EDGAR Online, Inc. (EDGR)

[hebercreeper]

EDGR...is this capable of a bounce? Good grief...the wait for me continues.

http://finance.yahoo.com/news/EDGAR-Online-Introduces-I-prnews-737000551.html?x=0

A PR today resulted in even less volume than yesterday as the persistent seller and ugly trading has deterred a lot of traders. Chart clearly shows the seller is plenty happy to dump at .40 range but hasn't driven it down much beyond that. I've used this as an opportunity to average down. Basically, I view this seller is allowing me to get a sizeable position at a price I like.

I think this is a great candidate to be a micro cap runner into January but it is not a very liquid/fluid/sexy trading stock. I'll share some DD:

XBRL- Extensible Business Reporting Language: Any of you that actually review SEC filings of listed companies have noticed the transition to the "interactive" filings, which are XBRL filings. This format enables quicker identification of relevant information (as opposed to opening a massive annual report and sifting through the legalese to get what you want).

XBRL standard is being adopted worldwide in asset classes & securities more than just common stock. EDGR has the largest database of US public filings in the XBRL language and they could possibly be granted a patent on the XBRL search engine obtained in the UB Matrix acquisition last year. My speculation is that the confidential treatment orders in the list of Edgar Online's SEC filings pertain to this patent application. This could add some sudden appeal if granted.

I see EDGR as a likely acquisition target based on future growth of the XBRL space. IBM acquired Clarity Systems last year to gain a foothold in XBRL & SAP and Oracle are partners leveraging EDGR technology. A decent premium to current market price is a drop in the bucket to one of these players. There are a number of reasons EDGR wouldn't sell at less than a 300% premium to current price but that's another topic. IBM's acquisition of Clarity Systems validated this space.

Growth is nice- EDGR has guided for 35% growth this year and 25%+ next year w/o knowing how upcoming product launches will be adopted. This is what we know to be growth drivers in 2012:

1)XBRL tagging will be required of all mutual funds in 2012
2)EDGR recent partnership to provide XBRL services with OTC markets
3)Detailed footnote tagging for future filings of existing customers (recurring revenue)

Based on the XBRL Cloud Dashboard, market share has been increasing in the past month.

https://edgardashboard.xbrlcloud.com/edgar-dashboard/dashboard.do

The dashboard shows the past 100 XBRL filings to the SEC at any given time. Ctrl-F Edgar for a quick snapshot...anything in the teens and higher should be viewed as a positive IMO.

There isn't much debt here and little overhang for a while as conversion rights on preferreds are 1.10 and higher. Late 2012 should be when they turn the corner to profitability and are able to begin recognizing the benefit of nearly $50 million in NOL carryforwards to offset future income tax. For this to happen, management needs to deliver.

The negatives:

XBRL filing is a low margin business compared to their past driver of data & subscription services. Companies are racing to secure their piece of this market at a temporary expense to the bottom line. To maximize the impact of higher margin value added analyticial services currently in development, EDGR must secure a relevant share of the XBRL market now.

The stock has been trading ugly with the big seller, likely Dawson Capital, in place. My guess is there are less than 500k shares left to be dumped. Strictly a guess based on volume since Q3 results and Dawson position size.

Management interests have been called into question as many feel Bain Capital (largest shareholder) wants to take the company private to spin off at a much higher valuation at a later date. After posting record revenue, for some reason the company felt compelled to include a liquidity statement in the Q3 earnings release. No going concern, 12+ months of cash at recent burn rate...who knows. Needless to say, a panic dump ensued which brings us where we are today. Three positive PR's later have me thinking management may be interested in a higher share price but who knows.

After seeing REVU (another Bain interest) finally starting to move, EDGR could be in play before you know it. I am holding a grip of shares and see a quick 50% possible as Dawson finishes selling.

All my opinion...always do your own research before buying stocks, especially illiquid names.