8/11/2010

Is Mr. Market being too harsh on these stocks?

TIXC (Tix Corporation); The stock was slammed after reporting losses on weaker than expected results Monday 08/09/10. Today the drop continued closing the day at .77 or 24 million market cap. The capital structure is still clean with a share count reduction over the past few years. Unfortunately it looks like they over paid for those buybacks. Q4 2009 they repurchased 1.3 million shares at an average of $1.55 per share.


Cash .27 per share – total liabilities .22 per share = .05 net cash per share ; 2.14 per share in sales, .64 per share in GP

This stock looks troubled based on the just released results. Management is expecting improved results but that his comments were specifically top line improvement for the second half of the year. No mention of improved profitability.

Insider own 42% so hopefully they are incentivized to create shareholder value.

Recent results;

http://finance.yahoo.com/news/Tix-Corporation-Reports-2010-bw-539538152.html?x=0&.v=1

Long TIXC


NOOF New Frontier Media; Hit a new 52 low closing the day at 1.36.

Its not comforting that some of my favorite value shops like Royce have been selling. But they did turn a profit this quarter.

Cash per share is .73

AR per share is .63

Geez the stock is only 1.36 with prior 12 month annual sales of 50 million!

Total liabilities are .43 per share

Cash +AR – total liabilities = .73+.63 -.43 = .93

Stock price = 1.36 -.73(cash) - AR (.63) +Total Liabilities (.43) = .43 or ~ 8.3 million

for 52 million in sales that generates huge amounts of free cash flow. FCF over the prior 5 quarters was 1.322 million. .49 in EBITDA per share or 9.53 million

There seems to be some real value …. But there is risk with revenue concentration.

Long NOOF

Additional sound analysis on NOOF

New Frontier Media Remains Historically Cheap After Q1 Earnings

click below to view
http://seekingalpha.com/article/219735-new-frontier-media-remains-historically-cheap-after-q1-earnings

New Frontier Media: Very Undervalued on a Cash Flow Basis

click below to view


http://seekingalpha.com/article/209858-new-frontier-media-very-undervalued-on-a-cash-flow-basis

Additional stocks that hit my value list and warranted additional purchases today were

NUTR (long)

JCS (long today)

HTCH (recent long )

ARDNA (recent long )

GTLS (long today)

I will try and add more data on these ideas but they were mentioned in the past.

Good luck tomorrow

3 comments:

asues said...

Thanks for linking to my SeekingAlpha posts on New Frontier Media.

I think many investors avoid NOOF because it's a 'sin' industry.

In any case, it's just too cheap to avoid at current levels, especially with solid growth prospects internationally.

ShadowStock said...

Multiple large insider buys today with NOOF: BOENISH KENNETH (Pres) 10,000 shares ; Timoshenko Walter 3,596 shares; WEINER MICHAEL (CEO)10,000 shares

the black out period is over and insiders are stepping up to buy

Salsero said...

Thanks to both of you and to ValueUncovered for the excellent work on this company. I've placed a small limit order myself, despite the following nagging concerns:

1) Is this is a business suffering through a recession or a business that is declining generally? FCF improved dramatically for 2004, 2005, 2006, and 2007 after three spotty and negative years. Since 2007 it has fallen off precipitously for 3 full years, with the June quarter resulting in negative FCF. It is possible that they are losing market share or profit margin to competition? After all this is a very competitive, no moat business.

2) Customer concentration: Four cable and dish companies generate 46% of total net revenue.

3) The corporate administration segment is gobbling up almost 70% of their pretax income from continuing operations.

4) Direct-to-consumer operations is losing money and expected to continue losing money, yet plans to improve the segment are not very robust.

On the positive side, AuditIntegrity.com ranks NOOF's accounting very positively.

Again, thanks for sharing your thoughts.