I am going to touch on a lot of stuff in this post so bare with me. Some of it is on how I found some of the recent Net-Net big gainers. You might want to put the coffee on. This one is full. Skip down to LDIS and IFON at the bottom if you are in a hurry.

Usually when I find a Net-Net (net current asset) stock that I like it is in a nasty downtrend and pretty much for lack of a better word, dead. These next two that I just noticed are a little different because they've already had a good run and have some good price action going for them. Before I get to them though I want to add a little more clarity on the last couple Net-Net's I posted on. SDBT and ACTS.

SDBT looks like the downtrend is over technically I feel but I'm not as confident on a buy and hold contrarian play if you will without cutting a loss because they don't have the kind of business model that a lot of successful Net's I've seen have. It looks good here technically but if it breaks this trend line and falls below $2 this rally is probably going to stall or fail. I first posted on SDBT in December of last year actually when the stock was bottoming in the $1.20s.

ACTS I wanted to get on the blog because it is less than net cash and these are usually good to follow. Net cash stock Soapstone SOAP that I posted almost exactly a year ago looks like they are going to liquidate for a total of $4.00-$4.50. Much different financial statements but there's often good trades or value to be had in net cash.

The best thing with ACTS I saw about it though was the run it has been having with the overall market and the nice action on the uptrend. I put it up real fast and didn't talk about the price action until Jae left a comment. I like the net cash but I appreciate the technicals more so right now. If it continues the run to $2.20's or does some good volume at $2.10 it looks real good. If this keeps falling to $1.80s it might easily re-test the lows.


Now, to the second half of the post on what I've been doing and not doing with Net's these past several months. I haven't been scanning for them with fundamental screens as much until just this past week. Well, I actually took a little bit of time for that awhile back when I found HURC, MLR, AEY and JOB and put them into one post.

It was pure technical analysis scans that put these recent big gainers right in front of me. Even before the fundamentals shifted and news came out with PIR. I found PXG at $.12, PIR at $.12 and AERG the day before its 122% run from other technical scans that had zero fundamental data in them. Check out the very bottom of this post on PXG before I even realized it was a Net. I saw PIR in an unusual volume scan at $.12 which was right at the bottom. PIR hit just over $2 a month and a half later. Over a 1,600% return. I can't remember if the candles helped it stick out on PIR or if it was just the ROC and volume. Candlesticks mostly spike big anyway on a high volume spike. AERG was a spike day and long candle.

It's funny I just felt like sharing more on my technical scans because I just answered an email from someone asking how I screen for Net-Net's. I gave them the two free fundamental screens I like to use at Grahaminvestor.com and Zacks.com.


Net-Net's LDIS & IFON
LDIS had a good week even though the market sold off. LDIS has $27 mil in NCAV and a market cap of $21 mil. They aren't profitable. They sell LED's for the flashes in cell phone cameras and audio circuits for different products. Dialectic Capital Management LLC had 10% of the float as of March. This might seem crazy but this company has little fundamentals going for it (unless next quarter is great which I'm interested in) but is gang-busters since early January. That is a very nice uptrending chart.















Check out these back to back volume spikes. Recently, so far, when they come back to back like that the stock has kept the move going. This stock hasn't been correlated to the Nasdaq except for the beginning of the year. This stock was actually rising in the last market correction this year. As of now I want to be a buyer of this stock on a pull-back off that trend line.















I found IFON in one of my trading screens over last weekend because this thing jumped off the screen technically at me. I put it in a post or on Twitter the other day. I didn't check the balance sheet until a couple days ago. Some of these fundy's were jumping a little to.

$25 mil NCAV
$24 mil market cap

They distribute wireless handsets in Central and South America and distributes high-end products under the Verykool brand name. They posted a profit in Q1 of $.02 vs a loss of $.03 year over year. They drew down $21.5 million of the $45 million credit facility.

They have zero long-term debt and have been reducing their short-term debt every quarter since June 2008.

This big a run so fast makes me a little nervous but I'm watching it for a breakout especially over $2 for a buy or a flag to form with some kind of technical signal.

































full disclosure: no positions at time of writing

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I first put net current asset stock PXG on the blog back in April because I noticed it was a net-net and hadn't had a big run-up like the rest of the industry. I really wish this wasn't so thin. 10,000 shares a day is average volume. $4 million market cap and net current asset value of about $6 mil. Drew some resistance lines to show what it is going to have to take out and hold before it runs again. The purple line shows the trend line. It is still intact and the stock is probably going to test it any day now.










































full disclosure: no position

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Cash has been declining since 2006 when they had $137 mil. I didn’t see a SEC filing in 2009 but in December 2008 they had $45 mil in cash and $201 mil in marketable securities which look liquid from the note at the bottom saying they are less than one year. So, looks like we have a little cushion at less than net cash. I'm not 100% sure how many shares are outstanding right now but it looks like 78 million. Looks like we have some good cash flows to. They have been buying back shares. This is a Chinese semi.

Net Cash & Securities $244 mil
Market Cap $156 mil

















full disclosure: no position
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Look for another fade in ZN. Sell volume looks like it's getting short-term exhausted though so be careful. Might be choppy. I missed the usually 70%+ accurate short set-up off that mini supernova.















It doesn't get much more bullish than this. A breakout gap on PALM a couple days ago in an uptrend. Institutions will probably continue to be all over this still.















SLNH Threw this one on Twitter couple days ago. This thing's going to sell off any day now. Almost epitomy of a Sykes Supernova. I don't get his alerts by the way.















IFON going long goes well with a 10/60 SMA cross. I think it could start to consolidate here and trade sideways but keeing on watch for a breakout.















