Before we get started today, I want to bring several important items to your attention.
As I’ve mentioned in previous alerts, Wall Street Daily has officially merged with Agora Financial.
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So with that business taken care of, let’s get to the actionable content…
The Mystery Buyer Is Revealed
Ever since I told you about ARI Network Services Inc. (ARIS) in our original recommendation almost a year ago, the stock has soared, rising to new 52-week highs in recent weeks on heavy volume.
On July 1, I noticed a pair of large block trades that crossed the tape for over two million shares.
At that time, the identity of the big buyer(s) remained a mystery. But not anymore.
A recent SEC filing reveals that 12 West Capital Management – a hedge fund with over $1.6 billion in assets under management – purchased 1,020,000 shares.
Clearly, other savvy investors have followed 12 West’s lead. Trading volume in ARI has remained well above the daily average in 12 out of the last 14 trading sessions.
Based on several internet monitoring posts I have set up, it’s clear that momentum traders are likewise noticing the stock, which should attract even more buyers in the days and weeks ahead.
The good news is that there’s no immediate risk of investors bidding up shares to a nosebleed – and therefore, unsustainable – level.
As I noted before, fair value for the stock is at least $7 per share. But in a takeover, ARI could fetch as much as $10 per share. So despite the recent rally, there’s still plenty of room for shares to run even higher.
After a conference call with the CEO and CFO yesterday morning, I’m more encouraged than ever about the company’s long-term growth prospects.
More specifically, a comprehensive reprogramming of the company’s critical software is set to roll out in September, which promises to improve leads for customers, increase conversion rates, reduce churn, and reduce costs.
Or, in short, it promises to boost sales, reduce costs, and therefore increase profits. And as we all know, share prices ultimately follow earnings.
As a result, I’m reiterating my “Buy” recommendation and raising our limit price to $5.25 from $4.75.
If you haven’t entered a position yet, don’t delay.
Ahead of the tape,
Chief Technology Analyst, Digital Fortunes