Reiterating Bullish Stance on Real Networks

In February, we highlighted a small-cap name with a big history called Real Networks ($RNWK). Yesterday, the company announced an equity raise priced at $2.70 and as of the writing of this update, the share price continued to fall. Since recommending the stock, the price peaked at $6.66 and then began falling in tandem with other small-cap names. However, since the equity raise came up, the fall in price has accelerated. We're convinced the fundamentals of the company that attracted us to it in the first place haven't changed all that much, and have indeed improved.

We wanted to provide our subscribers an update on our thinking about this name given the extreme volatility and the recent retreat in price of the shares. There are a lot of additional risks when dealing with small-cap stocks and as we said in our first article and would like to reiterate: there is more risk in small caps so be sure to make sure your positions are appropriately sized!

We remain bullish on this company and think part of the problem is that there is NO SELL SIDE coverage of this name. Expanding the float should help address that. The float was also exceptionally small, partially because the CEO, Rob Glaser, has put $10 million of his own money in.  We monitor all of our SFN picks closely and...
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