Thursday, December 13, 2007


DFNS where do we go from here?

DFNS continues to be down in the upper.20's to low .30's. I have emailed the company NUMEROUS times since Nov. 26th and have yet to hear anything from them. I had some questions I wanted addressed by the company.

One of which was why they didn't put out a press release after the Q3 report. It wasn't as good of report as Q2 (and I didn't expect it to be) but it was their 2nd best quarter they had in YEARS! So why they didn't put out a statement saying they were happy with sales etc... Was puzzling to me. The only reason I could come up with is they didn't want to put it out because future sales don't look that promising. I don't know if that is the case or not but they have been a reason for the huge selloff.

I love to see a company that insiders own a good portion of the stock. In DFNS case though the CEO owns over 60% of the stock which means whatever he says goes anyway. Doesn't matter what the shareholders think as he controls it. Which is fine as he has a lot invested but what tends to happen is lack of effort on the company side to give QUALITY information to the general public.

I haven't sold a single share and WON'T until we hit the mid .40's again AT LEAST!! (Not sure if I would then but that would probably be the minimum I would sell some at.) I am 100% in on DFNS it is the only stock I own and don't have any $$$ in my brokerage account to buy anything else. So if I did sell any shares it would be my excess shares NOT my stockdoubling project shares. The only way I would sell some before the mid .40's would be if news came out that sales have dried up or something else major happened.

The bottom-line though is this stock can be bought many times during the week for as little as .30. It is still a company that has a BOOK VALUE (The breakup value of the company) of .24. Also market value of the company when trading at .30 is LESS then $9 million. (That is how much it would cost to buy ALL the shares at .30) Which for a company that should do $17 million in revenue for the year is A STEAL!!

So the #'s are there as far as undervalued I would say that. It just depends is the underlying business still viable going forward. Was it a 1 year fluke in business or is this something that the company can sustain and build on going forward? And that is a question I don't have an answer to and the company isn't giving out any hints either. As I said before I could wait until the end of October 2008 for the stock to hit .50 and still be on pace for the stockdoubling project. I would prefer not to wait that long of course but I do have time to wait. When things look this undervalued I just am not going to sell any shares.

An interesting bit of information though which you can study yourself if you so desire.... Looking at a 5 year chart of DFNS. (go to and use the weekly charts) Around this time of the year should you have purchased DFNS around the mid/late December each year and held it for a couple weeks in the new year you would have made quite a nice return each time. What tends to happen especially with a lot of small cap stocks is people sell their losing stocks before the end of the year to get the tax write off. Then a flood of people come into to "cheap" or "value" stocks to start the year. And DFNS has value I think (assuming the business remains strong.) So we could see a bounce in it if history repeats itself on that. Time will tell on what happens.

Have a great trading day
Steve Hoven

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