Quarterly Report

Here's a graph of the portfolio's performance for the first quarter:


Since my approach is to invest in companies that have the potential for high returns in the six- to twelve-month range, it's premature to begin assessing the success of that strategy, but given the turbulence in the market, and the high degree of risk in small-cap stocks, I think it's done fairly well so far.

Of the 13 companies I've invested in, I've only made two serious mistakes (Pilgrim Petroleum and GoIP Global), though a couple of others (H3 Enterprises and Blue Star Health) are shaping up to be serious dogs, and the jury's still out on whether the remainder will live up to their potential.

Weekly Summary

There have been a few changes in my portfolio this past week - for the better, mostly, and I'm generally pleased with its performance thus far:


Granted, much of the gain is due to GOGB, which is still trading in small quantities - but it's been going on for so long that I'm beginning to doubt whether it's one or two individuals goofing around with the stock price. All the same, it's not attracting many buyers, and volume remains unremarkable.

I also feel pretty smug about dumping E-Trade at $4.12 a share earlier this week - it's slipped further (closed at $3.74 today) and the cheery news has dried up. While none of the major analysts have downgraded it lately, that's bound to happen. I only wish I had smartened up a month ago, when it peeked over the $5 mark.

Averaging Down

When it comes to penny stocks, I'm generally not a fan of averaging down - it's sending good money after bad to double your holdings in a stock that's plummeted in price and shows no sign of recovery.

However, when a stock seems to be picking up after a long slump and signs seem positive, it can be a good idea - and that's just the case where Revlon (REV) is concerned. The company seems to be getting back on its feet, and it's getting good buzz in the financial press, and since I have the cash lying fallow, I've decided to double down on this company ... here's hoping it pays off.

Bell Buckle Holdings (BLLB)

I lamented not getting into the game with Bell Buckle Holdings, a company I had been watching for some time but was reluctant to get involved with. The stock bounded from .0017 to .0048 in a short period of time, and my remark was "let's see where it stands a month from now."

A month has passed, so I figured it was worth mentioning that the stock peaked at .0051, fell to the low .0030's, and has slowly sunk back to around where it was at the beginning. I had been hoping to ride the excitement in anticipation to its OTC move (which never happened), and just didn't have the guts to jump ... so I missed out on that one.

That's the way it goes, sometimes.

Far East Energy (FEEC)

Company:	Far East Energy Corporation
Web Site:	http://www.fareastenergy.com
Purchase Price:	$0.42
Current Price:	Click Here

Far East Energy Corporation is a domestic firm (headquartered in Houston) that is working with to develop the natural gas reserves in China's the Shanxi Province, where there are considerable unexploited reserves of natural gas and coal.

After a lot of hype, the price of the stock soared to a peak of $1.60 summer, but speculators lost patience while waiting for the company to test and prove the production capabilities of an area hyped as having the potential to become one of the largest and most profitable sources in the world.

The company has recently completed a four-month exploratory study of the region, and the results have been positive, and I expect that the fever could catch again, and the price of the stock could go back to those same levels. And so, I'm getting in early and hoping to cash out on the next wave of enthusiasm.

Directed Electronics (DEIX)

Company:	Directed Electronics
Web Site:	http://www. polkaudio.com
Purchase Price:	$1.68
Current Price:	Click Here

Directed Electronics is an established manufacturer of mid-range home audio products and has been around for years, struggling to find its niche. Historically, its products were too expensive to attract a mass market, while their products were not up to the level demanded by audiophiles who pay a premium price for high-end equipment.

Recently, the company has come out with a line of accessories for the popular iPod music player that are being carried in Apple stores and discount retailers. The company has also been able to make a substantial reduction in its debt (in the proper way - with cash flow rather than equity).

The stock price has shown a slight upturn, and given the improvement in their capital structure and refocused product positioning, it could be the beginning of a significant uptrend.

Out with ETFC

Today, I sold out of my position in E-trade. I bought into the company earlier this year, and my sense at the time was that it was headed for a turn-around ... and the stock rallied to over $5.00. But then, the new CEO made the statement that he had no intention of divesting the company of the subprime loans that are dragging the company down, and the price has been slipping ever since.

The stock regained some footing last week, with the swings in the market, but I no longer have much confidence that it will make a full recovery, so I've gotten out before it continues back along its downward trend.


In all, I've no complaints about the money I've made here - it's a very tidy profit, but I don't want to get caught holding the bag and hoping that the CEO gets over his insistence on hanging onto the "assets" that are dragging the company down.

