Toby Smith Stock Review

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Toby let NMKT go 1/10/06...

ChangeWave MicroCap Investor Portfolio

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Symbol Description           Date Bought Entry Price Date Sold Sold Price Return %  
  
 NMKT   NewMarket Technology  02/17/04    $.77        01/10/06  $.32       -58.44%

Bruisers are aptly named because they inflict pain on us. These are stocks that go awry and don't pan out according to our thesis. The failure could be due to fundamental factors such as excessive dilution, an error in our evaluation, or simply a case of weak performers failing to survive our cuts.

For the two companies that we will be removing from our Buy List today, Man Sang Holdings (MHJ) and NewMarket Technology (NMKT), we suggest that it is a combination of all three.

NewMarket is a different kind of animal. We had high expectations for the company in early 2004 because of its foray into the corporate VOIP markets and its aggressive strategies to introduce new technologies. As if on cue, NMKT within months rose to more than +75% above our entry price -- only to reverse course and plummet to current levels.

Regardless, the basis of our decision is this: We are sick and tired of paying the "tuition fees" for the management of these companies.

China-based Man Sang clearly struggles in communicating any messages with U.S. analysts and investors, and also lacks the transparency we like to see financially and operationally.

NewMarket's CEO is a general with a big vision and battle plan, but little in the way of experience to execute. In confessional-like correspondence, he repeatedly pleads the case of the inexperienced CEO of a penny-stock company who is learning the ways of microcap land -- only it's happening at our expense. We would prefer to see NMKT hire a CFO with the talent and experience to handle such issues, freeing the CEO to focus on operations.

If you currently hold either Man Sang or NewMarket, we think you might very well enjoy upticks in the months ahead. However, you will likely do better by shifting into other, more promising microcaps in our portfolio.