CATASYS INC...

originally published Wednesday, July 06, 2016

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Catasys is looking like a compelling buy here, despite the broad market looking worse and worse. The fundamentals of the company in a nutshell are this; under Obamacare, the cost to medical insurance companies of treating drug addicts etc is about $70,000 per patient. Catasys has developed targeting algorithms that make it possible to reduce the cost per patient drastically, to something like $10,000 to $15,000 per patient. Many States have already signed with Catasys, about 10 so far, which means that there are a lot more States to go.

Technically, the stock is extremely tightly held, so much so that it is almost a private company. 75% of the stock is held by one owner, who was a leading figure in Drexel Burnham, 15% by other management, so of the 55 million shares in issue, the float is only 6.3 million – that is all that is available to the public – so this is a potentially explosively bullish situation.

Here is the latest 6-month chart…


I had expected to have more time to write this up, but bullish news came out overnight.

I think we are all agreed that Catasys stock is cheap now compared to its level at the start of 2007, when it was More than 5 thousand times the current price….


Of course it is meaningless to compare the company to what it was 10 or so years ago, since it has obviously been through a major crisis since and has doubtless been restructured, so that it bears no resemblance to what it was back then. Still, it is interesting to see its history, and it is useful to observe its steadily climbing Accum-Distrib line, which is a very positive sign.

Given the very low price of recent years, a log chart is required to make sense of what has been going on in the recent past. On the long-term log chart, below, for the same timeframe as the arithmetic chart above, we can see that while the downtrend does remain in force, it is converging quite strongly, a definite bullish sign, and as on the arithmetic chart above, the strongly climbing Accum-Distrib line is a very positive sign. In contrast, however, the On-balance Volume line at the bottom of the chart looks weak. The explanation for this disparity is that the Accum-Distrib line is compiled on a tick by tick basis, whereas the On-balance Volume line is only end of day – if the stock closes down on the day, the volume for the day is subtracted from the running total, if it closes up, it is added. As we can see on the 6-month chart, there are many days of trading in this stock where the price drops intraday, only to rally back before the close, leaving a lot of bullish long-tailed candles on the chart. It is this continuous “chasing it back up” that is causing the Accum-Distrib line to rise relentlessly even as the OBV line remains moribund.


Catasys Inc, CATS on OTC, closed at $0.66 on 5th July 16.

Catasys Inc website End of update.


Posted at 9.25 am EDT on 6th July 16.

The above represents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment or securities advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market technical analyst, Clive Maund is not a Registered Investment Advisor or Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks cannot be construed as a recommendation or solicitation to buy and sell securities.