Monday, April 13

C- level Recent Positive Insider Buying With Micro Cap Value

I’ve been sharing Form 4 micro cap purchases , from February 25, 2015 to April 10, 2015.  Today’s post takes a closer look.

My first approach focuses on company’s officers. CEO, CFO, COO (officers) activity carry more predictive power. Further, published studies show insider activity from smaller companies (micro cap) is more useful in determining the stock’s direction.
To measure conviction, I ranked shares purchased as a percentage of shares in float. Patience, waiting for your bid, building a position over time is advantageous with tiny companies.
These are a few convincing purchases from C-level executives (Officers) from February 25, 2015 to April 10, 2015.
 

Luby's, Inc. (LUB)

An interesting value attribute of Luby’s,  it’s the cheapest of the Restaurant stocks when comparing the acquisition cost (enterprise value) to owned real estate. Luby’s  was founded in 1947.

Bargain Status: Real Estate Rich Highly Fixable Opportunity










long LUB



PHI Inc. (PHII)
























Taitron Components Inc. (TAIT)







































Gordmans Stores, Inc. (GMAN)

Old post "Cheap and Risky founded 1915: 52 Change -58.40% "





































AeroCentury Corp. (ACY)























Other notable insider buying click to view details on google Docs.

Click to view quotes for all notable ideas.

Monday, April 6

Thoughtless Selling Creates This Opportunity

Dawson Geophysical Company (DWSN) $4.66 on 04/06/15
 
 
Dawson didn’t wait for my planned post. Thursday 04/02/15 DWSN moved up .34 or 8.45% on the day. Today it closed higher. It was thoughtless selling (-74% over 52 weeks) without an equivalent correlated destruction in operations or asset's value. This out sized uncorrelated price action to asset’s replacement value motivated the investigation.

Dawson Geophysical Co provides seismic data acquisition services throughout the United States and Canada. The Company acquires geophysical data using 3-D survey techniques. Seismic crews supply data to companies exploring oil, natural gas. Further, they serve the potash mining industry. The Company currently owns equipment for 16 land-based seismic data acquisition crews and 73 vibration vehicles. Dawson Geophysical was founded in 1952.

Existing assets are available at a deep discount to its history and industry. Enterprise value is 109.42 (MC = 100.20M + Ttl Liab = 52.622M – Cash 43.394M) or 89.70M using excluding current liabilities.  Total Assets for the MRQ are 246.840M, Non cash assets are 203.44M (246.840-43.394 = 203.44M). EV to Non Cash Assets = .44 or 89.70EV/203.44Non Cash Assets.

These assets generated 118.847M 2014 annual revenue. Produced net cash provided by operating activities, $9,255,375 for the year ended December 31, 2014.

Dawson controls a major portion of the domestic onshore seismic market. The seismic industry particularly DWSN has been indiscriminately crushed. But DWSN strong financial position will take it to the other side of this industry depression. Dawson's market share gains coupled with  competitors closing or taking on excessive debt will reward long term shareholders.
October 2014 Dawson smartly agreed to a merger with TGC Industries (TGE). This provides synergies, access to Canada, modest overhead reduction. After the combination, New Dawson has 21.70M shares outstanding. 

Reasons to consider a closer look for longer term investors.
Historical low valuations using EV to sales, EV to GP, EV to non cash assets, P/TB (see table below)
21% of shares outstanding held by insiders.
Institutional ownership from respected value institutions, Royce, Robeco, Perritt and others.
No Wall Street coverage
Mean reversion candidate down -74% prior 52 weeks,
Debt free market leader in land based geophysical services,
Contrarian industry idea with strength to lead industry niche once market improves
No 2015 insider selling
Strategic business combination with TGC Industries, October 2014. TGC has a strong balance sheet, complementary equipment, expanded client base, creates an opportunity for improved utilization rates and overhead reduction.





 
 
 
 



 
 
 
 
Long DWSN

Sunday, March 29

Overlooked Value Outlier Oversold


McCoy Global trades at a discount to its reproduction cost, tangible book value coupled with growing sales, dividend yield, book value and recently announced share buyback. Stocks is down -42.31% over the prior 52 weeks.
 
