Trade recap for May 12th

Mentions of AEHI in chat:
[May 12, 2010 12:00:56 PM EDT]     JC      AEHI hod
[May 12, 2010 12:17:32 PM EDT]     JC    AEHI seems pumped hmm
[May 12, 2010 12:22:32 PM EDT]     JC    frigging… AEHI new hod
[May 12, 2010 12:24:59 PM EDT]     SteveS    AEHI how high will that go?!
[May 12, 2010 12:28:03 PM EDT]     Reaper    AEHI omg
[May 12, 2010 12:28:09 PM EDT]     JC    wtf…AEHI..
[May 12, 2010 12:30:28 PM EDT]     Reaper    shorting a bunch of AEHI … very risky
[May 12, 2010 12:30:46 PM EDT]     Reaper    short 3100 AEHI @ .97055

IFLG a nice short (in SogoElite, not shown below):
[May 12, 2010 2:57:57 PM EDT]     Reaper    shorted 1k IFLG @ 5.35 @ sogoelite … very tight 10 cent stop
[May 12, 2010 2:58:50 PM EDT]     Reaper    I like the big offers on IFLG @ 5.37 and 5.40
[May 12, 2010 3:05:59 PM EDT]     Reaper    covered 500 of my IFLG @ 5 still short 500
[May 12, 2010 3:09:42 PM EDT]     Reaper    out IFLG @ 5

My trades today (except those at SogoElite):
BOT    1,000    AMEL    false    Stock    1.3100    USD    SMART    10:26:48        5.00
BOT    1,000    AMEL    false    Stock    1.3100    USD    ARCAEDGE    10:27:22        5.00
SLD    2,000    AEHI    false    Stock    0.9300    USD    SMART    12:27:34        9.30
SLD    100    AEHI    false    Stock    1.3400    USD    SMART    12:28:53        1.00
+    SLD    1,000    AEHI    false    Stock    1.030    USD    SMART    12:30:22        5.00
BOT    1,500    AEHI    false    Stock    0.6000    USD    SMART    12:45:10        4.50
BOT    1,600    AEHI    false    Stock    0.6500    USD    SMART    12:58:53        5.20
+    BOT    5,000    DIVX    false    Stock    7.235    USD    SMART    15:48:17        25.00
+    SLD    2,500    DIVX    false    Stock    7.300    USD    ARCA    15:48:52        12.50
+    SLD    2,500    DIVX    false    Stock    7.400    USD    ISLAND    15:49:12        12.50
+    SLD    500    DIVX    false    Stock    7.510    USD    SMART    15:50:58        2.50
+    BOT    500    DIVX    false    Stock    7.550    USD    SMART    15:54:12        2.50

09:53:31    PRWP    B    0.8    1630    NITE
10:22:18    PRWP    S    0.83    1185    NITE
10:19:11    PRWP    S    0.83    445    NITE

Daily profit: $2,193.60

AEHI Intraday chart
aehi

Disclosure: No positions in any stocks mentioned. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

Trade recap for January 22nd: It is a wonderful thing to be flat

Not too terribly exciting of a day, but profitable and a nice end to the week. I hope you don’t mind too much my singing at the beginning of the video.

Trades at IB:
SLD    705    ICXT    false    Stock    7.30    USD    ISLAND    09:33:48        3.52
+    BOT    705    ICXT    false    Stock    7.230    USD    ISLAND    09:34:11        3.52
BOT    200    IDN    false    Stock    3.2800    USD    AMEX    10:24:39        1.00
SLD    200    IDN    false    Stock    3.3000    USD    ISLAND    10:26:38        1.00
+    SLD    2,000    IDN    false    Stock    3.110    USD    ARCA    14:54:32        10.00
+    BOT    1,000    IDN    false    Stock    3.020    USD    AMEX    15:20:29        5.00
+    BOT    700    IDN    false    Stock    3.040    USD    DRCTEDGE    15:27:05        3.50
BOT    300    IDN    false    Stock    3.0400    USD    AMEX    15:30:31        1.50

Daily profit: $490.30

Weekly profit: $1450.70

Disclosure: No positions in any stock mentioned. This blog has a terms of use and you can find all my disclaimers and disclosures there as well; my full terms of use is incorporated by reference into this post.

Trade recap for December 14th

Another day where I traded a lot of SNSS.

