Charlie Munger
“You’re looking for a mispriced gamble that’s what investing is. And you have to know enough to now whether the gamble is mispriced. That’s value investing."
Last week’s post (http://shadowstock.blogspot.com/2010/06/building-shareholder-value-under-radar.html) TEAM gained +18% on Friday. Jacob Engineering offered to buy TechTeam unit 59 million for their government unit.
http://www.reuters.com/article/idCNSGE6530DF20100604?rpc=44
Distressed micro cap value based ideas.
Dismal prior 3 month stock price returns
BOLT
Bolt Technology Corporation
3 month return = -26%
Price: $8.22
Market Cap = 70.96 million
EV: $ .50
Enterprise value = 35.80 million
Bolt is a casualty of offshore drilling woes and a year over year decline of revenue of -54.56%.
But this is offset by an outstanding balance sheet (A+ financial health), debt to asset reduction from 2005 and 2007 to the TTM total liabilities/assets, improving gross margins from 41% in 2006 to 50% for the TTM.
DDE
Dover Downs Gaming & Entertainment Inc
3 month return -17%
Price = $3.04
Market cap : 98 million
EV = $6.01
Enterprise value: 193 million
Short % float 6%
Current dividend yield 3.90%
Large real estate holdings
Price/NTA = .91
Average operating income from 2006 to 2009/Current EV = 19%
Current operating income /enterprise value = 9%
Potential discount to normaized earnings
YOY quarterly revenue change = -5%
Reducing total liabilities/ assets from 2007 to the TTM
SGA/Revenues for the prior year = 9%
Share count reduction from 2004 to the TTM
Shares purchased at opportunistic prices (last quarter of 2008 and first quarter of 2009)
VII
Vicon Industries
3 month return -16%
Price = $4.25
Market Cap = 14,103,000
EV = 3.13
Enterprise value = 19,130,000
Reducing total liabilities to assets from 2005 and 2007 to TTM
Shares purchased at opportunistic prices (last quarter of 2008 and first quarter of 2009)
YOY Quarterly revenue change -22%
Short % float = .2%
Consistent stable share count
Potential discount to normalized earnings; average annualized operating income over 2006 -09 / current enterprise value = 20.77% versus the current OI/EV = -3.79%