McCoy Global (MCCRF) $3.00 or (MCB.TO) $3.78CAD 
McCoy Corporation established in 1914 is Canada based provides products and services for the global energy industry. It operates internationally through direct sales and distributors

McCoy is  "an innovator of tubular handling, assembly and measurement equipment used for making up threaded connections in the oil and gas industry. Further, its engaged in the design, manufacture and distribution of capital equipment”. Source Morningstar


McCoy has two primary segments, energy products/ services and mobile solutions.
The Energy Products and Services segment includes the Drilling and Completions division, also Coatings / Hydraulics division. Mobile Solutions is the Trailers division. It manufactures heavy haul, forestry and oilfield trailers along with drilling and well servicing chassis.

Summary Investing points;
McCoy has an unique combination of value attributes making it a value outlier. The price trades  below its tangible book value, growing YOY sales of 8.40%, growing book value per share since 2009,  consistent strong ROIC of 12.62% TTM, multi year low valuation for EV/GP,  growing dividend yield TTM = 5.90%, strong balance sheet and free cash flow, solid Z score with a high F score. 52 change in share price was negative -42.31%.

McCoy Recently announced (03/25/15) an approved large share buyback. Click to read

"approval from the Toronto Stock Exchange to purchase up to 1,384,711 common shares, representing approximately 5% of the issued and outstanding common shares of McCoy.
McCoy's management and board of directors believe that the current market price of its common shares does not represent the underlying value of the Company, and has determined that the repurchase of its common shares is a desirable use of funds and in the best interests of the Company and its shareholders."
 

 
 
 
 
 
 
 
 
 
 
Market Cap: 82.95M , Enterprise:  59.24M
Trailing P/E (ttm): 5.76 , Price/Sales (ttm):  0.80
Price/Book (mrq):  0.93
Enterprise Value/Revenue (ttm):  0.62 , Enterprise Value/EBITDA (ttm): 3.73
Return on Assets (ttm): 7.22% , Return on Equity (ttm): 9.95%
Revenue (ttm):  96.26M , Revenue Per Share (ttm):  3.49
Qtrly Revenue Growth (yoy):  8.40%
52-Week Change:      -42.31%
52-Week High (Jul 7, 2014): 6.18 , 52-Week Low (Feb 3, 2015):    2.78
Shares Outstanding:27.69M , Float:  20.70M
Trailing Annual Dividend Yield:  5.90%     

 No position in MCCRF/MCB.TO

Sunday, March 22

Good Company at a Cheap Price, Micro Cap


Computer Task Group Inc (CTG): “Computer Task Group Inc is an IT solutions and staffing services company with operations in North America and Europe. The Company's services include IT Solutions and IT other Staffing.” Morningstar

IT solutions include planning, developing, implementing, and managing technology requirements. Staffing service involve the recruitment, and management of IT talent. CTG also supports organizations that need flexible IT staff . The company’s market focus includes Healthcare, Technology Service Providers, Financial Services and Energy.

CTG is cheap as measured by their earning yield , EV/EBIT = 5.77. Its a good company with a consistent high ROIC. Current ROIC is 17.30%. The ROIC can be higher or lower depending how you calculate invested capital.
Note the financial statistics below highlighting the historical low valuations and market size.  Enterprise value to tangible book, revenue, EBIT or GP are all at historical lows. Further a solid financial position is demonstrated by the Z score, zero debt, positive cash flow and 3.25% TTM dividend yield. CTG is oversold and cheap.







 
























Value institutions have maintained or increased their positions.  See below; Royce, Heartland,Robeco,TETON Westwood Mighty Mites and other respected value institutions.








 
 
 
 
 















CTG = $7.45
Market Cap: 139.67M , Enterprise Value:98.82M
Price/Book (mrq): 1.25 , Enterprise Value/Revenue (ttm): 0.25
Enterprise Value/EBITDA (ttm): 4.84

Revenue (ttm):393.27M , Qtrly Revenue Growth (yoy):-4.40%
Gross Profit (ttm):  79.34M , EBITDA (ttm):  20.43M
Total Cash (mrq): 40.86M , Total Cash Per Share (mrq): 2.18
Current Ratio (mrq):  2.57 , Book Value Per Share (mrq): 5.99
Operating Cash Flow (ttm): 6.71M ,Free Cash Flow (ttm): 7.32M
52-Week Change: -55.60%

52-Week High :17.47 , 52-Week Low : 7.27
Shares Outstanding: 18.75M  Float: 13.34M
% Held by Insiders: 32.95% , % Held by Institutions:  58.10%
Trailing Annual Dividend Yield:   3.20%








 

The stock's underperformance versus its strong valuation creates a mean reversion candidate . Below, view the stock's performance versus its industry peer group.
 
