Ben Graham Net-Net EFJI

EF Johnson Technologies EFJIMost of their business is from wireless radios. They sell wireless communications equipment with a large base of their customers being the government.

Major Customers
The U.S. Department of Defense was approximately 15%, 62% and 16% of consolidated revenues in 2008, 2007 and 2006. DRS Technologies, Sprint/Nextel, and the State of California are significant customers, representing 13%, 12% and 12%, respectively, of consolidated revenues in 2008.

Valuation
At $1.24 a share market cap is $32.74 mil and net current asset value is $39.41 mil. Net current asset valuation is a quick rough liquidation value. However, in this particular case almost 50% of NCAV (net current asset value) is comprised of inventory sitting in storage. In the event of an actual hypothetical liquidation it would very likely yield much less than the amount on the companies books.

2009 earnings per share have been boosted it appears to $.06 and a sole analyst expects $.10 for 2010. At 1.24 a share this is only about 12 times earnings and they could continue to grow over 50%. This asset valuation and trailing 2009 PE multiple of 20 seem nuts to me. Nuts meaning it might still be undervalued.

On the 15th of September volume soared and the stock flew on the back of a press release for their new Hybrid IP25 first responder radio system and 2 new military contracts for the radios on the 15th. I would have loved this stock at $1.00 because of the larger asset valuation cushion and also because of the price action. I believe the stock could have a pull-back soon which I explain in the following charts and I am going to wait a day or two to see what develops.



In the above chart we can see that there could be strong support right around $1.00.



The green line on ADX contracting worries me a little right now



It's running on heavy momo(momentum) right now being that it is hugging the upper band. Some people could take some profits soon.



The arrow on the right shows how buying volume is trending downward day to day which worries me that buyers might be getting exhausted in this round up for now atleast. Plus the doji candle two days ago and a shooting star candle Friday. The momo could very well continue for awhile but I feel more comfortable waiting just a day or two for either a pull-back or some other sign buyers are committed right now.


full disclosure: no position at time of writing

Strong KEME

I haven't traded any of those ETF's like I was thinking about like SRS or a short on the Nasdaq. This market continues to be incredible as far as the confidence in equities even with higher valuations. I'm not going to short any indices soon. I put this momentum penny stock KEME at the top of my watchlist the other day and ended up longing it at an average basis of $1.48 a share. It failed to breakout then has just seemingly re-tested and printed a hammer today. I'm looking for a breakout to sell into and add to my 7% profit so far. If it gets hung up again on the breakout and doesn't look strong I'll probably take the gain or cut it break-even to slightly down. This hammer looks really good to me though.





full disclosure:long

Net-Net LDIS Is Liquidating

I just wanted to do an update on LDIS. In this press release they say they want to get a liquidation from between $.93 to 1.20 per share. This is right on the back of a Nasdaq deficiency notice for a low share price and it requires that the share price must now trade at $1.00 in the next 180 days or it could be delisted. I first noticed LDIS when it was at $.73 back in July. I can't seem to find a net-net I like that doesn't do well lately. Even net cash stock ACTS from awhile back has performed well. As of right now I'm not going to buy LDIS.


I sold INHX at $1.21 today from a $1.20 buy because I got a bad feeling about this action the past several days. They got some media? coverage I guess on a Seeking alpha article and a $2 target by Zacks. The thing I didn't like about that was it did boost the price into that breakout I was looking for but it looked like a bull trap and nasty shooting star to me plus I've got some back to back winners and taking a commission scratch on this one will probably be some good risk management that I need. It is still looking strong but I'd just rather buy the next big break if it comes.
















full disclosure: no positions

Real Estate Index In Trouble

Existing home sales fell very unexpectedly it seems.

I'm a day late in catching this perfect set-up but I think there will be some continuation. Maybe a lot of continuation. When I first saw the candle the arrow points to I thought it was a pure shooting star but it is more of a doji which is just as ugly being at the top of this chart. These two spike days back to back look very bearish plus that half shooting star/doji, plus the fundamentals.

I'm hoping for a pull-back so I can get long UltraShort Real Estate ProShares (SRS). If it gaps down I might go long to. The risk of taking this trade for more than a day or two is there is good support at 11.00 to 11.20 in SRS(the line) and it will probably bounce around before another big move.





full disclosure: no position in SRS, IYR

ABK Ambac Financial

ABK's consolidation here around resistance is forming a nice looking triangle. It's congesting right around resistance which is very bullish. Add that healthy consolidation and this is a good set-up for a buy here on any pop in price. Especially on heavy volume over 1.81. I'm going to front run it and nibble on it here today. These are the kind of set-ups(triangles) that have been working so well lately.
















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ABK really gave off some easy signals to read in hindsight. There was a hammer at the bottom on 8-17 and a doji off that recent consolidation.



full disclosure:no position at time of writing. Order pending.