Weekly Summary

In spite of a turbulent week on the big boards, prices of penny stocks have remained realtively stable, and damage to my portfolio has been minimal:

My total loss for the week comes to less than $100, with no notable losses (or gains, for that matter) in any of my positions.

SOYO's Aspirations for 2008

In a press release this morning, SOYO Group shared its dreams for the upcoming year:

For the fiscal year 2008, SOYO projects net revenues of at least $140 million, and projects net income of at least $5 million. The Company expects to see significant growth in its SOYO and Prive brands, and a new revenue stream with the introduction of the Honeywell Consumer Electronics product line.

These seem like lofty goals from a company that managed to produce half as much income on less than a quarter the revenue in FY 2007, but they are not entirely unreasonable given their rapid growth since expanding into consumer electronics.

A conference call is scheduled for next week to answer shareholder questions, though admittedly, I probably won't tune in to hear the details. Until they start shipping units and banking profits, it's just talk.

Weekly Summary

Another week has passed, and there's been some improvement in my portfolio, though I still have the sense that GOGB is artificially inflated, as its volume has been extremely low. Also, it's clear to me that BLSH was a bad pick, and a few others are headed into the deep:


Some of these losses may be due to the general state of the market, and I'm deep enough in the red in my main portfolio that I don't need to take any additional capital losses at this time. Neither am I looking to invest additional cash in any of the companies on my watch list, as their performance has been consistently bad these pas few months. In all, it's a bad time to be in the market, but I'm hoping to ride it out.

Reviving Revlon

An article in today's Wall Street Journal (here) details Revlon's plan to revitalize the brand and gain some of the market share that it recently lost in the wake of its dismal failure to successfully launch its Vital Radiance cosmetics line. The solution: back to basics.

The Vital Radiance line failed largely because of marketing missteps. For example, it didn't incorporate the well-known Revlon brand name, hired unrecognizable models as spokeswomen and cost more than consumers cared to spend. ...

This time around, Revlon is playing it more conservatively with its new mineral foundation, blush and eye shadow under its ColorStay cosmetics line ... other new products, including the line of customizable foundation as well as shades of Revlon nail polish and lipstick, also feature marketing that heavily emphasizes the Revlon name.

While the price of the stock has been hovering around one dollar for the past two years, its market share has slipped only one percent, and the company is running well into the black. It may take some time to dig themselves out, but I have a lot of confidence in its prospects for success.

SOYO to Release 2007 Year End Results

Today, SOYO Inc. announced that the company will release 2007 year end results and fourth quarter numbers on March 27, 2008, but did not disclose any details that would support or undermine the general sense among investors that the company may be gaining strength.

I don't expect the 2007 numbers to be encouraging, as the company has only recently begun to scale its production and distribution and position its products within the marketplace.

However, confidence may waver and many investors who (unreasonably) expected the company to be an overnight success may dump their shares. It may be a good opportunity for anyone with a long-range perspective to load up and average down.

Weekly Summary

What goes up, comes down, as the performance of my portfolio over the past couple of weeks has shown:


I took a loss on Pilgrim Petroleum, just to get away from a situation that was starting to smell very fishy, and the price of GoIP has been suspiciously inflated for weeks, and is now beginning to normalize - but values have been slipping across the board and the losses are mounting.

I expect I'll be in the red next week, and I expect that will be an ongoing situation until the market in general shows some signs of recovery.

E-Trade Slipping

E*Trade released its 2007 financial statements this week, and the portrait is more dismal than anyone seemed to expect: a 1.7 billion dollar loss for last year. The new CEO's remarks in a interview with forbes.com, that he would rather face the risk of the firm's home equity portfolio than sell it off (unless someone was going to offer "100 cents on the dollar to buy it") only exacerbated doubts about the continued viability of the firm.

And so, the company is going to continue to flounder, at least in the short run, and I fully expect my investment in it to slide slowly 9or perhaps quickly) into the red, possibly becoming just another tax write-off.

GOGB: Slow Cashout

Over the past three weeks, I've been slowly selling off blocks of GOGB shares. I'd have preferred to sell them all at once, but volume has been extremely low as trades were taking place at well above the stock's objective value. That's one of the hazards of investing in penny stocks, especially the triple-zero ones.


In the end, I've sold off half of my holdings at an average profit of 200% (tripling my investment), but had to pay four commissions instead of one.

Since I have faith in the company's long-term prospects, I'll retain the other portion, in hopes that the company takes off for legitimate reasons.