 
 
 
 
 
 

Sunday, March 15

Deep Neglect Nano Cap Value


Fuel-Tech, Inc. (FTEK): “Fuel Tech Inc is a technology company engaged in the development, commercialization and application of state-of-the-art proprietary technologies for air pollution control, process optimization, combustion efficiency and advanced engineering services.”Morningstar




Market Cap: 72.84M , Enterprise Value: 58.89M
Price/Sales (ttm):0.85, Price/Book (mrq): 0.80
Enterprise Value/Revenue (ttm): 0.70 , EV/EBITDA: 17.85
Qtrly Revenue Growth (yoy): -36.00% ,
Gross Profit (ttm): 46.82M  EBITDA (ttm):3.30M
Total Cash (mrq): 15.58M , Total Cash Per Share (mrq):    0.68
Current Ratio (mrq): 3.09 , Book Value Per Share (mrq):  3.91
Operating Cash Flow (ttm):4.86M ,Free Cash Flow (ttm):-1.00M
52-Week Change: -40.15%
52-Week High: 6.77 , 52-Week Low:  3.08
Shares Outstanding: 22.84M ,Float: 15.95M
% Held by Insiders:28.93% , % Held by Institutions: 25.80%

Short % of Float (as of Feb 27, 2015): 4.10%

Moderate positive insider activity
2014 Insider Activity
Symbol Year Month Type Title Price Paid Shares Value Shares Activity / Shares Outstanding
FTEK 2014 Dec DirectPurchase Officer 3.69 30,000 110,700 0.13%
FTEK 2014 Sep DirectPurchase Officer 4.23 60,400 255,295 0.26%
FTEK Subtotal 2014 4.05 90,400 365,995 0.40%














































 

Sunday, March 8

Institutional Negative Sentiment, Two Contrarian Thoughts


Travelzoo Inc. (TZOO): Price = $9.77

“Travelzoo Inc. is an Internet media company, which informs over 27 million subscribers, as well as millions of Web site users, about the travel and entertainment deals available from thousands of Companies.” Morningstar


Summary Thesis
The annihilated stock price creates a margin of safety with cheap strong valuation versus its industry and history. 

Down -59.16% over the past 52 weeks, Revenue growth for 10 years was 17.20%, Revenue growth for 5 years 11.70%, Book value 5 year growth was 3.60%.

Valuable website properties should entice a strategic buyer. Fly.com (a flight search engine), SuperSearch (travelzoo.com/supersearch/ for flights, hotels, vacations and car rentals. 


Founder Bartel Ralph owns 51%.




















Note the growing tangible book value per share, historically cheap EV/Revenue, current enterprise value of 89.10M versus 639.02M EV(2010),353.28M EV (2011), 253.36M EV (2011). 


Market Cap:  143.91M , Enterprise Value:  89.10M
Price/Sales (ttm): 1.04 , Price/Book (mrq):   3.71
Enterprise Value/EBITDA (ttm): 5.62
Profit Margin (ttm):  11.51% , Operating Margin (ttm): 9.48%
Return on Assets (ttm): 8.20% , Return on Equity (ttm): 45.97%
Revenue (ttm):  142.08M , Revenue Per Share (ttm):     9.62
Qtrly Revenue Growth (yoy):   -15.90%
Gross Profit (ttm):  124.17M , EBITDA (ttm):  15.87M
Total Cash (mrq): 54.81M , Total Cash Per Share (mrq):     3.72
Current Ratio (mrq):2.13 , Book Value Per Share (mrq):2.70
52-Week Change:    -59.16%
52-Week High(Mar 10, 2014):24.11 , 52-Week Low)(02/10/15): 8.45
Shares Outstanding: 14.73M , Float: 6.06M
% Held by Insiders:  52.32% , % Held by Institutions:  38.10%
Short % of Float :5.40%



Five Star Quality Care Inc. (FVE):Price = $3.56

“Five Star Quality Care Inc a healthcare and senior living provider. It is engaged in operating senior living communities, including independent living or congregate care communities, assisted living communities and skilled nursing facilities.” Morningstar

Summary Thesis
Mean reversion candidate within a demographically favorable industry, Long-Term Care Facilities.

60.22% off 5 year high, and 41.54% off 52 week high, 5 year range 2.15 to 8.95.

