Wednesday, May 27, 2015

Writing about Dot Hill and Nimble Storage

I originally studied Dot Hill (HILL) when I was asked to report on Crossroads (CRDS) back around 2002. I was looking for comparisons in the data storage markets. I bought some Dot Hill and have owned it ever since, but traded in and out of it more than most of my stocks.

When I saw a press release about a comparison of Nimble Storage (NMBL) and Dot Hill products I was already planning to write an update on Dot Hill for Seeking Alpha. Dot Hill has been one of my best performing stocks because I bought most of what I own at between $1 and $2 per share and it is now over $7.

The result was:

Dot Hill and Nimble Storage: Comparing Growth and Risk

I have long found it interesting how stocks pushed by the larger Wall Street banks/brokerages can carry higher valuations than otherwise similar companies. Also how a good story about future profits can clash with actual returns when the future arrives. This story fits both criteria, but has a positive ending, since Nimble will probably grow into its current market valuation over the next 2 to 3 years. The firms that helped it with its recent IPO will continue to advise their clients to buy it, so you cannot count on a dip in price between now and whenever actual profits get to the point of justifying the stock price.

If demand for data storage slows or is disrupted, of course both Dot Hill and Nimble will suffer. But right now they look like growth stories within the storage equipment market.

Saturday, May 16, 2015

Writing about Agenus and Celgene

I had an article published by Seeking Alpha:

Why Agenus Can Continue to Rise After Doubling

In the article I said Agenus (AGEN) could be up 20x in about 5 years.

That, of course, is the kind of prediction that can get an analyst or financial writer in trouble. So I thought of how I might make a less outrageous claim (especially considering that I own Agenus, and so could have a bias).

But then I thought about Celgene (CELG). I did an analysis of where I thought Celgene should go back in January of 2014. I pulled back from the top end my analysis, and wrote an article intended for Seeking Alpha. The editors asked for revisions that I thought were unnecessary, and I was very busy right at that moment, so I did not revise it, did not get paid for it, and sent it to what they call their Instablog. I also reposted it here:

Celgene in 2017: $375 per share or more [January 14, 2014]

And I went on with life. But when I had more free time I looked at my Celgene analysis again, and figured I was almost certainly right. To make my article seem less outrageous, I pulled in the timeline and lowered my estimate. I had also learned a bit more about what Seeking Alpha editors want. So they published it:

Celgene in 2015: $200 per share [April 29, 2014]

Now if you look at Celgene's stock price, you would see it closed Friday at $115.53. You might say, "That rascal William Meyers was hyping Celgene, but he missed by a mile." Except that Celgene split two for one in June 2014.

Adjusting for the split, my headlines would read:

Celgene in 2017: $187.50 per share or more

Celgene in 2015: $100 per share.

In other words, by catering to the believable, I actually under-predicted 2015 by quite a bit. There is a ways to go to hit my 2017 Celgene projection, but I am more confident in it now than I was when the article was originally written.

Of course I could still be wrong about Agenus, though in my article I did set out a bunch of milestones Agenus would have to hit in 5 years to go up by a factor of 20x.

I own Celgene and Agenus stock. Despite my prediction about Agenus, I am not selling everything else and buying it, or mortgaging my home, or anything like that. Things can go wrong, and that is why I always tell my friends:

Keep diversified!

Monday, May 11, 2015

Acceleration Wars: Intel, Nvidia, Xilinx And Altera

A whole bunch of companies I cover reported last week. You can find my notes on their analyst conferences at

I had an article published at Seeking Alpha too:

Acceleration Wars: Intel, Nvidia, Xilinx And Altera

I should also note I added to my Inovio (INO) holdings today. This is a long-term investment. Inovio is not likely to have a product on the market before 2018. In the meantime it has a decent amount of cash and may receive more from milestone payments from its research partnerships.

I hope to start catching up with my thoughts on the company's I write about for Seeking Alpha this week, based on their recent analyst conferences.

Wednesday, May 6, 2015

Sold Some Dot Hill

This morning I reluctantly sold 10% of my (tiny) Dot Hill (HILL) holdings. This was because Dot Hill had become well over 10% of my portfolio by value, breaking my portfolio rule. Even after the sale Dot Hill is somewhat more than 10% of my portfolio, but it is looking to be on a roll. So enough for now.

Dot Hill will report Q1 results tomorrow. I'll be looking for guidance. If Q2 is predicted strong then the rest of the year should be great.

The shares I sold today for $6.85 I bought for $1.74 on February 4, 2010, but I originally invested in Dot Hill back in 2005. It was up and down for a while, but now it looks like we are mostly going up.

I will likely write an article for Seeking Alpha on Dot Hill soon. You can see links to everything I have written on Dot Hill, including my notes on analyst conferences I took over the years, at

William Meyers Dot Hill page

Tuesday, May 5, 2015

I Buy Adept Technology, again

I just bought a small amount of Adept Technology (ADEP) at $5.92 a share. I'll be watching to see if future developments warrant further investment.

Adept Technology is a small cap company that makes industrial robots. It has been around for quite a while. I like robots. This is my second go round with Adept. Despite my trying to be a long-term investor, and my shifting to biotechnology stocks, I bailed out of ADEP once already, and with good reason. If you do decide you like ADEP, be wary.

I originally bought Adept in 2012, when it was in deep trouble due to falling sales. I bought at $3.95 on 11/5/2012 and then at $2.94 on 11/09/2012. My final purchase was for $3.34 on 2/8/2013.

It was a turn around bet, and after Adept hit bottom some small brokerages started recommending it. The stock rose faster than its revenue, and so I started selling. I sold at $7.92 on 10/7/2013, then at $14.45 on 12/26/2013, and the remainder at $18.63 on 2/10/ 2014. The stock went even higher than that, but neither sales nor profits justified the high prices, to me.

Of course eventually the stock price stalled and started falling. I continued to cover Adept at OpenIcon. You can read my notes about the Adept Technology March 2015 quarter results and analyst conference.

My reasoning for today's purchase is that the current market cap is about $80 million. In March revenue was $14.1 million, and June quarter guidance is for revenue between $13.5 and $15.0 million. Margins are not great, so they are losing money, but could hit profitability on a bit more revenue.

But feedback on their mobile robots (for warehouses, etc.) is good, and they expect to sell significantly more as the year progresses, though perhaps in a lumpy manner.

My rule of thumb for P/E is 20. So they need $4 million per year, or $1 million per quarter, to justify the current price. I think Adept could reach $1 million profit per quarter by the end of the year. They could also fail for a variety of reasons, including less than expected sales of their old-line, assembly-line robots, or of the new mobile robots.

Again, I hope that Adept succeeds gradually, and the stock price just goes up to reflect the level of success. So I can be a happy, long term investor, rather than having to sell after concluding that the stock price has been pumped up beyond reason.

Especially when investing in micro-cap stocks it really pays to

Keep Diversified!