PFSW

[David Randolph]

Looking at my portfolio, everyday I'm faced with the question do I take 30-40-50% or more loss or do I still wait. I don't need the money, it does not worry me therefore and so I hold on...even tough my common sense tells me I good have made up for the losses if I had taken them and moved on...so I just should!

You need to understand that fundamentals change and many companies go down and never recover ... and some of them just go bankrupt. Moreover, a stock can be valued at more at, say, $2 than at $10, because the # of shares outstanding rose more than 5 fold. So you need to protect your capital by recognizing mistakes and take your losses when you have to.

You don't need the money, but of course, you value the money, right? So, you don't want to lose it, you want it to grow.

The stock market acquires attention every day. Sometimes that does not work for me, running a company or being on the road. And it seems important shifts always take place on those moments and I read a day later...

That's why you subscribe this service, so you don't have to worry or spend too much time studying the markets. You're able to concentrate on your personal life and your profession.

Look at the Main Portfolio ... pushing up to all time highs, up 25% in 2007

Are you telling me you don't have time to read the e-mail with the crystal clear instructions before the market opens and act accordingly? I don't think so ... you just need to be more pro-active and cut those losses away and never look back. Then start following the Main. That's what I work for, it's the service I provide. You do what you do best, and I do what I do best (even though I make mistakes, many times stupid mistakes, on balance and with time, things work out, because I have the experience and the willingness to work hard to achieve the results).

Thanks for your message Amarens

[realcoolhead]

Exactly. I usually just look at the email and if nothing is changed, I don't even look at each thread anymore. 

My return is "only" about 70% of the return of main portfolio, because initially I only dedicated 60% of the account following the main and the rest goes to SPY. I don't regret it because I figured that's the kind of volatility/risk I can take. That helps when things didn't go well temporarily because instead of going down 3% in one day, mine only went down less than 2%... and when some of you guys were kind of panicking, I slept well. In the long-run, I think emotional well-being is an important parameter in the game of investing. After David started the video portfolio, I liquidated half of SPY. So now I have 80% dedicated and more diversified.    (maybe not exactly 80% because I didn't double-down on PFSW ...)

Anyway, I'd say I only need maybe half an hour per day following David and I can spend the rest of day doing other things. (Well I am going to China for a 3-week vacation next week so I will have to take some golden party hour out checking emails ... and following video portfolio will be a bit difficult since that means waking up 3:30am in China ... then again it really doesn't matter much in the long-run even if I trade one day late, that's the beauty of keeping things simple and for long-haul!)

That's why you subscribe this service, so you don't have to worry or spend too much time studying the markets. You're able to concentrate on your personal life and your profession.

Look at the Main Portfolio ... pushing up to all time highs, up 25% in 2007

Are you telling me you don't have time to read the e-mail with the crystal clear instructions before the market opens and act accordingly? I don't think so ... you just need to be more pro-active and cut those losses away and never look back. Then start following the Main. That's what I work for, it's the service I provide. You do what you do best, and I do what I do best (even though I make mistakes, many times stupid mistakes, on balance and with time, things work out, because I have the experience and the willingness to work hard to achieve the results).

Thanks for your message Amarens

[David Randolph]

Exactly. I usually just look at the email and if nothing is changed, I don't even look at each thread anymore.

Ohh, I get a lot of work writing those updates, and sometimes some interesting stuff comes up. Anyway, it's nice to know that your trust is at that level

My return is "only" about 70% of the return of main portfolio, because initially I only dedicated 60% of the account following the main and the rest goes to SPY. I don't regret it because I figured that's the kind of volatility/risk I can take. That helps when things didn't go well temporarily because instead of going down 3% in one day, mine only went down less than 2%... and when some of you guys were kind of panicking, I slept well. In the long-run, I think emotional well-being is an important parameter in the game of investing. After David started the video portfolio, I liquidated half of SPY. So now I have 80% dedicated and more diversified.  Smiley  (maybe not exactly 80% because I didn't double-down on PFSW ...)

Anyway, I'd say I only need maybe half an hour per day following David and I can spend the rest of day doing other things. (Well I am going to China for a 3-week vacation next week so I will have to take some golden party hour out checking emails ... and following video portfolio will be a bit difficult since that means waking up 3:30am in China ... then again it really doesn't matter much in the long-run even if I trade one day late, that's the beauty of keeping things simple and for long-haul!)

I thought you had mutual funds, but indeed, the SPY is a much better idea, since the majority of the mutual funds underperforms the index over the long term, and they charge fees for their underperformance

Going back to PFSW, I don't have much time to make new research for it today, but there's no doubt that the company will release better than expected results in Q2 and that's certainly not priced in. There's more visibility and attractiveness now that the stock is at $1.03 than 6 months ago when it was at $1.4.

I'll keep holding PFSW.

[Amarens]

then again it really doesn't matter much in the long-run even if I trade one day late, that's the beauty of keeping things simple and for long-haul!)