Daily profit: $733.16

Trades at IB:

+    BOT    2,500    SNSS    false    Stock    2.220    USD    ARCA    09:31:21        12.50
SLD    2,500    JYHW    false    Stock    0.7150    USD    ARCAEDGE    09:32:22        8.94
+    SLD    2,500    SNSS    false    Stock    2.300    USD    SMART    09:32:32        12.50
+    BOT    30    BRK B    false    Stock    3,300.933    USD    NYSE    14:13:11        1.00
SLD    1    BRK A    false    Stock    99163.00    USD    NYSE    14:14:05        1.00
+    BOT    800    SNSS    false    Stock    2.110    USD    SMART    14:24:30        4.00
+    SLD    800    SNSS    false    Stock    2.120    USD    ISLAND    14:27:43        4.00
BOT    300    BHWX    false    Stock    0.9000    USD    SMART    15:59:00        1.35

Disclosure: Long 300 BHWX, short 30 BRK-B, long 1 BRK-A. No positions in anything else mentioned in this post. I have a disclosure policy and you can find all my disclaimers there as well; those disclosure & disclaimers are incorporated by reference into this post.

Trade recap for November 17th: My pathetic inability to trade supernova NLST

Another disappointing day; I captured less than 1/3 of the profit that I should have had in NLST. Still, another $1k+ day.

Trades at IB:
SLD    1,000    IMGG    false    Stock (OTCBB)    1.6400    USD    ARCAEDGE    09:43:02        5.00
SLD    500    IMGG    false    Stock (OTCBB)    1.6400    USD    ARCAEDGE    09:43:33        2.50
BOT    500    IMGG    false    Stock (OTCBB)    1.4350    USD    ARCAEDGE    10:20:52        2.50
BOT    500    IMGG    false    Stock (OTCBB)    1.4600    USD    ARCAEDGE    10:21:39        2.50
BOT    500    IMGG    false    Stock (OTCBB)    1.4700    USD    ARCAEDGE    10:22:23        2.50

nlst

NLST 4 day chart
nlst4day

NLST 1 day chart
nlst1day

Daily profit: $1,574.43 (after adding in profit on position closed after-hours; see comment #1 below)

Disclosure: Short 5,000 shares of NLST. No positions in any other stocks mentioned in this post. I have a disclosure policy and you can find all my disclaimers there as well; those disclosure & disclaimers are incorporated by reference into this post.

Update on trading like Tim Sykes: $101,000 in profits

If you are not familiar with my history with Tim Sykes, I suggest reading The truth about Tim Sykes from a former critic, followed by my Update on trading Tim Sykes’ system, and Making money by buying stocks on my watchlist. I first started trading like Tim Sykes in June of 2006. I had initially been skeptical of his system but it was hard to argue with his performance. Before I bought his book and DVD and subscribed to his TimAlerts (I am now a lifetime subscriber), I first read every single one of his previous blog posts and I examined every single of his previous trades since he started blogging in November 2007 (his trades are verified on Covestor). If someone wishes to learn from Sykes and does not wish to buy his DVDs, I heartily recommend reading his blog posts to study all his previous trades.

From the very beginning I was successful trading based on Sykes’ alerts and using his strategy for my own trades. I have now surpassed $101,000 in total profit using his strategy. In terms of my total trading account, this is not a huge amount (I have a multi-hundred-thousand dollar account), but considering that I rarely use very much capital to trade in Sykes’ style and the trades are short-term, I have most of my trading capital available to trade my other trading strategies.

Below are a few stats on my trades this year and last. Like what you see? Why not check out Tim Sykes’ DVDs? I recommend Pennystocking Part Deux and TimFundamentals Part Deux (I own both). I don’t recommend TimTactics.

Total profit in 2009: $53,323.78

Watchlist longs (stocks I buy based on my own watchlist): $1,765.69
Weighted average profit margin: 1.45%

Other self-initiated trades: $26,689.68
Weighted average profit margin: 0.95%

Trades based on TimAlerts: $21,314.40
Weighted average profit margin: 1.65%

Total profit in 2008: $48,224.60

Self-initiated trades: $30,991.11
Weighted average profit margin: 3.92%

Trades based on TimAlerts: $17,233.49
Weighted average profit margin: 1.10%

timprofit_11-11-09
(Note: the above chart does not include my profits from my watchlist longs, currently at $1765 since June 2009)

Biggest winners 2009

Here are some of my best trades this year.

