Tuesday, December 31, 2013

My Great 2013 stock investments

My portfolio did so well -- so much better than the stock indexes -- in 2013 that I have to keep telling myself, my wife, and anyone else who cares to know that this is not repeatable. This qws a once in a lifetime year.

I am a long term investor, and for the most part just held the stocks I began the year with. I did trade, trimming in and out, a bit more than usual. One stock, Onyx Pharmaceuticals, was acquired by Amgen. I added positions in just two stocks, Agenus (AGEN) and (PLX). I dropped my position in FNHC, mainly because it had a big runnup and I cover it, so I was worried about maintaining objectivity.

On the whole I was up 79%. Just plain stocks. No options, leveraging, or shorting.

So here's the list of companies I owned both at the beginning of 2013 and at the end:

Symbol end price 2012 end price 2013 % change
ADEP $2.38 $16.89 610%
AMAT 11.20 17.68   58%
AMD 2.40 3.87   61%
BIIB 146.37 279.57   91%
CELG 78.47 168.97 115%
CMN 19.82 33.91   72%
CYCC 6.06 4.02 -34%
DNDN 5.29 2.99 -43%
GILD 36.72 75.10 104%
HILL 0.85 3.37 296%
HNSN 2.08 1.73 -17%
INO 0.46 2.90 530%
MCHP 31.80 44.75   41%
MRVL 7.08 14.38 103%
SGI 10.23 13.41   31%
STX 29.80 56.16   88%
TTMI 9.19 8.58    -7%

I've written extensively about most of these stocks, so here I'll just make brief year-closing comments on the 3 best percentage gainers, and the 3 worst. Worst first.

Proving I am not prescient we have Dendreon (DNDN). I once made a lot of money on Dendreon, but 2013 was a rough year. Its single approved therapy, Provenge, is not doing well against competition. In addition, Provenge is very expensive to make. Even approval for sale in Europe did little for the stock.

Cyclacel (CYCC), which is in a pivotal Phase III trial for leukemia (AML) in elderly people too old to do chemotherapy, lost 34%. That is surprising because the data during 2013 was pretty good: the independent data monitoring agency allowed the trial to continue after the half-way point, indicating the data so far shows the drug to be safe and effective. It is still a gamble, but it is a company to watch in 2015.

Hansen Medical (HNSN), a maker of surgical robotic catheters, had a mediocre year as sales did not ramp as well as expected. Maybe the Q4 report will be better. The technology is promising, but I'd be surprised if they get in the black in 2014.

As to the winners, from 3rd to 1st place:

Dot Hill (HILL), up 296% this year, is a little-train-that-could story. The data storage equipment maker landed a number of new clients in 2013, got back into the black after years in the red, and looks to be headed to a good 2014.

Inovio (INO) was up 530% when people finally realized that its DNA vaccine technology could be a major breakthrough. However, they don't even have successful data from a Phase II trial yet. What works in the test tube and in animals and Phase I trials may not ever make it to commercialization. I like the company, but I'd like it better with more concrete data.

Who, at the beginning of the year, would have thought Adept Technology (ADEP) would have a 610% year? The stock started cheap because they had a bad 2011-2012, with customers cutting back on orders of their industrial robots. So they cut expenses and in 2013 introduced new lines of robots and landed new customers. The price has also been driven up by momentum traders. Check it out, but you might want to see Q4 results before you take a plunge.

I am a professional researcher, analyst, and writer. I write about my personal experience with investing for fun. You can follow me at this blog site, at www.openicon.com, or at William Meyers at Seeking Alpha.

Monday, December 30, 2013

Dot Hill Ends 2013 on a Positive Note

Although it is a small cap, obscure stock, I decided to write up Dot Hill (HILL), the data storage equipment maker, for Seeking Alpha:

Nearly Quadrupling In 2013, Dot Hill Still Has 2X Potential In 2014

Data storage requirements seem to be endless: everyone wants to store video, and video inherently requires a lot of storage capacity. Throw in vast quantities of alphanumeric data, and with the demand for permanent instant access, you need a lot of drives, whether hard disk or solid state or even tape. Dot Hill has some very good technologies for handling all that, when you need boxes full of drives with wide pipes to the rest of your datacenter. Nothing is guaranteed in the world of small-cap stocks, but 2013 was a turnaround year for HILL. On the other hand 2012 was a bad year, which is why HILL's stock price at the beginning of 2013 was so low.

My data other storage stocks also did well this year: Marvell Technologies (MRVL) and Seagate (STX). I suspect corporations have been under-investing in storage technology for the past few years. If so, 2014 could be the catch-up year. Some one should probably make a data storage index fund.