Price and valuation are near 2 year low.

IMPROVING valuations such as tangible book value per share, revenue per share, EV to revenue per share.

Own or lease 211 senior living communities





















Market Cap:  173.23M , Enterprise Value: 210.31M
Price/Sales (ttm):   0.16 , EV/Revenue (ttm):    0.19,  Price/Book (mrq):  0.59
Enterprise Value/EBITDA (ttm): 10.40
Revenue (ttm):  1.10B , Revenue Per Share (ttm):    22.94
Qtrly Revenue Growth (yoy):   2.80%
Gross Profit (ttm): 1.09B ,EBITDA (ttm):  20.23M
Total Cash (mrq):40.00M , Total Cash Per Share (mrq):     0.82
Total Debt (mrq):77.07M , Total Debt/Equity (mrq):  25.71
Current Ratio (mrq): 0.69 , Book Value Per Share (mrq):6.16
Operating Cash Flow (ttm): 30.32M 
52-Week Change:    -40.27%
52-Week High:6.09 , 52-Week Low: 3.23
% Held by Insiders: 17.16% , % Held by Institutions:  60.80%

Short % of Float : 1.70%

Sunday, March 1

Small Cap, Profitable, Value, Oversold, Strong Growth


“Furmanite Corp together with its subsidiaries provides technical services, including leak sealing & hot tapping under pressure, on-site machining, heat treatment, heat exchanger repair & manufacture, concrete repair, bolting, valve testing & repair.” Morningstar


Summary:
·         Small cap profitable value stock with strong growth down 40% for the prior 52 weeks. Serves a wide group of industrial sectors.

·         Worldwide revenues with 3,000 employees, ~85 locations. Financially strong with a +85 year history, founded in 1952.

·         Material insider buys from a diversified group near the  current price during end of 2014. 

·         Historically and industry cheap using EV to sales or EV to non cash asset(EV to non cash assets was 1.18 for the MRQ versus a 2013 EV/non cash assets of 2.10). Equity per share for the MRQ was 3.71 versus 2010 balance of 2.66; revenue per share increased to 13.87 for TTM versus 2011 8.48, GP per share was 3.38 for the TTM versus 2.60 for 2011.


·         Value institutions, Royce, Ariel and Gamco all increasing position for the quarter ending 12/31/14








































Market Cap:261.84M (price = $6.95), Enterprise Value: 283.94M

Price/Sales(ttm): 0.51, Price/Book (mrq):1.91

EV/Revenue (ttm): 0.54, EV/EBITDA (ttm): 9.34

Qtrly Revenue Growth (yoy): 24.70%,Gross Profit(ttm):121.25M

52-Week Change:  -40.60%

52-Week High: 12.34, 52-Week Low: 5.75

% Held by Insiders:  3.43%, % Held by Institutions:   65.60%


Image below taken from Morningstar





















Value based Ownership:


















Thursday, February 19

Insider Nano Cap Value Purchases, less than 30M in MC and EV


Click for Quotes on the Stocks Below
















Dynasil Corporation of America (DYSL)

“Dynasil Corp of America is a manufacturer of specialized instruments and products for application markets in the medical, industrial and homeland security/defense sectors.” Morningstar

Diversified group of insiders were buying at the current price during February 2015. Dynasil Corp founded in 1960 owns two real estate properties. One story masonry and steel manufacturing and office facility containing approximately 15,760 square feet in West Berlin, New Jersey. Additionally,  there is a two-story 17,000 square foot manufacturing and office facility in Kent U.K.


Total liabilities aggressively reduced from 2011 at 18.63M to the MRQ 11.99M.

Improvement in working capital management, average 2011 to 2013 versus 2014; DSO, Inventory Turnover, Cash Conversion Cycle, Asset Turnover

Tangible book value per share improvement with no correlated increased stock price.





