Saturday, November 17, 2007

New Life in the Land of the Forgotten: Ranks of Tiny, Profitable Net/Nets Growing

Call us strange, but we believe that a little market volatility can be a good thing. It helps wipe away market excesses, such as those that were the end result of credit that was too easy for too long, and poorly designed and misunderstood securities which have bankrupted many. (Notice, we did not use the “S” word)

We’ve whined for months about the lack of interesting companies—those worth further research—trading below their net current asset value, but recently, the situation has been looking up (or down depending on your reference point). We are beginning to see more profitable net/nets. Most are deep into the microcap space, but beggers can’t be choosers.

The criteria for this weeks net/net list is as follows:
Company profitable on a trailing 12 month basis
P/E ratio less than 50
Market Cap greater than $20 million


Company: Bexil Corp
Ticker: BXLC
Price: $31.15
Market Cap: $27 million
NCAV: $37.8 million
P/E: 42


Company: Forward Industries
Ticker: FORD
Price: $2.71
Market Cap: $21.1 million
NCAV: $24.6 million
P/E: 46


Company: GSI Technology
Ticker: GSIT
Price: $2.30
Market Cap: $65.1 million
NCAV: $66 million
P/E: 12


Company: Eternal Technologies
Ticker: ETLT
Price: $.59
Market Cap: $27.8
NCAV:$48 million
P/E: 4


Company: Atlantic Coast Entertainment Holdings
Ticker: ACEH
Price: $18
Market Cap: $179.4
NCAV: $220 million
P/E: 5
*Currently does not have an operating business, primary assets are cash

Good to see some unfamiliar names. We are also seeing a few other interesting companies that are not curretnly profitable. Perhaps we'll feature these in a furture post.

*Of the companies mentioned, the author has a position in Eternal Technologies (ETLT). This is neither a recommendation to buy or sell any 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.

6 comments:

Michael Goode said...

Hey Clyde, just yesterday there was a buyout offer for Atlantic Coast Entertainment Holdings (OTC BB: ACEH) for $22.15 per share. Readers should not waste time investigating it.

Disclosure: I hold ACEH.

Byrne Hobart said...

Are you including closed-end funds in this list? I believe Bexil is one, in fact if not in name (they're run by Winmill Co. (WNMLA), which used to be a screaming bargain at less than net cash and less than marketable securities on hand).

Michael Goode said...

Byrne,

Bexil is a shell company that sold off an operating business about a year ago (I think insurance). It is currently profitable (interest on cash is greater than operating expenses) and is looking for a medical company to buy.

Michael

clyde said...

BXLC is still considered to be a holding company.

As for ACEH, which was on a previous net/net list. it did indeed get a buyout late yesterday.

Thanks for your comments. CM

Jurgis Bekepuris said...

According to Nov 15 Q2/2008 report DITC is no longer below NCAV and neither is it profitable.

clyde said...

Jurgis is correct, and we have removed Ditech from this posting. The company released a press release after market close on 11/15and we missed it. Our apologies. CM