My article was published yesterday evening, and Dot Hill rose $0.12 today (3.7%) to close at $3.37. Probably not due to my article, since the last time I wrote a positive article on Dot Hill, in August, a sell-off followed.

I own shares of Dot Hill. I am a long-term investor. I may buy or sell shares from time to time depending on how the stock price matches up with my view of the stock's value.

You can see my notes on Dot Hill analyst conferences, and a list of all my Dot Hill articles at Dot Hill at Openicon.com.

Happy New Year!

Thursday, December 5, 2013

Cantel Medical (CMN) record quarter

Cantel Medical (CMN) had a record quarter. Cantel specializes in infection control, which is a very cost-effective form of health care.

I own stock in Cantel Medical. For all my previous reports and articles on Cantel see Openicon Cantel Medical.

Here are my notes on today's analyst conference:

Basic data (GAAP):

Revenue was $118.3 million, up 4% sequentially from $114.0 million and up 19% from $99.7 million in the year-earlier quarter.

Net income was $11.2 million, up 10% sequentially from $10.2 million and up 17% from $9.6 million year-earlier.

EPS (earnings per share) were $0.27, up 8% sequentially from $0.25, and up 17% from $0.23 year-earlier.


No specific guidance (Cantel never has provided specific guidance). But noted the January quarter has fewer sales days than the October quarter.

Conference Highlights:

Cantel Medical delivered record sales and earnings. All three major business segments showed good performance. Organic sales growth was 10%. Cantel continues to benefit from its investments in development, sales and marketing programs.

The medical device tax impacted by almost $1 million; there was none year-earlier.

Realigning reporting segments were changed, adding some formerly "other" revenue to Water Purification/Mar Cor segment.

Endoscopy segment (Medivators) revenue was $43.6 million, down 2% sequentially from $44.5 million, and up 19% y/y. Launching new and improved lines for 2014 and adding to sales team. Recently acquired Jet Prep for its specialty colonoscopy catheter.

Healthcare Disposables (Crosstex and SPS) sales were $26.2 million, up 32% from year-earlier. Organic growth was 4%, the rest was from the SPS acquisition. 40% y/y increase in operating products with improved gross margins. Sterility assurance is a growth area, as are international sales.

Water Purification and Filtration segment (Mar Cor) revenue was $39.8 million, up 11% sequentially from $35.7 million, and up 20% y/y. Heat-based and portable systems see continued acceptance. Orders exceeded shipments, so backlog hit a record. Siemens customer transfers are going well.

Therapeutic Filtration (formerly Dialysis) segment sales were down 11% y/y. Now represents only 8% of operating profits, but still important to Cantel, with growth possible in international markets. Proposed U.S. 9% cut for dialysis treatments has been postponed to 2015.

43.5% gross margin, up sequentially from 43.1%.

Cash and equivalents balance ended at $28.5 million, down sequentially from $34.1 million. Debt ended at $82 million; net debt was reduced $13 million to $53.5 million. Cash flow from operations $10.8 million. Cap ex $2.2 million.

EBITDAS was $24.1 million, up sequentially from $21.6 million and up from $21.0 million year-earlier. EBITDA was $23.0 million. Stock based compensation was $1.1 million.

Cost of sales was $66.8 million, leaving gross profit of $51.5 million. Operating expenses were $33.2 million consisting of: $15.8 million selling; $15.2 million general and administrative; $2.3 million research and development. Interest expense $0.7 million. Income taxes $6.5 million.

36.7% effective income tax rate. R&D credit set to expire at end of year, but hopefully will be renewed.

$0.045 semi-annual dividend to be paid in January.

For 2014 plans substantial investments in the three major business segments. Adding international teams, notably in China and Singapore. Will continue to look for acquisitions.


Priorities for international markets? China received most of the investment in 2013; infection control is a top priority for the government there. Just hired first manager in Germany. Then the U. K., where we already have a present. Then Australia, where we already have a high market share. Many second-tier markets, like Latin America and Eastern Europe.

We are not likely to do acquisitions in China, but could in Europe to help enter established markets.

How much could you spend on acquisitions? We are in good shape. We have over $50 million available in the revolver, plus the opportunity to add an additional $50 million.

Expects 2015 to require investments equal to 2014, then operating leverage going forward after that.

We are not in markets that are growing at over 10%; we are growing faster than the underlying markets. Success depends on new products and on sales efforts. We would say 10% organic growth is a goal, not a prediction.

We would be willing to make an acquisition outside of our 3 core areas as long as it was within infection control.