(By Rich Bieglmeier) Last Wednesday and Thursday, BroadVision, Inc. (BVSN
) jumped from $8.13 to $11.01 on Big-Gulp sized volume. The impressive move and activity happened on no news. MarketWatch explained that the gains and volume were likely driven by "chart moves."
Maybe, but it looks more like institutional buying to iStock. According to our accounting, more than $4 million dollars flowed into internet software & services company. It's not been our experience that retail chart watchers buy 8.25% of a company's market cap on bullish moving-average crossovers; although, the chart does look good.
Wednesday's 1.98 million shares were one of the biggest trading days of 2012. Thursday followed up with another 1.38 million shares. Sometimes, big spikes are followed by big spikes in the stock price. Investors should be on the lookout for the stock price to top $12 for the next breakout. If shares can get the better of $12.50, then BVSN should begin to climb the hill it created by falling from more than $50 earlier in 2012.
It's no wonder the stock price jumped from a $50 plane without an adequate parachute. For the past six months, revenues fell by 17.8%; however, the pace slowed a bit in the most recent quarter as sales dropped by 9.7%. Meanwhile, earnings per share losses continue to pile up. For the June quarter, the company lost 54 cents and stock is down 83 cents for the first half of 2012.
Oddly, it appears that BroadVision isn't currently followed by any analysts on Wall Street. There are no earnings estimates or "buy", "sell", or "hold" recommendations, and the company has limited institutional ownership with 9.4%. However, insiders still own nearly 40% of the outstanding stock. This combination is actually good news for investors. Studies have shown that under-followed companies with high insider ownership are strong candidates for out-performance.
Management is trying to turnaround BroadVision with Clearvale, a cloud-based social enterprise ecosystem that turns the workforce into an online community – think Google Business Tools. We are skeptical that the company can successfully compete with the likes of Google – especially since Google is giving away many similar features for free until 2014.
We do like the $52.0 million of cash and cash equivalents and short-term investments the tech company has on hand, which translates to more than $11 per share in cash. Meanwhile, they have no long-term debt. The strong cash position gives management flexibility to borrow if needed; although, borrowing at this stage wouldn't enhance shareholder value in our view – which is about the only thing holding the stock up in iStock's opinion.
In our opinion, some institution recognized the cash value per share discount BroadVision was trading at, when at $8. Hopping in triggered some unusual volume and momentum screens that attracted more buyers on Thursday and Friday of last week. Either that, or good news is about to be released.
The next scheduled news announcement is third quarter earnings on October 25. Hopefully, management will have more to offer in the upcoming conference call than a sales pitch for Clearvale. Until the downward sloping profit and revenue trends reverse, iStock would look elsewhere or wait for BroadVision, Inc. (BVSN) to trade 20%-25% lower than its cash value. At least, then, it is a self-financing takeover target.