ALAN    Short    12550    5/14/2009    $1.012    —  Cover    5/14/2009    $0.605
Profit: $5,104.96    40.21%
Stockpreacher pump, shorted into biggest volume around 1, exhausted all IB borrows quickly; was up from 0.48 previous day; goal was to cover around .60
ALAN    Short    44500    5/14/2009    $1.009    —  Cover    5/14/2009    $0.734
Profit:  $12,217.48    27.21%
As above, in other acct, messed up big time; hit buy instead of cancel, and bought 9300 at 1.03 right as I achieved my full position (this is reflected in the average prices; so I really only took 36k shares from 1.01 to .63)

SPNG.ob    Short    20000    6/12/2009    $0.177   —  Cover   6/15/2009    $0.125
Profit: $1,041.20    29.43%
had death drop from .28 to .08, shorted (with tim) on bounce on a Friday, covered after almost 30 straight minutes of slow drop next Monday morning

SMTX    Long    2613    6/30/2009    $0.752    —  Sold    6/30/2009    $1.142
Profit: $1,019.07    51.86%
Stockpreacher pump, three separate buy orders all partially filled at .68, .755, and .78; sold near hod of 1.19 (little volume there; was significant volume at 1) and then immediately went short with all 4k shares IB had
SMTX    Short    4313    6/30/2009    $0.970   —  Cover    6/30/2009    $0.905
Profit: $280.00    6.69%
Stockpreacher pump, shorted quickly to get shares (IB only had 4k shares), shorted when up 40% from .68
SMTX    Short    35750    6/30/2009    $0.978    —  Cover    6/30/2009    $0.899
Profit: $2,831.40    8.09%
Stockpreacher pump, got plenty of shares shorting with best ask in other account; very aggressive position; an hour later only 220k shares had traded; Stockpreacher losing his mojo; covered 10k after a few hours, covered rest 2 hours before close when big size on ask started getting eaten

OPXA    Short    1000    9/9/2009    $4.459    —  Cover    9/10/2009    $3.874
Profit: $585.10    13.12%
Tim shorted 30 minutes after me; up from 1.50 to 5.65 the previous day on what was really a small subset of results from phase 2 MS drug trial, shorted when down 20% on day but broke below morning’s lows (not absolute lows, but lows with volume at 4.50), averaged into position; looked to hold overnight, but couldn’t resist covering into drop below lods 30 minutes before close
OPXA    Short    1000    9/9/2009    $4.459    —  Cover    9/9/2009    $4.184
Profit: $275.10    6.17%
Tim shorted 30 minutes after me; up from 1.50 to 5.65 the previous day on what was really a small subset of results from phase 2 MS drug trial, shorted when down 20% on day but broke below morning’s lows (not absolute lows, but lows with volume at 4.50), averaged into position; covered 1k so the position wouldn’t be all my account overnight
OPXA    Short    2000    9/9/2009    $4.459    —  Cover    9/9/2009    $4.111
Profit: $697.20    7.82%
same as above, covered when TimAlert cover hit as it tanked a bunch
OPXA    Short    2000    9/9/2009    $4.459    —  Cover    9/9/2009    $3.969
Profit: $980.20    10.99%
same as above, covered more when it broke $4 and then bounced … was down 30% on the day then so I doubted it had much more; looked to hold 1k overnight

XSNX.ob    Short    35000    9/10/2009    $0.202   —  Cover    9/10/2009    $0.156
Profit: $1,612.10    22.82%
Stockpreacher / Beacon Equity pump from .12, shorted right at highs of .21 and 10k again after Tim Sykes alerted

Biggest losers 2009

Here are some of my worst trades of 2009.

CBOU    Long    19500    7/20/2009    $4.951    —  Sold    7/20/2009    $4.800
Profit: -$2,944.50    -3.05%
TimAlert, he shorted @ 5, I thought he bought, so I bought; oh crap. Then I shorted but at crappy price (4.78) which added $900 to my loss

GVBP.ob    Short    18500    9/14/2009    $0.396    —  Cover   9/15/2009    $0.633
Profit: -$4,395.42    -60.06%
TimAlert, true pump and dump, were shares available at IB sho Tim shorted into +40% morning spike, I took the rest of the available shares; covered when Tim covered

OPTT    Short    5000    10/14/2009    $7.695    —  Cover    10/14/2009    $7.970
Profit: -$1,375.00    -3.57%
shorted 4 minutes after open on red, first down day after one 50% up day, had faded last hour of previous day, hit a lod of 7.56 and then quickly jumped green and I got out as quickly as I could

Biggest winners 2008

Here are some of my best trades from 2008.

USS    Short    7000    7/29/2008    $4.030    —  Cover    7/29/2008    $3.336
Profit: $4,852.77    17.20%
USS    Short    3000    7/29/2008    $4.027    —  Cover    7/30/2008    $2.725
Profit: $3,904.17    32.32%
I made up for my earlier loss by shorting this supernova.