That is why I subscribe to this service  and I love it. But indeed sometimes it happens a day goes by without email, meetings etc. And then I discover a day late and believe me Realcoolhead that can make a difference (SFP, HYRF, EYII, HEPH, SATC to mention some). If that happens now I just take the even bigger loss. But for a couple I just wait and see. The losses are so huge, I might as well.

And yes David I do value money and don't want to loose it and do bump out, but it won' t make me enjoy life less. That's all I wanted to say.

But once again you helped me over the obstacle and next week I'll sell some of the onces I don't see recovering anymore and in which is still too much money to see it all go away.

Amarens

[David Randolph]

Hi Amarens, from your holdings I see that your problem is holding stocks regardless of the fundamentals. Also you didn't pay attention to the change in the # of shares outstanding, which is crucial, especially when considering OTCBB traded stocks.

Good luck in your evaluation

Two sentences out of PFSW's 10-Q report that seem interesting to me:

1) «Sales of HP and HP-related products represented 51% of eCOST's net revenues (11% of consolidated net revenues) in the three months ended March 31, 2007. Sales of these products in the two month period ended March 31, 2006 were 31% and 6% of eCOST's net revenues and consolidated net revenues, respectively.»

So, HP is the primary sales driver of www.ecost.com. And HP has been selling well, as everybody knows, HP is near an all time high now.

2) «Our eCOST business is moderately seasonal, reflecting the general pattern of peak sales for the retail industry during the holiday shopping season. Typically, a larger portion of our eCOST revenues occur during the first and fourth fiscal quarters.»

This 2) only reinforces the importance of the 20% sequential revenue growth ECost achieved in Q2 2007, according to the company's 2nd quarter guidance:

• PFSweb Announces Preliminary Second Quarter Sales For eCOST.com
Business Wire (Mon, Jul 9)

They did it in a seasonally weak period.

My hands are getting stronger and stronger in PFSW, I'll keep holding the stock.

[David Randolph]

Not much to say about PFSW today (also I'm short on time), I'll continue holding.

[David Randolph]

Did I tell you about that little gap opened in PFSW's chart? Well, the stock came down to close the damn thing. Fundamentally nothing changed, over the medium term the only way is up.

[David Randolph]

I don't know how someone can sell a stock priced at 1/10 of annual sales after the following news:

«eCOST.com expects to report revenue of approximately $26 million for the second quarter of 2007. On a sequential basis, revenue increased from $21.6 million for the first quarter of 2007 and $21.1 million for the fourth quarter of 2006.

"eCOST.com's second quarter sales have noticeably increased quarter-to-quarter, and we believe that the quarter-to-quarter comparison is a key measurement of our turn-around progress. Further, we believe this quarter's revenue growth will contribute to an improved bottom-line result for eCOST.com as compared to the prior two quarters," stated Mark Layton, Chairman and CEO of PFSweb. "The continued positive trends that eCOST.com has experienced so far this year offer initial verification that the changes we have implemented are working. These changes include improved customer service, enhanced web site functions and an expansion of the number of available products to more than 100,000 SKUs in a wider variety of categories."

I'll continue holding PFSW with strong hands.

[David Randolph]

I read on Systemax's website that the company has about 40,000 items for sale in any given day. Well, eCost has 100,000 items for sale

It doesn't mean www.ecost.com will sell more than www.tigerdirect.com, but at least it is offering more. I own both stocks, so no bearish comparisons to make, as we know, SYX is profitable and PFSW isn't, at least, not yet. Also SYX is a $760 M market cap and PFSW is a $46 M market cap, so the differences are well represented in both companies value.

I'll keep holding PFSW, I'm a believer it its turnaround story.

[buddjas1]

Ok.  I have had a chance to research the company.  I see why you have bought the stock.  You are counting on a turn-around in eCost.  That is a supportable basis.  As you said, eCost is planning on Q2 revenue of $26,000,000.  http://biz.yahoo.com/bw/070709/20070709005621.html?.v=1

That is higher than Q1 and Q406, which are the seasonably strong quarters.  And, an analyst at the last conference call suggested that the breakeven point for eCost was $25,000,000.  See page 15 of http://www.sec.gov/Archives/edgar/data/1095315/000095013407011848/d46869exv99w1.htm  So, we can see the eCost segment being profitable for the year.  In contrast, Q1 eCost revenue was $21,647,000 and had an operating loss of $1,326,000.  See page 15 of http://www.sec.gov/Archives/edgar/data/1095315/000095013407011678/d46626e10vq.htm

The real issue is whether the new profitability of eCost will make up for the continuous losses in PFSWeb.  That segment has historically lost money ($1.6 million, last quarter on operating basis).  The merger with eCost occured in late 2005. 
http://www.sec.gov/Archives/edgar/data/1095315/000095013405022354/d30843e8vk.htm
http://www.sec.gov/Archives/edgar/data/1095315/000095013406001028/d32319exv99w1.htm
Before then, net income for PFSW was mostly negative:

