8/19/2010

Boring, small, obscure, cheap, ugly, ignored, out of fashion, and unloved

Columbia’s Bruce Greenwald uses this terminology to help investors find value stocks. I’m sure he’s not the first to use that language to find deep value contrarian investments but it’s the mantra many of us use to find stocks.


MEAD could be labeled with the above adjectives.

http://finance.yahoo.com/q?s=MEAD

The price per share was $3.45 on 08/19/10, market cap of 4.06 million with and enterprise value approximately of the same value .

Price ($3.45) - Cash ($3.30)+Total Liabilities ($3.45)= $3.60 – AR (2.84) = $.76

Inventory is 6.72 per share =

Book value = 10.18

Current Assets (12.27) – Current Liabilities (3.42) = $8.85

Annual revenues were 24.61 million or 21.034 per share or 3.45/21.034 = P/S = .16

Meade does have some traditional deep value where net working capital (CA – CL) = 8.85 versus a current price of 3.45

With the extensive restructuring, reduced head count, smaller cost structure, focused smaller product line, new lower cost manufacturing facilities, smaller corporate headquarters and a stock incentivized management team (36% held by insiders) the company has strong acquisition appeal.

Its risky and the current cash will last for about one year at the current run rate but its an interesting play on a brand name product (Meade Telescopes) at nano cap prices 4.06 million.

Check out the great new website

http://www.meade.com/

Long MEAD

3 comments:

Floris said...

Paul Sonkin is a 10% owner. It looks really ugly if you just type in the ticker symbol on google. Looking at the decrease in expenditures and the increase in top line revenue, they could be moving back to profitability. Since Sonkin is also a director (and apparently receives stock options as well), his participation could be a catalyst.

Might not actually be too bad.

Thx,

Floris

Adger Allen said...

Hi Floris-

Do you know about Sonkin's involvement from the MEAD filings? I would love to track his fund through 13Fs, but the only ones I see are very dated - I assume the fund is too small to require them. have you found a different way to see his moves?

thanks a ton,

John Allen

Adger Allen said...

Hi Floris:

I don't see how to track Paul's moves through 13F filings, as I think his fund is small enough he doesn't have to consistently file them. did you learn of his involvement through looking at the MEAD filings? Is there some other way to see what his fund is doing?

thanks,

John