2 Value Stocks with additional positive insider Transactions : Friday 07/08/11

DLIA: dELiA*s, Inc.   CFO and Treasurer : Dick David J.       Industry = Catalog & Mail Order Houses     7,500  shares purchased for  $ 13,125  @ 1.75  insider ownership =   10.56
current price = $1.81
Mean reversion candidate, 5 year price range was 1.30 to 12.00,  84% off the 5 year high,24% off 52 week high, reasonable  balance sheet with a reduction of total debt from 2008
value institutional ownership with T2 partners, Royce

3 insider purchased 87,500 shares  from 7/1 to 7/8 for $144,000 at a average price of 1.65

The details were as follows
7/1/2011 Chief Executive Officer : Killough Walter purchased 50,000 shares for 80,000  @$1.6
7/5/2011 President: Jozwick Dyan  purchased 6,600 shares for 10,560 @$1.60
7/6/2011 President: Jozwick Dyan purchased 23,400 shares for 40,855  @$1.745
7/7/2011 CFO and Treasurer: Dick David J.  purchased 1,780 shares for 3,115 @$1.75
7/8/2011 CFO and Treasurer: Dick David J. purchased 5,720 for 10,010  @$1.75

Enterprise Value = 45 million
Market Cap = 56 million

long small position in this risky retail turnaround potential

SIGM:Sigma Designs, Inc.  10% Ownership : TSAI LUNG C    Industry =  Semiconductor - Specialized  3,097 shares purchased for $26,090  @8.42   insider ownership =  16.39
current price = $8.59

3 insiders purchased 45,000 shares  for  $367,946 @average price of 8.18 from 06/01 to 07/07

the details were as follows

7/5/2011: 10% Ownership : TSAI LUNG C    purchased  11,903 shares for  $93,950  @7.89
7/7/2011: 10% Ownership : TSAI LUNG C   purchased  3,097 shares for  $26,090  @8.42
6/10/2011: President & CEO : TRAN THINH  purchased 20,000 shares for $158,243 @7.91
6/1/2011: 10% Ownership : ALMON WILLIAM  purchased 10,000 shares for $89,663 @ 8.97

Mean reversion candidate with a historcal cheap valuation
Historically cheap EV/Sales = .77 and P/B = .70

88% off 5 year high: 5 year range 6.93-73.00; 52 week range = 7.44-15.02

Enterprise Value = 159 million
Market Cap = 274 million

small long position for this potential price turnaround


Anonymous said...

Many of your value ideas have low daily volume. How much should we worry about low volumes on some of these smaller companies?

ShadowStock said...

Hi Teresa

My blog was created to focus on small and neglected stocks, hence illiquid stocks. But I try and introduce other more liquid value based ideas.

The above two RISKY stocks, DLIA and SIGM are actually more active than most of the best performing illiquid ideas on this blog.I guess it really depends on your goals, personality, investment style and liquidity requirements. But if your goal is to build a portfolio that will maximize long term wealth illiquid stock are your best friends. We are all in the cash conversion game (over time)and illiquid stocks can play a critical role in this goal.

My thoughts on Illiquid stocks

"This should make sense to serious deep value investors. The potential to find extraordinary bargains with illiquid stocks can be profound. Why … well it is simple, millions of investors are speculating/investing in a relatively small group of heavily traded liquid stocks. This greatly lowers our chances of finding long term wealth building value. The ignored and neglected illiquid stocks have a higher chance of presenting us with dramatically undervalued securities. So if your goal is to maximize wealth, logic would dictate that your research investment efforts are best spent with illiquid stocks that have been avoided by the public and Wall Street"

My approach to illiquid stocks will be to build the position slowly or add to the "farm team" so i can monitor/research further and if warranted add more over time. DIVERSIFY and concentrate when the bet looks to increase in odds or just create a highly diversified portfolio.

Many of the ideas introduced and many I still own went days with zero shares traded. For example, DAGM (LOAN), DCU(EVI), CLRO, ICCC, DWCH ,SYMS, DRAD, CLRS.PK (BDE), FIGI.PK, WSTL,WRLS, HSKA and many others you can find when they were introduced and Yes JVA when it was ~ 3 and i was building a strong position. Some days JVA had zero shares traded during 2010 along with many other illiquid stocks mentioned on this site.JVA closed at 26 Friday. Take a look at the stocks mentioned on the site.

Good Luck and diversify

Anonymous said...

Once again, thanks. Diversify, that I can do. When to sell is the biggest problem. JVA is a good example. As you mentioned, it went to 26, but I sold in the low 20's. I guess I have that "pigs get slaughtered" mentality, so I see a nice profit and I sell. Teresa

Anonymous said...

Forgot to add, after researching FARM I decided to purchase a few shares which are up over 1.25 today. Your site is giving me an exciting new outlook on investing. Then, I found shadowstock on twitter and noticed you mentioned FARM today. I also "googled" shadowstock and found a site with a dated portfolio which gave me a true picture of what you mean by diversification. I'm learning!