GFET    Short    22100    8/11/2008    $0.300    —  Cover    8/12/2008    $0.231
Profit: $1,521.78    22.99%
up 300% on no news; shorted during morning panic, didn’t spike back up; held o/n

COIN    Short    11500    9/4/2008    $5.592    —  Cover   9/5/2008    $5.363
Profit: $2,628.26    4.09%
shorted on breakdown of 5.80 resistance level in afternoon; crappy entry due to BSOD on computer; added on bounces

VM    Short    4600    9/22/2008    $3.293    —  Cover    9/22/2008    $2.864
Profit: $1,974.96    13.04%
huge one-day spike in last minutes of previous day, companies with similar spikes OMN, RTK, NGD all tanked pre-market, so I shorted at open; covered as it got close to 2.75 from before the spike and big bidders appeared at 2.82

SIL    Short    32000    9/24/2008    $3.321    —  Cover   9/25/2008    $2.685
Profit: $20,368.00    19.17%
shorted a bunch on green to red after noon, shorted more on attempted break of 3, covered many times, shorted more on bounces; held full position overnight; covered as it dropped

VLKAY    Short    100    10/28/2008    $192.990    —  Cover    10/30/2008 $143.735
Profit:   $4,925.50    25.52%
shorted more on short squeeze; covered prior to forced buy-in

Biggest losers 2008

Here are some of my worst trades from 2008:

USS    Short    5000    7/28/2008    $4.500    —  Cover    7/28/2008    $4.935
Profit:  -$2,176.25    -9.67%
This was an accidental trade due to placing my limit order too low at ThinkorSwim to reserve shares to short.

COIN    Short    4200    9/4/2008    $6.000    —  Cover    9/4/2008    $6.263
Profit:  -$1,102.92    -4.38%
Shorted at break of 6.00 on TimAlert; got whipsawed out and covered as it bounced to 6.25 (Tim and others held)

WRSP    Short    7073    9/19/2008    $1.359    —  Cover  9/24/2008    $1.683
Profit: -$2,296.53    -23.90%
shorted on second up day from .7 to 1.1 … didn’t wait for first down day to assure getting shares, averaged up; covered in next couple days when volume died; later spiked to 1.90

VLKAY    Short    100    10/27/2008    $109.990   —  Cover   10/30/2008    $143.735
Profit: -$3,374.50    -30.68%
Up 100% on massive short squeeze; Volkswagen ADR; Previous big bump month ago on short squeeze led quickly to drop off; was first big up day; should have waited until next day to short; gapped up next day

Disclosure: No positions in any stocks mentioned in this post. I receive a commission for every DVD bought through my affiliate link to Sykes’ web store. To see more details on my relationship with Sykes, please see my disclosures. I have a disclosure policy and you can find all my disclaimers there as well; those disclosure & disclaimers are incorporated by reference into this post.


GFET Short 22100 8/11/2008 $0.300 $6,620 8/12/2008 $0.231 $1,521.78 22.99%

eOn Communications (EONC): Up on earnings or hype?

I sold short a number of shares of eOn (Nasdaq: EONC) today, realizing $1176.40 in profits and retaining a 2000 share short position over night (I tried to sell short more shares on a spike but my main broker, Interactive Brokers, ran out of shares and the spike faded before I could short in my secondary brokerage account) . I initially shorted in response to a trade alert from Tim Sykes (sign up for TimAlerts here) although I re-shorted once I realized how good of a potential short EONC was. Sykes is one of the few day traders around who uses fundamental research as well as technical indicators to decide how to trade.

After Sykes shorted EONC because

this company is up 100% today on “positive” earnings on an apparent 50%+ increase in revenues…what they fail to mention is that that increase is only due to including revenues numbers from an acquisition and without it, revenues actually dropped because their products aren’t in great demand. Not to mention these “positive earnings” might get a lot of hype from today’s PR but they’re nothing new, here’s the SEC filing from a week ago where they talk about revenues

Quote excerpted from the alert Syks sent to his TimAlert subscribers. See his post about the trade.

This trade is a great example of how traders can benefit from understanding fundamentals … the company’s earnings press release was not actually news because the information in it had already been released in the 10-k (annual report) the company filed back on October 29th. Normally companies release earnings in press releases as soon as the data are available, maybe a week or so before the quarter’s results are sent to the SEC in a 10-Q or 10-K. Considering that the company’s results were available for over a week, why did the stock spike over 100% today when the earnings report hit the newswires?

