Friday, July 13, 2007

Top Four Profitable Net/Nets by Market Cap

The markets continue to head higher, and although we are not perma-bear doomsday types, we are finding it increasingly difficult to find many names that are all that interesting--do we sound like a broken record yet?. Bear in mind (no pun intended), this is not 2000, and stocks are not trading at obscene multiples, but our definition of value is sometimes rather narrow, and we often have to turn over a lot of rocks to find one gem. There are only so many hours in a day.

With that, this week we bring you a list of the top four profitable net/nets, (aka stocks trading below their net current asset value), in order of market cap. "Profitable" in this case means that a company has a trailing twelve month profit, no matter how miniscule. No rocket science here, but then again, we've never been accused of being rocket scientists. This list should be seen as the beginning of the research process, a raw list of potential ideas that demands much further scrutiny before any decisions are made, not a definitive buy list.

Top Four Profitable Net/Nets by Market Cap:

\*please note, in a previous version of this post, we listed Bel Fuse. Due to a data error (Bel Fuse has two share classes, the market cap we used only reflected one class), Bel Fuse shout not have appeared anddoes not currently trade below its NCAV

Atlantic Coast Entertainment Holdings Inc. (ACEH)
Mkt Cap: $158 million
NCAV: $216
Price: $16.35

Trans World Entertainment Corp. (TWMC)
Mkt Cap: $146
NCAV: $209
Price: $4.69

Bexil Corp (BXL)
Mkt Cap: $30
NCAV: $38
Price: $33.3

Boss Holdings (BSHI)
Mkt Cap: $16
NCAV: $19
Price: $8.08

There you have it. Slim Pickings at best. To put in perspective, the total market cap of these four companies is less than $500 million, and we had to head pretty far down the market cap scale! That being said, proceed with caution. Smaller companies tend to be less liquid, and liquidity issues can be devastating to those not paying attention.

*The author does not have a position in any of the stocks mentioned in this report. This is neither a recommendation to buy or sell any of these securities. All information provided believed to be reliable and presented for information purposes only. The author will not trade any of the securities mentioned (buy, sell, short) for at least two weeks following the date of this post.


Anonymous said...

Could you explain how you computed the NAV of BELF? It seems to me the market cap is about $400 million, well above NAV.

clyde said...

You are correct, this was our error. Bel Fuse has two classes of shares, we only reflected one of the classes in our market cap calculation. We regret this oversight and have removed Bel Fuse from this piece.