Tuesday, January 15, 2008

Increasing Avalon Holdings (AWX) Position

We recently saw a further pullback in microcap Avalon Holdings(AWX)(from the $6.50 range to $4.50) as an opportunity, and added to our position. At $4.70, the company has $1.77 per share in cash, and we believe the downside is limited.

Be aware that AWX is incredibly small, has low volume, and fairly wide spreads. Please see our earlier research for more information.


*The author has a position in Avalon Holdings (AWX). 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.


MetCap said...


Based just on a quick look at the Balance Sheet and the Statement of Cash Flows, it looks like this company has been spending btwn 2 and 4 X Operating Cash Flows on Capital Expenditures for the last 4 quarters. This is reflected in the declining Cash amount on the Balance Sheet each quarter.

Do you know what the Capital Expenditures are for and how long they're required? If this trend continues won't the company will be out of money in 2 to 3 quarters?


Clyde said...

The company purchased the Sharon Country Club in q4 2006, and 2007 cap-ex reflects improvements to club facilities. Through q3 2007, capex was $9.1 million, with company estimating total 2007 cap ex in the $10.5-$11.5 million range. Project was expected to be completed in q4.