Annual Review — Speculations

Checking in on all the picks in our Speculations spreadsheet

By Travis Johnson, Stock Gumshoe, January 23, 2014

I’ve been putting out my updated thoughts on each of our Irregulars spreadsheet companies (mostly past “Idea of the Month” stocks) over the last couple weeks, and now that I’m done looking at all of the “Speculations” on that list I thought I should combine them into one document to make it a bit easier to read.

Haven’t gotten to all the watchlist stocks yet this year, some of which I’ll have comments on in the days to come, but we looked at the “core” stocks earlier if you missed that note. As with the core list, this (longer) list is in alphabetical order and excludes only Altius, which moved up to “Core,” and the TARP Warrants, which I covered here — a few of these other blurbs were shared a week ago, but I thought I’d keep them together for convenience:

Aware, Inc. (AWRE) — Buy up to $6.

We are still waiting to see whether Aware can emerge with a meaningful and/or profitable business in biometrics, their core operations are very much obscured recently by the decision to cut loose their nonprofitable DSL assurance business so they are really focused on biometrics now. This is a $135 million company with $75 million in cash thanks to some patent sales in past years, so that story hasn’t changed much since we first wrote about them in July. The stock has climbed about a dollar since them, mostly in the last two months. There is no great instant catalyst I’m aware of, though the anticipation among investors is that there might be big licensing deals for (or sales of) their biometrics patents — that seems unlikely to me, though I’d like to see the company buy back a lot of stock with their huge cash pile as they try to create a consistently profitable business with growth potential. A stock this tiny with a huge cash pile makes me nervous, because they could easily do something foolish with the money, but it does provide a bulwark for the shares and I think it’s still worth buying this one if you’re willing to wait and see how it plays out — the downside potential is essentially the value of the cash on the books, which is $3.30. I would not pay more than $6, though, not until we have some more evidence that the company can become ...

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