The likely reason for the stock spiking today is that most traders do not read the SEC filings before deciding what to trade. They take a brief look at Yahoo! Finance and look at the news there. Earnings releases are usually new information (because they usually precede the SEC filings) so stock traders and individual investors all bought EONC today in response to the ‘good’ news. As they pushed the price up it showed up on the screens of momentum day-traders who then bought en masse, sending EONC up even more. Even though the press release today caused the stock rise, it was not new information, so the stock will likely dive in the coming days.

How is eOn doing?

eOn’s business involves VoIP and telephone routing products. After a quick glance at the company’s recently filed 10-K, I am glad I am short and not long.

eOn, while it was profitable in its most recent two quarters, has never been consistently profitable.

For the year ended July 31, 2009, eOn had a net loss of $339,000. eOn has incurred substantial losses since inception through July 31, 2009 resulting in an accumulated deficit of $48,856,000. eOn may not be able to achieve profitability from operations in the future.

eOn was also only profitable in the most recent quarters because of its acquisition of Cortelco. While it earned $111,000 in the most recent quarter, it would have lost money were it not for the Cortelco acquisition (Cortelco has earned $430,000 since being bought by eOn and it has only been 4 months since the deal closed).

Financial results for the current fiscal year include net income of $430,000 of Cortelco Systems Holding Corp., which was acquired on April 1, 2009.

While the earnings press release from today noted that:

Total year revenue increased 52% to $10,645,000 from $6,994,000 in fiscal year 2008.

This is due entirely to the Cortelco acquisition. Here the company describes revenues in the 10-K:

Net revenue increased approximately 52% to $10,645,000 for the year ended July 31, 2009 from $6,994,000 for the previous fiscal year. The increase reflects $4,231,000 in Cortelco revenue subsequent to the acquisition on April 1, 2009, partially offset by lower eQueue revenue from products, maintenance and professional services, and lower Millennium revenue compared to the prior year.

In actuality, were it not for the acquisition of Cortelco, eOn’s revenues would have decreased by 8%! But an 8% decrease does not sound as good as a 52% increase, so the company chose not to put the 8% figure in the press release.

Related party transactions

One thing an investor never wants to see is related-party transactions. These are always red flags, indicative of a company’s executives enriching themselves at shareholder expense. Related-party transactions also sometimes accompany fraud. Here are some of eOn’s related party transactions. All quotes are from the most recent 10-K unless otherwise noted.

Let’s start with the chairman of the board, who was also CEO and president until June 2008. Here is an interesting transaction between eOn and Symbio:

On August 1, 2007 and August 27, 2007, the Company made strategic investments in Symbio of $500,000 and $400,000 for 250,000 and 200,000 shares, respectively, or approximately 3% of Symbio. Symbio is a China-based provider of software development, testing, and globalization outsourcing services to multinational companies. The investment is expected to establish eOn as a preferred provider of telephony and contact center solutions for Symbio’s outsourcing engagements requiring customer interaction management. eOn also gains the ability to provide Symbio outsourcing services to its customer base. Symbio is a privately held entity and the Company accounts for its 3% investment by the cost method.

At the time of the second investment in Symbio for $400,000, the Company received a put option from David Lee, effective beginning January 1, 2008 and expiring January 1, 2011. The put option allows the Company to sell to David Lee a maximum aggregate of 200,000 shares of its investment in Symbio for a per share price of $2.00.

In consideration of the put option, in the event that the 200,000 shares are sold without exercise of the put option before January 1, 2011, the Company has agreed to pay David Lee 50% of the proceeds in excess of $1,000,000.

So Lee entered into a derivative contract with eOn hedging the value of Symbio’s shares. Here is a question for management: if Symbio is worth investing in, is it not worthwhile for the company to retain all the upside of the investment?

Lee was also the controlling shareholder in Cortelco, which was acquired by eOn back on April 1, 2009. Here are some details on that transaction, from the press release announcing it:

In exchange for all the outstanding shares of Cortelco stock, Cortelco shareholders will receive an initial aggregate payment of $500,000. All subsequent payments will be made to Cortelco stockholders quarterly in an amount based upon Cortelco’s quarterly earnings after closing, less $25,000 quarterly distributions made to eOn until eOn has received $500,000. Contingent primarily upon the level of Cortelco earnings after closing, all Cortelco stockholders are eligible to receive quarterly payments in cash until the full $11,000,000 consideration has been paid. David Lee, Chairman and CEO of eOn, is the Chairman and the controlling shareholder of Cortelco.

