, AMPX is on track to report EPS, we believe, of $5.60 to $6. We reiterate our Strong Buy Rating and lower our 12 month price target to $50.00.
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LJ International Strong Speculative Buy Rating Reiterated: Robust Golden Week Holiday Jewelry Sales in China
Sally H. Wallick, CFA
October 18, 2005. It appears that growth of China's retail sales remains strong, with jewelry sales performing especially well. According to China's Ministry of Commerce, retail sales reached $33 billion during the Golden Week holiday (October 1 through October 7), up more than 14% year over year. Retail sales were even stronger in urban markets surveyed, increasing 18% or more. Gold and jade jewelry sales were up 35%. One of LJ International's (NASDAQ: JADE) growth strategies is to benefit from China's rapid growth in consumer spending by opening retail jewelry stores. The Company expects to be operating 12-15 stores in China and Hong Kong by the end of 2005 and 100 stores in three to five years. We continue to rate LJ International common stock, which is trading at less than 11x projected 2006 earnings, a Strong Speculative Buy.
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Mexco Energy Corp. Buy Rating Reestablished on Recent Price Decline; Preliminary Price Target Set at $13
Les W. Childress
October 18, 2005. . Mexco Energy Corp.'s (AMEX: MXC) share price has dropped over 13% since Thursday October 13 and $4.60 or 35% from the $13.10 level on June 8, 2005, when we instituted a sell recommendation predicated on what was then a significant share price advance. As we noted in our June 8, 2005, research note, we believe Mexco is a fundamentally sound company with over 85% of production in natural gas and 100% on shore. We will discuss the Company in greater detail in our upcoming research report, but we believe the recent share pullback provides investors an attractive reentry point for this micro cap predominately natural gas well reentry play. We rate the shares a Buy and establish a preliminary price target of $13.
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O2Diesel: Clear Channel Unit Signs On As CityHome(TM) sponsor
Sally H. Wallick, CFA
October 18, 2005. Clear Channel Radio's Springfield, Illinois operation has become a sponsor of O2Diesel's (AMEX: OTD) CityHome(TM) program in Springfield. We believe that this sponsorship is noteworthy because, in our opinion, obtaining high-quality, high-profile sponsors, such as Clear Channel, is critical to the CityHome(TM) program's long-term success. We reiterate our Speculative Buy rating on O2Diesel's shares.
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Chemokine Therapeutics Speculative Buy Rating In Initiating Coverage; Developing Drugs In The Field Of Cytokines
William R. Prather, RPh, MD
October 17, 2005. Chemokine Therapeutics (OTCBB: CHKT) is an early-stage biotechnology company developing drugs in the field of cytokines. All Chemokine Therapeutics product candidates to date have been obtained through a license agreement for the underlying patents with the University of British Columbia and include a 2% royalty on revenues or other consideration derived from the licensed technologies. These patents represent platform technologies, and Chemokine Therapeutics' rational drug design process can identify and screen hundreds of analogs for potential clinical indications. Of particular interest to Chemokine Therapeutics is their focus on the naturally occurring chemokine-stromal cell derived factor 1 (SDF-1) and the associated surface cell receptor know as the CXCR4 receptor. Chemokine Therapeutics' lead product candidates, CTCE-9908 and CTCE-0214, are intimately involved in the SDF-1/CXCR4 relationship. Based on the premise that Chemokine Therapeutics will be entering Phase II clinical trials next year at this time and comparing the current value of Chemokine Therapeutics to an average of comparable biotechnology companies in Phase II trials, we arrive at our 12-month price target on the common shares of the Company of $1.75 and our rating of Speculative Buy.
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DXP Enterprises Shares Decline Over 30% from Recent High; We Raise 2006 EPS Estimate and Price Target; Reiterate Buy Rating
Paul J. Resnik, CFA
October 14, 2005. DXP Enterprises, Inc. (Nasdaq: DXPE) shares have declined over 30% since hitting a high of $26.30 on October 4. At the time of our research notes of September 20 and September 22, we discussed our belief that while DXP will gain significant business in the aftermath of hurricanes Katrina and Rita, the most likely effect on third quarter results will be negative as a result of both minor damage and business disruptions. It is possible that growing recognition of this possibility, magnified by some traders' response to the decline through near-term technical price trend lines, played a role in this share price weakness. Although there remains much uncertainty regarding the timing of hurricane-related benefits and the degree of near-term hurricane caused disruption, we have decided to make rather tentative adjustments to our revenue and earnings projections at this time, and contained in this note. We caution that DXP, as a company with almost $30 per share in revenues, can exhibit a fair amount of earnings volatility in "normal" times. We are adjusting our 12-month price target for DXP shares from $22.00 to $22.80 and maintaining our Buy rating.
