6/19/2011

Ideas from the extremely inefficient pink sheet market

I made a strong effort  to search the pink sheets to uncover potentially inefficiently priced stocks.
My efforts came up with several ideas out of thousands that have attributes that warrant a closer look.
The group has very low valuations, large cash balances, positive cash flow, 2011 insider buying for a few and clearly overlooked hiding in the shadows of Wall Street's pink sheets. More analysis will be provided in future updates. The discovered ideas are worth sharing after the work showed promise. But further work is required.

Please click to view the prices and data on all ideas below from Yahoo
OPST.PK :  Opt Sciences Corp , cheap valuation, cash, real estate

Marke Cap =  10.46 million
EV = 1.17 million
Cash per share =  11.99
EV Per share = 1.50
EV/Revenue = .19

Current price = $13.50
YOY quarterly revenue improvement of 25.50%
Improved GP% 34.3 for the TTM versus 26% for 2009


Real Estate: Principal office and manufacturing facility located in the East Riverton Section of Cinnaminson, New Jersey They own this 1.4 acre property.

"Opt-Sciences Corporation, through its subsidiary, O & S Research, Inc., deposits anti-glare and/or transparent conductive optical coatings on glass used primarily to cover instrument panels in aircraft cockpits. Its products enable pilots to read aircraft instruments in direct sunlight or at night, or in covert situations using appropriate night vision filters"

This profitable company started in 1956 could be selling below current breakup value.


MRVC.PK  MRV Communications cash balance is 81% of the market cap.

Current price =$1.22
Cash per share = .98
Market Cap = 192 million
EV = 53 million
EV/Sales = .20
EV/EBITDA = 2.90
SCND.PK  Scientific Industries

Current price = $3.16

EV/EBITDA = 1.94
EV/Revenue = .26
YOY Quarterly revenue change = 4.90%
Price/Cash Flow = 4.3
ROIC = 13.66 improved compared to historical results
GM% = 38.49% improved compared to historical results

Strong insider buying during 2011
 MBCN.PK Middlefield Banc Corp.

Current price = $17.25
Stable dividend yield over 6%
real estate

Strong insider buying 2011


FOFI.PK : First Opportunity Fund, Inc.

closed end fund trading at a large discount to nav = 9.19
First Opportunity Fund, Inc. operates as a closed-end and diversified management investment company
Strong insider buying 2011

SPGZ.PK Spectrum Group International Inc.

Risky stock due to its massive debt. but this once 34 dollar stock has an interesting

"trading and collectibles network serving both collectors and dealers. The company operates in two segments: Trading and Collectibles. The Trading segment trades in precious metals, such as gold, silver, platinum, and palladium in the form of coins, bars, wafers, and grain; provides precious metals merchant services, including leasing, consignments, and hedging; and operates as a distributor for various government mints worldwide, as well as offers loans on precious metals and rare coin and other collectibles collateral to coin dealers, collectors, and investors."

top line is outstanding with a 17% YOY quarterly growth.
Current price = $2.30


Strong insider buying 2011

5 comments:

Taylor Conant said...

Hi SS,

I don't know what you'll make of this but I called OPST to ask some questions a few months ago. The woman who picked up, who I believe said she was the comptroller or something like that, was extremely hostile and suspicious of my inquiries about the company and the stock. It was clear the company doesn't have a "friendly" disposition towards shareholders and potential shareholders alike.

Essentially I got no answers and cut the call short. She said she would let the CEO know I had called and he would get back to me if he wanted to, which he of course never did. The one bit of information I did glean was that most of the stock is held by the family that manages the company and that they weren't interested in selling and it was being held to be passed on to the children as an inheritance. I assume they're public in the first place because doing so created some tax benefit for them in passing the company along like this or something.

ShadowStock said...

Taylor

for me i found speaking to management was a negative use of my time. I've experienced the same kind of mistreatment.

But having said that some blogger like , Jeff @ Ragnar is a pirate has made positive impact to uncover important data for shareholders and help management realize they were poorly allocating their assets and hurting not just public shareholders but their own legacy.

http://ragnarisapirate.blogspot.com/

Taylor Conant said...

Hi SS,

I understand what you're saying. The reason I shared the anecdote was to highlight, in this case, that the stock might be cheap for a reason, and that management doesn't seem concerned with what price the stock trades at.

I'll check out the link. Keep up the good work.

ShadowStock said...

Thank you!
John

Paulie said...

Interesting article.

I've always seen stock market as a long-term investment. From what I've read, that's the way the big bucks are made, through long term stock investment.

I've only started investing in small companies, inspired by Yuri Mintskovsky, Rockefeller, Zuckenberg and lots others.

Hopefully, I'll achieve at least half of their success!