Thursday, June 16, 2005

Company Update:
Avoca Inc: AVOA
Price: $4150/$5000
Current Yield: 8.43%
Shares Out: 8,057 (actual)
Market Cap: $33.4 million

Avid CHEAP STOCKS readers may recall our piece on Avoca Inc, a tiny New Orleans based company which owns 16,000 acre Avoca Island. Our 12/20/04 report Off The Beaten Path:Micro-Cap Value Strategy
Going Private: Getting Around Filing with the SEC and Avoiding Sarbanes- Oxley in the Process
referred to this royalty trust, and the company's decision to initiate a reverse stock split, in order to reduce shareholder roles, and avoid filing with the SEC. Your editor went onto explain his rationale for buying a pre-split stake in this seldom traded company.

Fast forward 6 months and I am still holding Avoca. The bid ask has risen to 4150/5000, and that excludes the $350 dividend mentioned in the original gloating here, mind you, this is a tiny company, which rarely trades. If I wanted to sell tomorrow, I'd have trouble finding a buyer. But still, I like this company, which derives most of it's revenue from gas leases.

My point in revisiting Avoca is because of the company's first quarter financial statements that I received in the mail last week. Hats off to Avoca. Remember, they no longer have to file with the SEC, and don't have to send shareholder's reports either. Now if only JG Boswell (ticker BWEL) would afford me, a shareholder, the same luxury. JG Boswell, which now trades at $640 per share, is a $500 million company. It is not required to file either, but getting information as a shareholder is next to impossible. But, thats my problem. I knew what I was buying into.

In case you are wondering about Avoca's results, the company generated $1.09 million in revenue, and had net income of $680 thousand, or $84.46 per share in the first quarter, down from $1.29 million, $771 thousand, and $95.63 for the same quarter last year. The shortfall was due primarily to a major gas well being offline from December until May(31 percent decrease in production). An increase in gas prices (33 percent)helped close the gap. You editor is hanging on to this one.

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