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LESCO Inc. Consummates Supply Chain Asset Sale; Confirming Q3 Estimates; Buy Rating Reiterated
Paul J. Resnik, CFA
October 14, 2005. On October 7, LESCO Inc. (Nasdaq: LSCO) consummated the sale of substantially all of its supply chain assets to Turf Care Supply Corp. (TCS), an affiliate of Platinum Equity LLC. LESCO believes that it can now achieve greater profitability and growth as it focuses on its retail operations. We note that the sale not only removes low margin businesses from its mix but also frees up capital to more rapidly grow its profitable Service Center(r) network using internally generated funds. The purchase price of approximately $34 million is comprised of $15 million in cash that LSCO received at closing and approximately $19 million over the next 12 weeks. As previously announced, the Company expects to incur a total pre-tax charge of between $27.0 and $30.0 million associated with this transaction. Our Q3 estimates are for revenues of $157.7 million and EPS of $0.43 (LESCO has limited exposure in Louisiana and Mississippi). We continue to rate LESCO shares a Buy with a 12-month price target of $18.00.
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China Energy: To Develop Thermo-Photovoltaic Products With Beijing Zhongmei Chengxin Technology Ltd.
Richard W. West, CFA
October 12, 2005. China Energy Savings Technology (Nasdaq: CESV) announced on October 12, 2005, the signing of a Letter of Intent (LOI) with Beijing Zhongmei Chengxin Technology Ltd. (Beijing Zhongmei) to develop Thermo-photovoltaic Cell Technology. The signing of the LOI comes approximately one month after China Energy announced its intent to, "explore various new growth opportunities and technology solutions," to address China's growing need for energy conservation and alternative energy solutions for renewable energy and environmental protection. We reiterate our Strong Speculative Buy Rating.
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Large Candy Manufacturer Joins Electric City's VNPP Program; Strong Speculative Buy Rating Reiterated
Richard W. West, CFA
October 12, 2005. Electric City (AMEX: ELC) announced an agreement on October 12 with Nestle USA, Inc. to participate in Electric City's development of a 50-megawatt power curtailment system for Commonwealth Edison (ComEd) in northern Illinois. The good news is that the agreements keep coming! However, since Electric City is host of the ComEd System, they deliver and install the technology at the customers' site at no cost to the customers. Hence, the up front costs of installation will show on Electric City's statements way before revenues from the program will be recognized. In exchange for Electric City's guarantee of the delivery of peak-power reduction, Electric City will, in the future, benefit from the sale of the saved electric power at the direction of ComEd. Electric City's common stock is groping for a bottom in the $0.75 to $0.80 range and we believe investments made at this level will produce long term capital gains with minimal downside risk. We reiterate our Strong Speculative Buy rating.
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LJ International: Receives Orders Totaling Nearly $1 Million. Strong Speculative Buy Reiterated.
Sally H. Wallick, CFA
October 12, 2005. LJ International (Nasdaq: JADE) received two orders totaling nearly $1 million from a major global jewelry retailer. One order will be booked in the third quarter while with the second order, management expects to book this revenue in the fourth quarter. Management did note that the customer is a leading operator of general merchandise stores in both conventional and discount warehouse formats. In 2004, this retailer's orders with the Company increased 60%, making it one of LJ International's top four customers. We rate LJ International common stock, which is trading at less than 11x projected 2006 earnings, a Strong Speculative Buy. Our recommendation is discussed in more detail in a J.M. Dutton report dated September 16, 2005.
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China Energy Announces Distribution Agreement; Strong Speculative Buy Rating Reiterated
Richard W. West, CFA
October 11, 2005. China Energy Savings Technology, Inc. (Nasdaq: CESV) announced on that its wholly owned subsidiary, Shenzhen Dicken Technology Development Ltd., had signed a distribution agreement with a subsidiary of Emerson Electric Company (NYSE:EMR- $69.60), to enable China Energy to distribute Emerson's inverter products throughout China. We view this distribution agreement as a positive as it does serve to give credence to China Energy's place in the power savings market in China. We reiterate our Strong Speculative Buy Rating.
