Added another 1150 shares of nmgc this morning at 9.27--bringing me up to 2000 shares at average cost the same as this morning's purchase--9.27. Created a margin debt of $11,000 using SMA.
Rarely use margin buying--so this is a short term momentum play for me. Objective: To start exiting about in the $18 area. Was up to the "wee hours" listening to company's December conference call. The .12 positive earnings--first since end of 1999--was due to a one time $6 million licensing contract with Sony. With this in hand, 4 or 5 other customers are in the process of negotiations with company. AND - each contract is likely to be larger than the Sony contract. Projecting price of stock with 1997-1999 prices and positve Q earnings then--NMGC was then in a channel of $55 - $120. Prorating present trends, I come up with a price short term of about 17 to 18.
What is fascinating here is that if NMGC hits a second or several new licensing contracts this year, it could really take off. Because of semi-conductor component stock historically held a P/E ratio of roughly 17 to 22.
The fiscal year ends January 31st--and annual report will not be out until late April. Appears to me the really good news is likely to be in company's 2nd Q--April 30 through July 30th. If successful with present strategy, would likely go in about 3 weeks before second Q ends with a fairly sizeable order. Recent good news that tripled the stock overnight was well contained with little to no insider leakage as reflected in no prior earnings report price or volume rises.
Very volatile and risky stock. But for those interested in short term plays--this one of Lonestar's is very interesting. Waitedg.
AI
