5/04/2010

Telular Corp. (WRLS)

Tough market but I’ve made a point to add WRLS. The company provided convincing results just reported on April 29. I will make it short for tonight so these are some major points that convinced me to introduce.

Recurring service revenue up 24% year over year

Board increased stock repurchases to 5 million

Balance sheet continues to improve increasing cash balance to 23.8 million

Recent diversified group of insider buying as the quiet period is over after the results were reported on April 29.

9.189 million was expended on share buybacks from 09/30/08 to 06/30/09 with share prices ranging from $1.40 to a high of $2.00. These were large buybacks at very opportunistic prices as the current price over $3.00 and enterprise value of $2.00.

Total shares count was reduced from 2004 compared the current TTM.

Margin expansion

YOY quarterly revenue growth of 20.90%

Cash is 65% of price.

Total debt reduced from 2007 and 2005 versus the current obligations

Please click to see additional data

6 comments:

Anonymous said...

Hi Shadow,

What determines whether a stock is listed in your performance tracker? It seems some stocks are and some aren't. I'm assuming it is not survivorship biased.

What type of screener tool do you use. I'm only now returning to stocks after having been invested only in mutual funds or etfs for several years so trying to get up to speed. It looks like MSN Deluxe Screener was decommissioned.

Are there any good value investing books you recommend?

When you say you are building a highly diversifide portfolio does that only encompass micro caps or other stocks/funds plus bonds? With respect to micro caps what number of holdings do you consider adequate assuming spread accross different industries or sectors.

With respect WRLS what is the value angle? Also I noticed it has $7 MM, if I recall correctly, in off balance sheet commitments. Would you deduct to determine net book value? I know from brutal experience office leases classified as operating leases are as good as debt and as difficult to get out of without going through bankruptcy proceedings or transfer of ownership. I know private equity firms can manage this but not sure about strategic buyers.

All the best.

ShadowStock said...

"What determines whether a stock is listed in your performance tracker? It seems some stocks are and some aren't. I'm assuming it is not survivorship biased.”

Answer: Actually I have so little time that most times I will introduce and not add. Space is limited on the “performance tracker”. In fact my software to update has been down for the last 2 days. My main goal is to just introduce an idea that may have value to some investors and provide a note to myself to follow up. JCDA was a mistake and I quickly realized my mistake after further research but since it was added I kept on the performance page.

"What type of screener tool do you use. I'm only now returning to stocks after having been invested only in mutual funds or etfs for several years so trying to get up to speed. It looks like MSN Deluxe Screener was decommissioned."

Answer:I created my own screening tools. They are all custom programs. They are more flexible but updating the data warehouse can be a drag. Now I’m having lots of computer issues with little patience or energy to resolve at night.

Are there any good value investing books you recommend?
Answer:Nothing specific but try to read the classics and more importantly DEVELOP your own style.

Good Luck
John

Anonymous said...

John,

Started at the beginning of your blog and have beeng wading through into Q4 08. Like your analysis of DRAD, TUES. MCGC, wow! I'm tracking all picks calculating return based on a year holding period and was also checking return through 3/15/09 compared to S&P. Right now I've got 56% postive spread over S&P 500. With respect to the downdraft through 3/15/09 the portfolio is actually tracking very close to S&P which I'm surprised by having expected it to get killed, and after MCGC, TUES and DRAD is ahead. I assume GP = Gross Profit.

With respect to style, I read Michael Burry came to somewhat similar conclusion after extensive study of Buffett.

Ok stayed up till 2 am staring at your blog last night. Really need to get to sleep as exhausted going on 3 hrs sleep.

Best

Warren

ShadowStock said...

Warren

Thanks for the work! Let me know if i can help with the little time available.

john@shadowstock.com

PaulCA said...

WRLS - Thoughts on the significant revenue concentration? What about the sky-high non-cash stock based compensation expense - won't that ultimately prove to be dilutive?

ShadowStock said...

Yes, and Yes

but given the price and other factors mentioned I thought the stock was worth posting

good luck
John