Market:  22.43M , Enterprise Value:   27.50M
Price/Sales (ttm):  0.52 , Price/Book (mrq): 1.53
Enterprise Value/Revenue (ttm): 0.65 , Enterprise Value/EBITDA (ttm): 10.91
Return on Assets (ttm): 3.29% , Return on Equity (ttm): 16.05%
Revenue (ttm):  42.31M , Revenue Per Share (ttm):   2.75
Qtrly Revenue Growth (yoy): 1.50% , Gross Profit (ttm):   16.73M
Total Cash (mrq):   3.84M , Total Cash Per Share (mrq):     0.24
Total Debt (mrq):  7.27M , Total Debt/Equity (mrq):   50.81
Current Ratio (mrq):  1.50 , Book Value Per Share (mrq): 0.88% 
52 Week Change = -20.90%
Stock price on 02/16/15 = $1.35



ADDvantage Technologies Group(AEY)

“Addvantage Technologies Group Inc through its subsidiaries distributes and services a line of electronics and hardware for the cable television industry.” Morningstar



Market Cap (intraday): 24.67M , Enterprise Value: 23.85M
Price/Sales (ttm):0.60 , Price/Book (mrq): 0.61
EV/Revenue (ttm): 0.59 , EV/EBITDA (ttm): 7.24
Revenue (ttm): 40.61M , Revenue Per Share (ttm): 4.05
Qtrly Revenue Growth (yoy): 77.10% 
Gross Profit (ttm): 11.61M , EBITDA (ttm):  3.29M
Total Cash (mrq): 6.53M , Total Cash Per Share (mrq):   0.65
Total Debt (mrq):  5.88M , Total Debt/Equity (mrq): 14.73
Current Ratio (mrq): 5.97 , Book Value Per Share (mrq):3.97
52-Week Change: -14.58%
Shares Outstanding: 10.04M , Float:  4.91M

% Held by Insiders:52.07% , % Held by Institutions:8.20%


Electro-Sensors Inc. (ELSE)

“Electro-Sensors Inc is engaged in the manufacturing and distribution of industrial production monitoring and process control systems. It has two operating segments: Production Monitoring and Investments.”Morningstar


Market Cap: 13.69M , Enterprise Value: 5.57M
Price/Sales (ttm): 1.92 ,Price/Book (mrq): 1.20
EV/Revenue(ttm): 0.78 ,EV/EBITDA (ttm): 7.66
Profit Margin (ttm):  15.21% , Operating Margin (ttm): 8.15%
Return on Assets (ttm): 2.75% ,Return on Equity (ttm): 9.67%
Qtrly Revenue Growth (yoy):   12.20% .
Total Cash (mrq):  8.68M , Total Cash Per Share (mrq):   2.56
Current Ratio (mrq): 10.06 ,Book Value Per Share (mrq): 3.34
52-Week Change:   0.25%
Shares Outstanding: 3.40M , Float:1.46M

% Held by Insiders: 56.25% , % Held by Institutions:  8.70%

Internet Patents Corporation (PTNT) 


“Internet Patents Corp is engaged in Patent Licensing Business. The Company's portfolio consists of seven e-commerce patents.”Morningstar


Market Cap : 17.42M , Enterprise Value:-10.76M
Price/Book (mrq):0.61
Total Cash (mrq): 28.77M  Total Cash Per Share (mrq):4.38
Total Debt (mrq): 0.00 , Current Ratio (mrq):62.07
Book Value Per Share (mrq): 4.40
52-Week Change:  -14.79%
Shares Outstanding: 6.57M , Float:  4.43M

% Held by Insiders:50.32% , % Held by Institutions:11.70%

Monday, January 19

Year Ending 2014; Cannibals, Declining Stock Price, Financially Sound, Micro Cap


The goal, find the best stocks based on percentage reduction of outstanding share count comparing the MRQ to the prior year. Stocks with positive 52 week stock price returns, weak financial statement removed. The filter runs for micro cap stocks. 

The following may be worth a closer look














Click for quotes on the stocks above



AETI: “American Electric Technologies is a provider of power delivery solutions to the energy industry. The Company is comprised of three segments: TP&S, E&I and AAT”: Morningstar

AETI, notable value attributes;
Historically cheap valuations based on revenue and book value.
Improving book value per share, Book value per share  2011 = 2.55 Book value per share MRQ = 2.84

PRICE 2011 = 5.08  PRICE 01/20/15 = 4.66

Ariel Investments, John Rogers owns 18.58% purchased at prices greater than current price.

Market Cap: 38.18M , Enterprise Value: 37.73M
Enterprise Value/Revenue: 0.57
Qtrly Revenue Growth (yoy): -12.00%
52-Week Change:   -57.78%
52-Week High:11.19 , 52-Week Low:  4.50
Shares Outstanding: 8.18M , Float:  4.93M
% Held by Insiders:58.56% , % Held by Institutions: 13.30%
Short % of Float : 1.30%

To be continued/completed during the week.