Assets by definition
are economic transactions with probable future economic benefits. These assets
are reported at historical cost, not fair market value. My efforts for this
post, uncover deeply discounted cheap corporate assets for its "probable future
economic benefits". The Financial Accounting Standards Board
(FASB),defines assets as probable future economic benefits obtained or
controlled by a particular entity as a result of past transactions or events.
The process takes many
twists and turns.So a pool of +10,000 stocks was reduced by multiple financial
hurdles. For example it only included stocks with Z scores over 2.99 and
M Scores less than -2.22.This was to lessen the chance of near term bankruptcy
caused by weak financials(Z score/Altman) and aggressive accrual accounting (M
Score/ Beneish).
Additional financial hurdles were included to improve potential mean reverting
price behavior. Such as poor historical price returns, reduction of
share count, debt reduction and other measures to be discussed.
Enterprise value to non cash
assets (EV/Noncash Assets) was empahsized.The thought with using EV/Noncash Assets, uncover ignored deep discounted bargain
priced corporate assets further supported by other mean reverting and margin of safety attributes.
For this post when not indicated,
Enterprise value(EV)= market capitalization + total liabilities (short and long term) - cash.
Enterprise value(EV)= market capitalization + total liabilities (short and long term) - cash.
Non Cash Assets = total assets (tangible and intangible) - cash
This post will continue to be updated over time to provide deeper analysis, ideas and investment thoughts. I wanted to start the post today.
Discoveries;
All 4 categories are supported by strong financial position, clean share holder friendly capital structure and below market stock price returns for multiple periods.
Tonight the ideas below contain little or no details but will be updated.
Negative enterprise value selling below current liquidation value:
Profitable Negative Enterprise Value:
Emerson Radio Corp(MSN):
Gencor Industries(GENC):
Balda AG (BALOF):
Automodular (AMZKF):
Ambassadors Group(EPAX):
Click for quotes on the above 5 ideas
Outsized capital expenditures reported on the cash flow statement over the past 5 quarterly periods relative to enterprise value:
TransGlobe Energy Corporation (TGA): 142.1M in total capital expenditures over the last 5 quarterly periods. 142.1M in capital expenditures compares favorably to the current enterprise value of 387.55M. Current enterprise value calculated with a market capitalization = 297.86M, Cash = 77.94M, total liabilities = 167,639,000 or 5.19 EV per share.Total EV/CE over the prior 5 periods is 5.19/1.90= 2.73
High ranking EV/Total non cash asset companies reporting profits:
Discoveries;
For tonight I want to
break the EV/Total non cash assets discovery process into 4 categories.
1)
High ranking EV/Total non cash asset companies reporting profits.2)Outsized
capital expenditures reported on the cash flow statement over the past 5
quarterly periods 3)Negative enterprise value below liquidation value 4)Negative enterprise value reporting profits
All 4 categories are supported by strong financial position, clean share holder friendly capital structure and below market stock price returns for multiple periods.
Tonight the ideas below contain little or no details but will be updated.
Negative enterprise value selling below current liquidation value:
Phoscan Chemical (PCCLF) : Candian symbol(FOS.TO)
Price = .25, Cash per share = .31, Book value per share = .77
Price = .76, Cash per share = 1.27, Book value per share = 3.18
Profitable Negative Enterprise Value:
Emerson Radio Corp(MSN):
Gencor Industries(GENC):
Balda AG (BALOF):
Automodular (AMZKF):
Ambassadors Group(EPAX):
Click for quotes on the above 5 ideas
Enterprise value calculation for these 5 stocks include long term debt
but exclude short term liabilities.
Outsized capital expenditures reported on the cash flow statement over the past 5 quarterly periods relative to enterprise value:
TransGlobe Energy Corporation (TGA): 142.1M in total capital expenditures over the last 5 quarterly periods. 142.1M in capital expenditures compares favorably to the current enterprise value of 387.55M. Current enterprise value calculated with a market capitalization = 297.86M, Cash = 77.94M, total liabilities = 167,639,000 or 5.19 EV per share.Total EV/CE over the prior 5 periods is 5.19/1.90= 2.73
Codan
Limited (CODAF):
Mitcham
Industries. (MIND):
High ranking EV/Total non cash asset companies reporting profits:
ITEX: ITEX Corp Corp is engaged in the
business of battering. For over 30 years ITEX has created a distribution
channel for business to exchange services or goods with battering to preserve
cash flow. Members utilize digital currency (ITEX dollars) to exchange goods
and services rather than use cash.
Total non cash assets = 9,698,000 or 3.71 per share. EV/Non
cash assets = 1.98/3.71 =.5336
The market
capitalization is 7,410,000 (11/14/14) with an enterprise value of 3,737,000
using only non current liabilities. But for my analysis using
EV/Noncash Assets I include all liabilities, current liabilities (1,442,000)
and zero non current liabilities to derive an enterprise value
of 5,179,000.
This high yielding nano
capitalization has aggressively distributed returns to shareholders in the form
of a high dividend and share buybacks.
Free cash flow for the
TTM was 1,204,000 or .46 per share. The next 5 quarters starting 07/2013 to
07/2012 FCF was 2,989,000 or 1.14 per share. Shares outstanding are 2,614,000
for the MRQ. The MRQ share count was reduced from 3,604,000 for the period
ending 07/2011. This was a 38% reduction of shares outstanding from
07/2011. Furthermore, a consistent quarterly .05 per share
dividend was distributed since 06/2013, .04 quarterly dividends from
12/2010.
Market Cap: 7.41M, Enterprise
Value: 3.75M
Price/Sales (ttm): 0.55 , Price/Book (mrq): 0.62
Enterprise Value/Revenue:0.28
Enterprise Value/EBITDA
(ttm): 3.87
Revenue(ttm):13.54M ,Revenue Per Share (ttm):5.18
Qtrly Revenue Growth (yoy): -12.90%
Gross Profit (ttm): 5.23M, EBITDA (ttm): 968.00K
Total Cash (mrq): 3.67M , Total Cash Per Share (mrq): 1.41
Current Ratio (mrq): 3.70 , Book
Value Per Share (mrq): 4.59
52-Week Change: -26.17%
52-Week High: 5.10 , 52-Week Low: 2.65
Shares Outstanding: 2.60M , Float: 1.68M
% Held by Insiders: 47.18%
Trailing Annual Dividend
Yield: 7.00%