Net Income ($.000s)
Q298     164
Q399   (198)
Q499    (4,777)
Q200   (238)
Q300   (6,465)
Q400   (1,861)
Q101   (2,192)
Q201   1,903* (from one time sale of assets)
Q301   (453)
Q102   (3,227)
Q202   (2,408)
Q302   (4,694)
Q103   (1,774)
Q303   467
Q303   (1,141)
Q104   (1,767)
Q204   479
Q304   420
Q404   1,100
Q105   (214)
Q205   (546)
Q305   (453)
Q405   466

So, I remain skeptical whether PFSW will start showing a profit anytime soon.  The last time an insider (the CEO) purchased shares on the open market was preceeding the Q405 earnings release, which was the last profitable quarter:

http://www.sec.gov/Archives/edgar/data/1095315/000120919105063958/xslF345X02/doc4.xml
http://www.sec.gov/Archives/edgar/data/1095315/000120919105063509/xslF345X02/doc4.xml
http://www.sec.gov/Archives/edgar/data/1095315/000120919105063247/xslF345X02/doc4.xml
http://www.sec.gov/Archives/edgar/data/1095315/000120919105062903/xslF345X02/doc4.xml
http://www.sec.gov/Archives/edgar/data/1095315/000120919105062610/xslF345X02/doc4.xml
http://www.sec.gov/Archives/edgar/data/1095315/000120919105062347/xslF345X02/doc4.xml
http://www.sec.gov/Archives/edgar/data/1095315/000120919105061944/xslF345X02/doc4.xml

I will wait for that sign.

[pinoleropuro]

Amarens
man I am sort of in the same boat in regards to my losses. except I do need the money. 

David
so since I only have 3 you really think changing out of TZOO for PFSW is a better trade?

I need all the help I can get to try to recoop my now 25% loss due to TZOO and CIMT not helping me at all.
Thanks.

[mbaugh]

Of all the holdings on the main the ones I would keep if your looking for quicker gains would be NGA and CIMT.  I realize you may be down on CIMT, but now would be a foolish time to sell since the next earnings report will be coming out sometime in August.  I cannot see CIMT going down any further since the company has been improving and has had more time to sell its new version 8 software.   As for NGA, it has a nice improving chart and moves really fast just like GOAM and we are on the verge of a breakout.  On Friday while the market was down 150 points, NGA managed to close only a penny down.  Keep an eye on it and when it breaks 10.19, it will probably make a run to 11 + in a hurry!  I also expect earnings to be released around the last week of July and this company has been making progress quarter after quarter.  I hope this helps.

[David Randolph]

Ok.  I have had a chance to research the company.

Cool buddjas1, I love your research, you really go deep

You are counting on a turn-around in eCost. That is a supportable basis.

Not just that, but that's the primary reason.

The last time an insider (the CEO) purchased shares on the open market was preceeding the Q405 earnings release, which was the last profitable quarter:

But, just recently, the CEO and other insiders took the option of converting options at the $0.95 level. This is like the company asking: "Do you want to buy these newly issued shares at $0.95? Yes I do, here's the money". I agree, not the same thing as buying existing shares in the open market, but he could have said "no, I'll consider it later".

The company gave us a guidance, over the 1st quarter earnings press release, that if achieved, I believe will make the company profitable right here right now in 2007:



They never had EBITDA of $9 M. What do you think of this guidance?

At the time I read the 1st quarter earnings press release I didn't realize who Riverbed (RVBD) was, but now I know that company well and the way it has been growing and the way it is priced by the market. I'm quite pleased to see that RVBD is one of PFSW's costumers:



I love it when I see RVBD's name associated with another company ... GSB is another example, because it competes with RVBD in the Wide Area File Sharing (WAFS) market.

We'll keep studying PFSW, I'll keep holding.

David
so since I only have 3 you really think changing out of TZOO for PFSW is a better trade?

Yes, definitely a better trade, but also somewhat risky, I mean, there isn't a lot of visibility in PFSW yet and the chart still isn't bullish. The trade I would advise you to do but I believe you won't be able to do it because of your inner beliefs about the market is to switch TZOO for GSB. Can you do it? If you can't, tell me why not. Thanks

[pinoleropuro]

no problem doing it.
and thanks.

[David Randolph]

no problem doing it.
and thanks.

Thanks for your reply pinoleropuro. I would use any dip in GSB to buy for the long term. Good luck

PFSW is doing all it can to improve www.ecost.com business:

«- Opened a new 6,500 square foot facility in Manila, Philippines, with a dedicated staff of highly trained customer service representatives to supplement PFSweb's existing call center operations in the U.S. The facility will initially be used to support certain functions for eCOST.com. Also located at the facility will be an expanded staff of web development professionals. The additional capacity will increase PFSweb's ability to quickly address development plans for its web commerce capabilities for both eCOST.com and its service clients.

- eCOST.com added 2 new Virtual Warehouses in the first quarter of 2007 bringing the total number of Virtual Warehouses to 9. Virtual Warehouses enable eCOST.com to market more new products, expand product categories and are targeted to generate higher margins on sales.»

Technically we've had a nice 3% rise yesterday. I'll keep holding PFSW.