6/19/2010

LUB: Luby's Inc and potential inexpensive nano cap stocks

Back on February 10th I mentioned Luby’s (LUB). Part of the investment thesis was based on the large real estate holdings recorded at a substantial discount to market value.


http://shadowstock.blogspot.com/2010/02/book-value-and-real-estate-plays.html


On June 10th 2010 Luby’s posted a profit after 4 quarter of losses and a poor historical record of consistent profitable results. CEO Chris Pappas stated “we are cautiously optimistic that our customers are returning more often to our restaurants as customer traffic improves," said Chris Pappas, Luby's president and chief executive officer. "Our local market promotions are generating encouraging results."


Friday the story got very interesting. Luby’s purchased Fuddruckers in chapter 11 bankruptcy for 61 million in cash. Fuddruckers operates 60 Fuddruckers restaurants and three Koo-Koo-Roo locations. There also are 138 Fuddruckers franchises.


The market seemed to like the deal made public on Friday at 2:30. LUB will go from 96 stores to 297 (138 Fuddrucker Franchies).


This could be a risky move with no guarantee of operational success. They did buy the company in bankruptcy hopefully at a nice discount and added a stream of franchise income to help amortize the new debt. I hold a position in LUB.


Nano cap ideas some old and new


EVI (EnviroStar) is an illiquid nano cap stock Introduced over a year ago at $.77 The symbol was DCU.


http://shadowstock.blogspot.com/2008/09/dcu-oversold-neglected-ignored-unloved.html


Friday( 06/18/10) the stock closed at $1.20 for a 14% gain on the day. The stock still has deep value, in my opinion. I hold a position.


Excellent current EVI write-up by Shaun Noll, CFA


http://aboveaverageodds.wordpress.com/2010/06/09/investment-analysis-envirostar-evi/






NOOF (New Frontier Media)


Saj Karsan posted an informative read on NOOF


http://greenbackd.com/2010/05/24/guest-post-saj-karsan-on-new-frontier-media-inc-nasdaqnoof/


Okay everyone knows the industry is dying but to steal a quote from a just found blogger Ankit Gupta..


“I follow the belief that there is no such thing as a bad asset, only a bad price.”


This may apply to NOOF. They made important moves over the past 2 years to create shareholder value with massive share buybacks.


EBITDA – average capital expenditure over the past 4 years /  EV = 40.21%


OI (excluding onetime charges) /EV = 23.45%


Average FCF over the past 5 years / Current enterprise value = 26.52%




TRBR: TrailerBridge


5000 shares purchased by an insider on Friday 06/20/10


June 9th , Moody's Investors Service changed the rating outlook of Trailer Bridge, Inc., to stable from negative


Turn around probabilities seems high and the stock moved up 8.28% on Friday. 3.40 was the closing price down from the intraday high of 3.60


Additional ideas coupled with details for the above stocks


TRBR LUB SPRO CLRO TGX NOOF EVI


http://www.shadowstock.com/ss_061910.html

2 comments:

Adam Sues said...

I definitely agree on NOOF. The company has suffered large writedowns the past two years - combined with the unattractive industry, the stock has been beat down.

Company is still generating tons of FCF. I'm hoping they initiate a special dividend or share buyback soon.

ShadowStock said...

today i was buying shares of NOOF and LUB

good luck
John