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ImageWare Signs Two Important Licensing Agreements With Boston Equities and NEC
Rafael K. Kapelinski
October 11, 2005. ImageWare (AMEX: IW) signed two recent licensing agreements with Boston Equities and NEC. In our view the two agreements are significant for the reasons we discuss. The agreement with Boston Equities proves that ImageWare's patent portfolio should increasingly emerge as a potent value driver. We tentatively estimate that the agreement with NEC should generate anywhere between $100,000 - $200,000 per quarter starting in 4Q 2005E. We reiterate our Buy rating and a price target of $3.25.
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Pipeline Date - $2 million Financing Adds Capacity to Make Portfolio Acquisitions; Extension of a Successful Strategy
David Riedel
October 11, 2005. Pipeline Data (OTCBB: PPDA) has announced the successful completion of a $2 million financing. The addition of $2 million to the company's coffers for acquisitions is significant and should help the company to continue their successful strategy of acquiring smaller portfolios of merchant accounts and using the cost and operational advantages of their larger scale to increase the value of those portfolios. We reiterate our Strong Buy rating and $2.00 price target.
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[corrected] I-Sector Rating Maintained At Strong Buy; Exposure to the Growth of Cisco Corporation and the Internet Protocol (IP) Telephony Market.
David P. Soetebier, CFA
October 10, 2005. We have I-Sector Corporation (AMEX: ISR) rated a Strong Buy with a 12-month price target of $10. I-Sector is an opportunity for small-cap investors to gain exposure to the growth of Cisco Corporation and the Internet protocol (IP) telephony market. Its latest growth initiatives involve the newly emerging IP telephony market. I-Sector is targeting this market and, as a reseller and implementation specialist for Cisco products, stands to benefit from Cisco's success in this promising market. I-Sector has an experienced, entrepreneurial management team that has worked together for years. We believe I-Sector is inexpensive on many metrics. At its recent price, I-Sector trades at less than 0.5 times sales and less than 10 times our 2006 earnings-per-share estimate of $0.46. We expect the Company's IP telephony business to grow revenues in excess of 50% in 2005, including the benefit of two acquisitions. Indeed, if the IP telephony market develops as we think it should, our revenue growth assumptions could prove conservative. However, even with our current expectations, we believe the intrinsic value of the Company justifies significant upside potential.
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EuroWeb International: Completes the Acquisition of Navigator, Reiterating Buy and Price Target of $5.
Rafael K. Kapelinski
October 10, 2005. Euroweb (Nasdaq: EWEB) has completed the $10 million acquisition of 100% of Navigator Group (Navigator), a Hungary-based provider of IT outsourcing, applications development, and IT consulting services.The Eastern European market continues to generate superior growth rates, which reached 17% in 2004 versus 3% in Western Europe. The most powerful market drivers include strong macroeconomic growth, growing foreign capital investment, and increasing IT spending on public administration. Considering the average per-capita IT spending in Eastern Europe of EUR 74 versus EUR 732 in Western Europe, the market's long-term potential appears very attractive. We would like to argue that the integration risk is limited as Euroweb's management has a very strong acquisition track record.
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Unify Corporation: Strong Speculative Buy Rating Maintained in Update Report
Rafael K. Kapelinski
October 07, 2005. Unify Corporation (OTCBB: UNFY) first quarter fiscal 2006 results indicate that the Company continues to make progress on the growth and profitability fronts. Most important, the Insurance Risk Management Division already demonstrates the potential to offset the continued revenue decline in the already mature enterprise division. As a result, we estimate that the Company should be able to show single-digit revenue growth and edge closer to the break-even point in FY 2006. We reiterate our Strong Speculative Buy rating.
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XAR First Half Results Above Our Expectations; Shares Up 37% Since Our Initiation In June; Attractive Long Term But Lowering To Neutral Rating Over Next 12 Months
Rafael K. Kapelinski
October 07, 2005. Xaar Plc's s (LSE: XAR) 1Q 2005 results were above our expectations. Total revenues came in at £19.8 million (+17.5% over 1H 2004), slightly below our estimate of £20 million, but the Company was able to beat our profitability estimates by a considerable margin. The adjusted EPS was £0.054 vs. our expectations of £0.041. The bottom line is that the Company had a great first half of 2005 on the continued strength in the graphic arts market in all geographic areas. We view the premium at which the common shares are trading as sustainable and believe the stock has long-term investment appeal. However, our price target remains 300 pence per share, which is US$5.28 at the current $1.76 exchange rate. As the shares have risen 37% since our initiation of coverage on June 16, 2005 and now trade just 4% below our price target, we are revising our investment opinion from Buy to Neutral.