Whenever an executive of a public company sells a private company to the public company, shareholders in the public company need to ask who benefits from the deal. Such transactions are rife with conflicts of interest.

Auditor issues

eOn’s auditor, GHP Horwath, receieved criticism from the PCAOB.

The inspection team identified what it considered to be audit deficiencies. The deficiencies identified in one of the audits reviewed included a deficiency of such significance that it appeared to the inspection team that the Firm did not obtain sufficient competent evidential matter to support its opinion on the issuer’s financial statements. That deficiency was the failure to sufficiently evaluate the appropriateness of the issuer’s recognition and presentation of revenue from certain maintenance service contracts.

While that does not mean that eOn is doing anything wrong or that their auditor is incompetent, it is certainly a negative.

Aggressive accounting

The company also has a bit of aggressive accounting:

The Company capitalized approximately $243,000 of software development costs related to a new IP PBX that is under development.

Capitalization of software costs is both allowed and required, according to FASB Statement No. 86, but it can only be capitalized once it is feasible. It is still software industry practice to capitalize very few software development costs. Furthermore, there are slightly different standards for software that is to be included with hardware. Here is what the FASB stated:

The Board concluded that both establishing technological feasibility of the software component and completing research and development activities for the hardware component are necessary for capitalization of software costs to begin.

As eOn states in their 10-K that the “IP PBX that is under development,” it does not appear to me to be eligible for capitalization of the software developed to run it. When I run my own calculations on the results of a company in this situation, I correct for the aggressive accounting, de-capitalizing the amount spent and expensing it instead, which of course reduces the company’s book value and earnings.

Incentive Payments on Cortelco Acquisition

One thing I hate to see is when a company acts in such a way to increase current earnings and revenues at the expense of future earnings. This was the crucial problem I identified with the master franchise agreements that Noble Roman’s used (Boston Chicken also used those back in the 1990s to generate nice earnings before ultimately heading into bankruptcy). It is hard to find a business idea worse than master franchise agreements. That being said, I also dislike earn-outs in acquisitions. Companies that purchase a company and then pay based partly on the earnings on the purchased company over a period of time lose out on a significant portion of the upside (although these agreements do somewhat mitigate downside risk). The quarterly payments that eOn will make to the former owners of Cortelco are as follows (quotes from the merger agreement):

For the first 20 Quarterly Payouts, each Quarterly Payout shall be equal to the sum of (i) the Adjusted Cash Flow for the Quarterly Payout Period, plus (ii) 50% of the Pro Forma Net Tax Savings, minus (iii) $25,000, plus (iv) the Quarterly True-Up. All subsequent Quarterly Payouts shall be equal to the sum of (i) the Adjusted Cash Flow for the Quarterly Payout Period, plus (ii) 50% of the Pro Forma Net Tax Savings, plus (iii) the Quarterly True-Up.

This indicates that for at least five years (and continuing until Cortelco shareholders have been paid $11 million), the former owners of Cortelco will receive all the earnings of Cortelco and 50% of the tax savings from the merger. Shareholders of eOn will get comparatively little.

1.2 Adjusted Cash Flow. The earnings of the Surviving Entity after payment of all expenses associated with the Surviving Entity before tax as adjusted as set forth on Schedule 1.2 attached hereto, calculated in accordance with GAAP and Schedule 1.2 of this Agreement.

Conclusion

The only good thing I can say about the company is that it has plenty of cash ($3 million as of the most recent 10-K). It is also a tiny company, with a market capitalization using the closing price of its stock today of $8.32 million. Considering the aforementioned red flags, the company’s long history of losses, limited upside from the Cortelco acquisition, and a tangible book value of only $5.4 million, I would have no interest in buying EONC stock and I am glad I am short it.

Learn more …

Want to learn how to read SEC filings like I can? It can help you whether you are a fundamental investor, fundamental short seller, or a short-term trader who uses fundamentals along with technicals. Check out my 10+ hour DVD on the subject. It has 5 hours of me and 5 hours of Tim Sykes (get a feel for how he looks at companies by seeing his post on EONC), with each of us talking about how we look through filings. Read more about the money I have made by understanding SEC filings. The DVD will sell for $497 but is currently available for only $397 for those who pre-order.

Disclosure: Short 2000 shares of EONC. I may close this position at any time. The SEC filing DVD is being produced and sold by Tim Sykes’ company Bullship Press LLC and I will receive royalties on every sale. I will also receive a commission for every DVD bought through my affiliate link to Sykes’ web store. To see more details on my relationship with Sykes, please see my disclosures. I have a disclosure policy and you can find all mydisclaimers there as well; those disclosure & disclaimers are incorporated by reference into this post.

