TPS Position Update – May 22, 2015

. . . . Wave Systems (NASD: WAVX) – Sell

WAVX, one of our oldest positions, has shown huge potential in the past.  However, 2015 has been a very subpar year for the hardware-based security company.

In fact, the company just announced a new public offering of 7.3 million shares for $4.7 million.  The new issuance is pricing the new shares at $0.65, a steep discount from the stock’s price prior to the offering.

Not only will the additional offering dilute the stock, but it’s also substantially lowering the price.  It’s time for us to exit this position and divert our capital to more lucrative opportunities.

. . . . Gravity (NASD: GRVY) – Sell

As an avid video gamer, I had high hopes for GRVY.  The Korean game maker has some big titles under its name, with plenty of upside potential.

However, the stock has basically done nothing over the entire course of our ownership.  The company has failed to produce strong earnings or capture a significant amount of new players.

Moreover, the stock has now undergone a 1 for 8 reverse split.  Generally, reverse splits aren’t good news for investors.  Let’s go ahead and sell out of this position here.

. . . . Arch Coal (NYSE: ACI) – Sell

The coal industry never had a chance.  Well, it seemed like there may be a future for “clean coal” this year, and that coal companies might rebound to some extent.

Alas, no such thing occurred.  The continued drop in oil and natural gas prices put even more downward pressure on coal prices.  Basically, no amount of internal cost cutting can save the once massive US coal industry.

With oil prices not expecting to recover for the foreseeable future, and given the push for greener energy, coal has essentially lost its place in the US.  We’re going to move on from ACI as well.  Sell your shares here.

Action To Take

• Sell Wave Systems (NASD: WAVX)
• Sell Gravity (NASD: GRVY)
• Sell Arch Coal (NYSE: ACI)

Category: TPS Update