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Cap Rock Energy Announces Continued Listing On AMEX As It Files Its Required Quarterly 10Q And Amends Past Filing
Richard W. West, CFA
October 07, 2005. Cap Rock Energy (AMEX: RKE) filed on October 6, 2005, its SEC Form 10Q for the period ended June 30, 2005, its amended SEC Form 10Q for the quarter ended March 31, 2005, and its amended SEC Form 10K for the year ended December 31, 2004. The Company had previously announced the reason for the delay in filing is that Cap Rock was determining the impact of a technical tax issue that the IRS raised, relating to the taxable status of one of Cap Rock's subsidiaries. We are maintaining our Neutral Rating for Cap Rock, as well as the suspension of the price target, pending our detailed review of the new and amended filings.
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Electric City Adds Large Distributor To ComEd VNPP Program; Stock Appears Under Accumulation
Richard W. West, CFA
October 07, 2005. Electric City (AMEX: ELC) announced an agreement with SANYO Logistics Corporation, a subsidiary of SANYO Electric Co., Ltd. (NasdaqSC: SANYF), to participate in Electric City's ongoing 50-megawatt power curtailment system for Commonwealth Edison (ComEd). The SANYO agreement comes shortly after Electric City signed similar recent agreements with Exel Logistics, Nissan North America, and with Fischer Scientific. Electric City's common stock is reacting positively to these recent announcements. During these recent heavy volume days, Electric City's stock has traded in a tight range of $0.80 to $0.91. This type of trading activity indicates that accumulation is taking place for Electric City. We reiterate our Strong Speculative Buy rating.
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GasStar: Chesapeake Energy Purchases Just Under 20% Interest; Validates Deep Bossier Drilling; Raising Target Price to US$5.50
Les W. Childress
October 07, 2005. Our read on the GasStar (TSE: YGA) and CHK (NYSE: CHK) deal is this: the East Texas acreage and Deep Bossier in particular has been a concept story even for the other companies drilling there. Despite the high pressures and temperatures in drilling wells to 19,000 feet, the CHK deal would seem to validate the concept. Second, Gastar had intended to raise equity in some form to help finance the buyout of Geostar's (former parent) interest in Gastar. Both companies got something in the deal. Gastar needed financial assistance; CHK needed acreage in East Texas. We elaborate on our observations. Pending our next report, we up the target to $5.50 US and affirm our positive outlook for the Company and rating.
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(Corrected) Qiao Xing Universal Tel. Rated Strong Buy in Update; Target Price Raised to $10.50
Sean Yu
October 06, 2005. Given Qiao Xing Universal Telephone, Inc's (Nasdaq: XING) impressive result in 1H2005, new orders from domestic and foreign companies and success in the mobile phone market under the brand of CECT (CEC Telecom Co. Ltd.), we maintain our Strong Buy rating on the stock. After raising its effective share in the net income of CECT from 52% to 74.5%, CECT has become the most important revenue source for Qiao Xing Universal Telephone, Inc. Given the slowdown of industry growth in both the indoor and mobile phone market, we slightly lowered our revenue estimate in 2005 to $323.6 million. However, CECT's high-end market strategy has proved to be successful because of active top management participation in market forecast and model design, despite the weakness of other local players compared with foreign competitors. Considering the unique position CECT has created in the highly competitive market and its further penetration of indoor phone segments into a new type of wireless phone market, we revised our revenue growth rate estimate of 25% in 2006 upward to 30%. Our net income forecast is revised up to $18.6 million for 2005 and $27.2 million for 2006, representing growth rates of 57% and 45% in 2005 and 2006, respectively, due to elevated gross margin and lower selling, general and administrative (SG&A) expense. We are increasing our target price from $8.10 to $10.50, a level 10.4 times its 2005 expected EPS of $1.01 and 7.1 times its 2006 expected EPS of $1.47. At a current price of $5.11, the stock has an upside potential of over 100%.
