They seem to really be ramping up purchases, loans, and investments in the future now. Not really being content to use their proprietary product to increase money while increasing production for their customers to the point of higher profitability.
It may not all work out as I have no idea what they're investing in besides a 2nd proprietary device they hope to release and expanded production capacity, but it seems like they have enough cash on hand to do that stuff and they have their sights higher. It's become more risky, but everything else seems to be hitting save for weird loans to obscure companies. My sights and hopes are increasing for an upside that is greater than the 100MM company I thought they might be worth with obviously an increased risk if they fail like the impairment from last quarter. Still the core business seems to be able to weather some failed investments.

108k shares repurchased since end of June at an average price of about $10.18 - I think that's going to look like a great price by this time next week. I'm sure you are right that they would have continued the repurchased through october too.

Also $17m backlog all of which is going out over the next 3 quarters! Suggests to me they should be able to sustain these kind of quarterly results.

I finally got to looking into the 10-Q and reading all the way through rather than skimming. Could not find a breakdown of revenue of what is from their new PDEX device vs the contract manufacturing for customers.

Find it odd they did all the repurchasing when the stock price was much higher. I assume it's because the proprietary device they made is doing really well, but that could be the optimist in me.

I don't believe any of the revenue is from the new product they developed. See page 16 of the 10Q or the 8k press release that came out before the annual report. It won't be pdex branded any more, they've entered a contract to private label it and sales won't start until late fiscal 2019.

Also regarding the repurchase price I imagine $11 doesn't looks expensive if you have some idea you are going to do $1.4m per quarter in net income going forward. If you are wondering why they only ramped up the repurchases in September, I would guess it relates to the $5m loan they took out at the start of September.

I understand the loan part, but shouldn't they be forward looking and get that loan earlier?

Also, the CEO said in an interview back in the Spring I believe that the device would be ready Q1 of 2019 and sales would start immediately which was this past quarter.

Yea I vaguely remember something like that. But was that before they got the contract to private label it? Maybe it's a bit more involved than just putting the customers name on it, they might need to do some extra development. Or the customer just doesn't want it yet.

Either way we have the revenues for that still to come.

On the loan, RvK mentioned it in the press release before the 10Q, and I got the impression that it might have taken a little while to get the terms they wanted.

Thinking on it some more maybe they got better terms on the loan once they could show the improved profits or increased orders.

Hey guys sorry I haven't been able to update here for a long time.

When I look back on the story here, we ended up being right on the big things that really mattered: (1). The stock at the time was not pricing in the revenues from these new contracts that were ramping up - there was a severe mispricing (2). The business had significant operating leverage that would allow their bottom line to increase dramatically and achieve 20%+ ebitda margins. (3) The higher EBITDA margins translated into higher valuation multiples, the stock was trading at .4x EV/Rev at the time and today trades somewhere around 1.5x EV/Rev which is the reason why the sales have doubled-ish but the stock has gone up 7x. (4) I thought this management team was talented and driven to achieve results and I still believe that today.

Obviously there was also some luck involved when the largest customer ends up ramping to $18m/yr or whatever instead of the $5m I assumed when I originally wrote this 3.5 years ago. I knew that contract was the "largest in company history" but obviously couldn't have predicted it would reach the levels it has but I think this investment still would have done fine had the largest customer not ramped up that large but you need some things to go your way to make 700% in 3.5 years. We were somewhat unlucky when the former largest customer went from $5m/yr to $0 when I had heard that that business had been secured which turned out to not be the case.

Anyways, its been a fun ride. I'm glad lots of people here agreed with my thoughts at the time and came along for the ride and have made lots of money. Hopefully people have held on all the way up, since I did stress the importance of that in my first post . I haven't bought or sold a share of the company in well over a year now and still own something like 90% of the shares I originally owned when I wrote this up.

Thanks for sharing bci. I piggy backed a small position in the $2.xxs doing no research beyond this thread.

This stock has carried my whole portfolio over the last year which has struggled beyond PDEX. Luckily I'm ridiculously overweight in it with an average cost around 6.50 as I kept adding on the way up and took some off after last earnings before buying it back and more right before this earnings.
I just like that if you assume last earnings is the new normal then the stock even on today's highs is at a 10 P/E ratio and we don't think they have started to really realize the profits on their new private device or fully ramped up production for their customers.

This and TWLO have been 2 of the most successful investments in my portfolio the last 2 years, which is a good thing since I was decently overweight in them. Thank you for sharing such a detailed thesis with us and updating your projections as time went on. 2+2 owes you big time, and I'm personally very grateful for your insights.

I'm going to pick up more shares if it keeps dropping down around 10.50

Boom!

am i missing something?

I ended up grabbing more at 11.50 so this is nice. I'd guess it's just a big buyer loading up. I haven't even looked at their quarterly report from the 19th lol.

This is tilting because I had an order sitting for like 30 minutes when it was at 7$ but got annoyed by low liquidity and cancelled. Anyway congrats guys, very nice pick and analysis

I learned that lesson the hard way building my position here and on several other similar investments where I planned to hold 12-24+ months and had a thesis where if it played out I'd be looking at 200-500%+ returns. Just suck it up and pay the spread. If you pay 10-15% above where the market is that hour or day or week, it's nearly irrelevant 18 months down the road and I've felt bigger regrets about being penny wise and pound foolish on those bids when looking back than if I pay a moderate premium to build the position and ensure that I build those holdings. Would love to hear more about how others make that judgment call.

I don't think anything happened yesterday, at least that I'm aware of other than some purchases, moving the price up 10%.

Earnings are probably going to come out at the end of next week or the week after.

Agreed, this thread is BFI at its best. Congrats to all of you who have been in with OP who obviously deserves the lion's share of the credit.

Punter would you be making this post if the stock was back in the single digits? Imagine if you hit the ask every time you thought you had a good read. My guess is that wouldn't work too well especially in microcaps with thin liquidity. There is such a thing as being too patient (complacent) but not in this case.

Just for some perspective guys, Prodex ipod on August 6, 1986 at... $16.5. Was trading at ATL of $0.75 in March of 1990 and then got to its ATH of $17.25 in May of 1996. Pretty intense long term volatility.

numbers are out

EPS of 0.28/share. Revenue up nicely. Also announced agreement with customer for $3.4 million for private labeled device. Quick read indicates another strong quarter.

https://www.sec.gov/Archives/edgar/d...dex_ex99z1.htm

My account shows a big jump, but the app isn't updating the price. Looks like 4%

there's basically no liquidity even during market hours, i wouldn't read to much into after-hours trading here