TSTR looking good for a long on a day trade.

















full disclosure: no positions

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I posted the set-up in MEA on June 18th.















Since then the stock is up over a point and got some nice big blocks of shares changing hands. I might put some on off a pull-back. I guess technically speaking we have more of a rounding bottom formation but the break over resistance is significant. Looks like it is going to flag and maybe retest that new support. The way it has been trading on the daily charts as far as candlesticks makes it hard for me to get a good read on this last candle. But the technicals are good right here on a pull-back that moves off that longer support line.

Metal recycling and this stock has a little to do with what I've been thinking about as a future trend few might realize right now. All these heavy cars we are driving around for the next decade or so are probably going to be worthless when unleaded gas hits $8 a gallon. What's going to happen to all these cars? Could be a future business venture. Surely though inventing alternative transportation and energy is a sure thing to.

















full disclosure: no position at time of writing

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I didn't actually find this one in a scan, rather, it was on an old list from a screen or something. At first thought it could possibly be a potential liquidation play but this thing has started to bottom out with the rest of the market.

SoundBite Communications SDBT is illiquid and not a top favorite but it has some interesting things going for it that make it a good watch. First of all the stock has about $33.8 million in net cash vs a $38 mil market cap. They have $37.622 million in cash and have burned through only about a million in the last year. No long-term debt. They grew the top-line pretty well from 2006 to last year. Revenue grew year over year consecutively. The interesting thing is it broke the downtrend and has bottomed out with confirmation on the break over $2.















full disclosure: no position

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Back in early March just days before the rally I was considering the possible returns of a Net-Net portfolio when the market rebounded. I never built the diversified portfolio of Net stocks like I was thinking of. This turns out to be good and bad. Part of the reason I didn't build it had to do with the fact that the data can be back-tested with the right database and software. Grab a cup of coffee and relax this post is a long one.

The other part is I've never been a fan of over diversification. Why accept market like returns? I understand the validity of it with Net-Net's but I like capital appreciation and would rather be a stock picker with them because I can be a very good one. This quote below has always made sense to me when it comes to anything investing wise and it can be applied to about anything financial.

to carry ones eggs in a great number of baskets without having time or opportunity to discover how many have holes in the bottom is the surest way of increasing risk and loss. -John Maynard Keynes

In this post is a lot of the Net-Net's I cherry picked recently and over the financial crisis led market death spiral. Here is the post with the links to most of the net-net's that I selected bottom up based on their qualitative and quantitative attributes. If you go back and look at a lot of those Net-Net's in that article and ones that I didn't even include in it like Pier One PIR that had an astounding 1,700% return from its March bottom I was onto actually.

"Pier One PIR is desperately trying to bottom. Lot of buyers at $.12. Stock is about 30% of NCAV mostly inventory. Long-term debt is stable but it's a crap shot."

The technicals said go but most of my thoughts on the fundamentals said don't buy. The net current asset valuation was the writing on the wall though and I ignored it because I think to much which is usually a good thing. Well, I did find it interesting with the sub NCAV valuation and that is why I posted it and mentioned it for anyone interested. I guess it was also partly being afraid to be contrarian because of the unique economic crisis we have been going through.

The lesson is always go with a stock below net current asset value that jumps off the screen on me. They usually will outperform like a Finish Line FINL or Heelys HLYS. Finish Line ran 170% after I posted on it and Heelys 30%. Tuesday Morning TUES was on the blog at $1 in February and hit $3.90. It goes on but I think you get the point.

What Pier One PIR and all those amazing returns tells us is that Net-Nets(net current asset values) can be useful as a contrarian strategy but more importantly can be individually picked versus diversifying if you pick them like me. If I had gone with a diversified portfolio instead or market-cap weighted I imagine the results would have been more on par with the overall indices and small-cap market.

Many Net-Net's have done quite well after I post them on the site as you can see. My accuracy with them on the blog and the ones that I didn't even include in those previous articles like MLR's 30% run after I picked it and so on has me considering charging a small monthly fee for access to my best Net-Net stock selections and contrarian picks (see Best of on righthand side-bar for just a portion of them).

I don't have the time to scan for short-term momentum trades like I do for my trading everyday and do the time consuming heavy research that is needed into companies for investing. I'm getting to a point where I need to get compensated for my time on fundamental analysis picks like Net-Net's.

Stock Pursuit is by far the best site for Net-Net picks. It is often imitated but never trumped. This includes many other sites and blogs that will only post one hit wonder articles on the strategy and its history with maybe a dozen random stocks meeting the criteria. No other site that I know of posts as frequently and consistently strong returns from their Net-Net picks as Stock Pursuit does.

Google is with me on this as Stock Pursuit ranked 4th out of 117 million other sites for "stocks below net current asset value" and in the top 10 out of 4.7 million for "net current asset stocks". Google ranks sites based on authority and frequency of new content.

This blog will always keep going though with free content in one form or another so any pay site I do will be on a different site all together possibly. All of this subscription model depends on the momentum I can get going forward. I might include my pure technical picks as well on another site. Either or both of these might be moving to my domain DynamiteStocks.com We aren't talking expensive here. Maybe $1 to $5 a month. There will probably be a poll on the site sometime soon to see what readers and new visitors want so I can get the logistics in order to best serve you.



full disclosure: no positions

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Keep a heads up for an important post on net current asset stocks and my potential plans for dramatically changing what I do with my content on this blog.
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Metal recycling company MEA is trying to breakout over major resistance on good volume. Keep an eye for a retest and run.















ESLR had a failed breakout. That makes it a short. Sorry I'm a couple days late on it for a short. Might pick up some support here but watch for further downside.














TLB














Make sure it isn't high above Bollinger Bands if you buy it.















full disclosure: no positions

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