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Forgent Announces Court Confirmation Of Date For Markman Hearing; Places Microsoft On The Schedule; Reiterate Strong Buy Rating
Richard W. West, CFA
October 06, 2005. Forgent(tm) (Nasdaq: FORG) and its wholly owned subsidiary, Compression Labs, Inc. (CLI), announced that on October 3, 2005, Judge Jeremy D. Fogel reconfirmed a Markman hearing date on claim construction for February 13, 2006.. The Court also placed Microsoft Corporation (NasdaqNM:MSFT) on the claims construction schedule. Also, we are still mystified at why the filing of a lawsuit by Forgent against 15-cable TV providers covering the possible infringement of U.S. Patent No. 6,285,746 (the '746 Patent), owned by Forgent's wholly owned subsidiary, VTEL Corporation, did not prompt any upward movement in Forgent's common stock. The '746 Patent, expiring on May 21, 2011, relates to a computer controlled video system, allowing playback during recording. We reiterate our Strong Buy Rating and reaffirm our 12-month price target of $5.00 per share.
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O2Diesel Names New CFO
Sally H. Wallick, CFA
October 06, 2005. O2Diesel (AMEX: OTD) named Dave H. Shipman chief financing officer effective October 1, 2005. Mr. Shipman has a strong financial background, as well as extensive management experience with small growth companies. Mr. Shipman's appointment follows the naming of Rick Roger as president and chief operating officer in July. We believe these actions will help to position the Company for accelerated growth in 2006 and beyond. Therefore, we reiterate our Speculative Buy rating on the Company's shares.
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Further Discussion of TMFZ Holdings Coversion to a REIT Structure
Richard W. West, CFA
October 06, 2005. We have received several calls regarding our October 5th Research Note on the filing of TMSF REIT Inc.'s initial SEC information statement/prospectus filing relating to its issuance of 3,436,500 shares of new TMSF REIT, Inc. stock at a price of $14.75 per share. This Research Note is to expand on our October 5th note and clarify the timing of the conversion of TMSF Holdings, Inc. into TMSF REIT, Inc., to present the reasons for the conversion, and to present the events that must happen before the conversion is completed. As we have stated previously, due to the success of TMSF Holdings' management as a mortgage banker in buying and selling mortgage loans, we are maintaining our Strong Buy Rating on TMSF Holdings.
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Touchstone To Resume Double-digit Earnings Growth In 2006; Strong Buy Rating Maintained
Sally H. Wallick, CFA
October 05, 2005. We are maintaining our Strong Buy rating on Touchstone's (OTCBB: TASA) shares for two reasons: (1) We believe that the strong flow of business in recent periods, as well as this year's complementary acquisitions, positions the Company to resume double-digit earnings growth in 2006 and (2) at 11.8x projected fiscal 2006 earnings per share, we believe that the share price discounts recent revenue and earnings shortfalls. Touchstone's third-quarter revenue increased 3% to $3.0 million. A modest revenue decline in the proprietary assessment products and services division was offset by a revenue increase at custom test products and services. The period's revenue fell short of our estimate as a result of deferred revenue of $684,123. Had this revenue been booked in the third quarter, revenue growth would have been nearly 27% year over year.
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Arcadia Resources Opens Home Health Care Product Stores in Six Sears Locations in Detroit - Reiterate Strong Buy
David Riedel
October 05, 2005. Arcadia Resources (OTCBB: ACDI) and Sears, Roebuck and Co. announced recently a multi-year agreement under which will sell Arcadia merchandise and services within selected Sears stores. Recently, the company announced that they have launched these stores-within-a-store" in six Sears locations in the Detroit area. Arcadia will operate this business under the name "Sears Home Healthcare'. We reiterate our Strong Buy rating on Arcadia shares and our $4.00 price target.
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O2Diesel: Financing Announced
Sally H. Wallick, CFA
October 05, 2005. O2Diesel (AMEX: OTD) has entered into a common stock and warrant purchase agreement with an European investor for total proceeds of $2.3 million. We rate the Company's shares Speculative Buy. We believe that potential catalysts to boost the share price could include additional capital infusions that strengthen the Company's financial position and/or acceleration in revenue growth.