Why I bought pumped stock Total Nutraceutical Solutions (OTC: TNUS) at 4pm today

Right at the market close I bought pumped stock Total Nutraceutical Solutions (OTC: TNUS) at its high of the day, $0.95. It was already up 82% on the day. While I missed playing it earlier in the day I heard credible rumors that it was going to be the BestDamnPennyStocks (BDPS) pump tonight and I liked the way it was closing strong, so I bought 2,000 shares right after the market close (I made this trade as I was recording my daily trade recap, so you can see me make the trade).

BOT    2,000    TNUS    false    Stock (OTCBB)    0.9500    USD    ARCAEDGE    16:00:34        9.50

tnus

Tonight I received the expected pump email on TNUS from BDPS:

My Huge 2009 Loss Eraser is TNUS
TNUS is a fairly new issue which means it has not been trading long as a publicly traded company.

New issues always fly once the spark ignites but you got to watch close for the technicals and time it perfect!

TNUS has been on my radar for 3 months and I have been waiting and watching close for these technicals to occur

Those technicals confirmed today and TNUS is about to ignite and should start running like wild fire starting tomorrow!

Notice The TNUS Chart the flat line with very little volume due to TNUS being brand new without a soul knowing about the stock.

Now notice the past four days of positive money flow and volume.

Today it really broke out and should keep running for another 4-5 days huge!

TNUS was on the #1 gainers list in the whole market today and I believe it could be on there tomorrow as well!
This right here is the beginning of TNUS igniting because the street is finding out and the company is ready to get the word out via various Investor Relation Programs.

New issue stocks are usually super low risk/ Super high reward stocks!

I Have two more emails coming tonight on TNUS with shocking info you can’t miss.

Okay, that is all bullshit; here is the part that really matters:
Never invest in any stock featured on our site or emails unless you can afford to lose your entire investment. ********************************************************* The disclaimer is to be read and fully understood before using our site, or joining our email list. PLEASE NOTE WELL: The BestDamnPennyStocks.com employees are not Registered as an Investment Advisor in any jurisdiction whatsoever. Full disclaimer can be read at http://www.BestDamnPennyStocks.com/legal_disclaimer.html Release of Liability: Through use of this website viewing or using you agree to hold BestDamnPennyStocks.com, its operators owners and employees harmless and to completely release them from any and all liability due to any and all loss (monetary or otherwise), damage (monetary or otherwise), or injury (monetary or otherwise) that you may incur. The information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. BestDamnPennyStock’s affiliates may from time to time have a position in the securities mentioned herein and may increase or decrease such positions without notice. BestDamnPennyStocks.com owners may or may not hold positions in the companies that are profiled. It should be assumed that the owners of BestDamnPennyStocks.com own positions in companies profiled and may buy or sell at anytime  before during or after Investor Realtion services. BestDamnPennyStocks.com affiliates, and friends and family of BestDamnPennyStocks.com may have a position in such securities. The position may have been acquired prior to the publication of any website information or email alert. You should also be aware that the aforementioned parties do have the right to sell their positions at any time without further notification. Any opinions expressed are subject to change without notice. BestDamnPennyStocks.com encourages readers and investor s to supplement the information in these reports with independent research and other professional advice.  All information on featured companies is provided by the companies profiled, or is available from public sources and BestDamnPennyStocks.com makes no representations, warranties or guarantees as to the accuracy or completeness of the disclosure by the profiled companies. BestDamnPennyStocks.com expects to be compensated $250,000 cash from third party Tiki Island SA. for a TNUS investor Relations Service.   This is not a solicitation to buy or sell any securities. Any claims or Statements should be deemed apocryphal. BestDamnPennyStocks.com, nor any of its affiliates are not registered investment advisers or a broker dealers. [emphasis mine]
So I am impressed by the large sum of money ($250,000 cash, not shares!) put into pumping this. I believe TNUS could run up for a couple more days before collapsing. Of course, I hate holding pumped stocks, so I will likely sell my shares soon after the market open (and holding pumped stocks is risky and the company is certainly worthless in the long run, so I would not advise anyone to buy), but the further up this goes the further it can fall, so you know I will be looking for shares to short.

Looking for my watchlist? This is it … TNUS is going to be interesting, so I’ll ignore all the lesser stocks. One thing I have learned from the way I missed an easy trade on GGC is that I should ignore lesser plays whenever there is something truly great to watch.

Disclosure: Long 2000 shares of TNUS. I have a disclosure policy and you can find all my disclaimers there as well; those disclosure & disclaimers are incorporated by reference into this post.

My review of Tim Sykes' DVD TimTactics: Buy his other DVDs instead

If you have considered or will consider buying Timothy Sykes’ DVD TimTactics, I have some simple advice: do not buy it. I say this not because I think it is a horrible DVD, but because Tim has covered much of the information in his other DVDs. I do recommend Sykes’ DVD Pennystocking Part Deux and I thought TimRaw was pretty nice (full reviews to come later; I need to re-watch them), but despite this DVD including so-called ‘advanced trading tactics’ I found little in this DVD that was not also in those other DVDs.  The advanced tactics that were only in this DVD were not particularly hard to figure out and I have learned most of them in one year of full-time day-trading. Also, if you are the patient sort, Sykes’ DVD TimFundamentals 2 will be coming out soon; it was recorded during his 2009 seminar in Las Vegas (which I attended) and I think that was an excellent seminar. TimFundamentals 2 plus Pennystocking Part Deux would give you 97% of the information available on DVD about Tim Sykes’ strategy (the seminar would be sufficient to learn his strategy, but Pennystocking Part Deux’s intra-day charts are invaluable).

Following is my full review:

Informational content: 2 of 5 stars. TimTactics is billed as advanced trading tactics, so I was hoping for strategies above and beyond what he showed in his other DVDs. For example, it would have been nice to see how he reads level 2 or time and sales. He did not show that. Also, any student of his who watches Livestock religiously and has followed his blog (TimAlerts or just his free blog) for a year or more likely will have learned many of his ‘advanced’ tactics, such as how the overall market affects penny stocks. This brings me to some advice that I have said and written multiple times: if you are cheap and are willing to invest a lot of time you can learn Sykes’ strategy without buying his DVDs. Of course, buying one of the better DVDs is useful and will save on time and help to speed up learning. And if that helps you to make more profitable trades sooner, it can easily be worth the investment.

A few tactics he had that he has not mentioned before were things I had heard from other traders or figured out myself, such as how to get faster OTC BB executions. Other than the tactic for faster OTC BB executions, the only tactic I had not heard from Tim before (or learned elsewhere in the last year that I have been a day-trader) was his strategy for trading after-hours or in pre-market trading.

Production quality: 2 of 5 stars. The resolution of the video is barely acceptable. All the video was screencast from Sykes’ laptop, and it started life as a webcast. However, there is no excuse for not recording and saving the full screen resolution without much compression rather than packaging the low-quality webcast video on DVDs. Likewise with the sound, it is far inferior to the sound quality on my daily trade recaps hosted by Youtube. Towards the end of the last DVD for a few minutes you can here someone else making noise besides Tim. While the production quality is not good, Tim is easily comprehensible and the viewer can still see everything important in the video, so if you are still interested in this video, do not let the production quality stop you.

Disclosure: I received TimTactics for ‘free’ for signing up to Sykes’ October 2009 seminar in Las Vegas. I have a disclosure policy that provides more details on other Sykes products and services I have purchased and my relationship with him. I have purchased other DVDs of his and I am a TimAlerts lifetime member;  I have now made over $93,000 trading using his methods since June 2008. I am an affiliate of Tim Sykes and make money when people buy his stuff through my links.

Update on trading Tim Sykes' system

My fairly consistent profits from trading using Tim Sykes’ system have continued. Despite some sketchy trading, my profits have been helped by the plethora of pump and dumps recently and me scalping TimAlerts for quick profits (in fact, my recent trade of RODM nearly paid for the TimAlerts lifetime subscription that I bought a year ago). I thank Tim for all he has taught me and I heartily recommend his Pennystocking Part Deux DVD to anyone who wants to learn how I and he trade stocks.

tim_profit_small
(click chart to enlarge)

Note that the profit on this chart does not include the profit from my watchlist longs, which are definitely in the style of Tim Sykes. As I write this I have accumulated $1770 in profits in that strategy over the last 40 days. See my recent detailed report on how successful those trades have been.

If you like more detailed statistics, here is a histogram of my profit margin on Sykes-type trades:

profit_histogram_small
(click chart to enlarge)

Unfortunately I am not the most experienced with creating histograms in Excel. No trades fall below the -16% return bin, but eight trades generated more than 22% profit (they are just thrown into the 22% bin; the largest profit margin was 51%).

Disclosure: See my disclosure policy.