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Conversion of TMSF Holdings to TMSF REIT; S-4 Filed; Maintaining Strong Buy Rating on TMSF Holdings
Richard W. West, CFA
October 05, 2005. TMSF REIT, Inc., the new real estate investment trust that TMSF Holdings, (OTCBB: TMFZ) is converting to, made its first appearance on the investment scene with an initial SEC information statement/prospectus filing relating to the issuance of 3,436,500 shares of new TMSF REIT, Inc. stock at a price of $14.75 per share. In effect, this means that for every five shares of TMSF Holdings, shareholders will receive one share of TMSF REIT when the registration is effective. It has already been approved by the written consent of the holders of a majority of the outstanding shares of TMSF Holdings. We are maintaining our Strong Buy Rating on TMSF Holdings
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Access Integrated Technologies Inc.: Wall Street Journal Article Underscores Favorable Trends in Digital Delivery; Rating Remains Speculative Buy
Jonathan H. Ziegler, CFA
October 03, 2005.  The Wall Street Journal Weekend Edition on Saturday/Sunday October 1, 2005 ran a cover story entitled Better Mousetrap In Shakeup, Disney Rethinks How It Reaches Audiences. We view this as a worthwhile read for those investors interested in Access Integrated Technologies, Inc. (AMEX: AIX). It portrays the momentum and importance of digital delivery at one very large studio under its new CEO, Robert Iger. Our rating for Access IT shares remains Speculative Buy.
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Arcadia Resources Raises $30 Million in Major Financing; Use of Proceeds Not Identified; Reiterate Strong Buy Rating and $4.00 Price Target
David Riedel
October 03, 2005.  Arcadia Resources (OTCBB: ACDI) announced today that they have raised $30 million in a financing. Though the use of proceeds was not disclosed, this is much more than the Company needs to finance current operations and likely indicates that a major acquisition is brewing. We reiterate our Strong Buy rating and $4 target price.
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Chapeau, Inc., d/b/a Blue Point Energy, Inc. Announces Order for Lean-One® Chip Module; Neutral Rating Reiterated
Richard W. West, CFA
October 03, 2005. Blue Point Energy announced on September 30 that it received a purchase order for their Lean-One® CHP Module, to be installed at the Frank Hagel United States Federal Building in Richmond, California. With the new Lean-One® CHP Module order and the movement on the four established projects, Blue Point Energy is now apparently progressing toward meaningful revenues. We are encouraged by these events and the prospects for future revenues. In a Notification of Late Filing filed with the SEC on September 28 Blue Point indicated that for the year ended June 30, 2005, revenues were approximately $330,000, compared with revenues of $170,500 for the year ended June 30, 2004, and the approximate net loss for the year ended June 30, 2005 was $2,899,000, compared with a net loss of approximately $3,457,000 for the year ended June 30, 2004. We will review our Neutral rating after the filing of Blue Points' SEC form 10K for June 30, 2005, and will then publish an Updated Research Report.
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Elron Electronic Industries: New Investment in Broadband Services and Software, Recent Price Weakness Widens NAV Discount to 25%; Reiterate Strong Buy Rating
Barry Raeburn
October 03, 2005. We continue to believe that, at an almost 25.3% discount to NAV, the stage is set for out performance for Elron Electronic Industries Ltd. (NASDAQ: ELRN) shares. Minimally, we believe with such a discount there is sufficient downside support for the stock.

The recent announcement of the new investment in Gaia Broadband Services Management Ltd. shows that portfolio activity remains at a high level. The company recently declared a cash dividend of $3.00 per share, totaling approximately $89 million. This dividend payment was a direct result of successful investment activity over the last 12 months. Recent price weakness after the dividend payment has created a compelling opportunity, in our view. The discount to NAV is significant and has widened to 25% from 16.5% in early September. We maintain our Strong Buy rating and 12-month price target of $15.
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Pipeline Data Applies for Listing on American Stock Exchange; View as Positive for Company, Profile and Outlook; Strong Buy
David Riedel
October 03, 2005. Pipeline Data (OTCBB: PPDA), a leading provider of credit card processing services, has applied for listing on the American Stock Exchange. While this process can take many months, we believe that being listed on the AMEX would be a significant positive for the Company. Anecdotal evidence indicates that becoming listed on the AMEX is positive for the share price and trading volume. Such a listing expands the base of institutional investors who can invest in the shares as well as raising the profile and credibility of the Company. Currently trading at just half of our target price of $2/share (based on comparable industry transactions and a valuation of their portfolio), we believe Pipeline is considerably undervalued. Listing on the AMEX would, we believe, raise the profile of this Company and highlight its undervaluation. We reiterate our Strong Buy rating.
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