JG Boswell (BWEL) 2014 Fundamental Data

Thanks to the addition of the most recently available year-end data, we've now strung together twelve years worth of fundamentals for JG Boswell. Below are some of the highlight for 2014:

Current Data (2014 Annual, Year ended 6/30/2014)
Current Price: $910
EPS (Fully Diluted): $49.58
P/E: 18
Price/Sales: 1.57
Price/Book: 1.48
Revenue: $587.4 million 
Net Income: $50.2 million
Net Profit Margin: 8.55%
EV/EBITDA: 12.1
Indicated Dividend Yield:1.81%
Current Market Cap: $921.2 million
Current Enterprise Value: $1.077 billion
Cash: $2.75 million


10 Year Averages Based on Annual Data:
P/E: 26
Price/Sales: 1.67
Price/Book Value: 1.47
Net Profit Margin: 7.9%
EV/EBITDA: 10.6
Dividend Yield: 2.1%
Market Cap: $733 million
Enterprise Value: $876 million

*The author has a position in JG Boswell (BWEL). This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.

A DIscussion on Net/Net Quality

I'd never seen this clip until today; from an interview done by my friends at Great Investors TV, which has done a phenomenal job of interviewing value investors.

http://greatinvestors.tv/video/how-to-find-the-right-net-net-investments-with-jonathan-hell.html

(You can learn a lot watching a video of yourself; I learned that I am a serial head-tilter!)

A Value Investors New Take On Facebook

Following a 10-day mission trip to a small and very poor community in the Dominican Republic, I’ll never view Facebook (FB) through the same lens that I had previously. I’ve long had a love-hate relationship with the company; hating the stock, but sometimes loving the application. 

Now, while I’ve grown weary of the endless stream of “look how great little Bobby is”, “look at my awesome vacation photos”, "I just ate pancakes" or posts describing a 50-year old friends first colonoscopy, I do understand just how wide Facebook’s reach is.

Two years ago, we met 10 year-old Jhon at our construction site in the DR; when he learned that we had the same first name (more or less), he rarely left my side for the next ten days, and we bonded. Young Jhon cried on our last day, and presented me with a drinking glass from his home, which I still treasure.  Last year, when I could not make the trip I was saddened, because I missed the little guy. Jhon looked for me; when my daughter, who was able to go told him I would not be there, he cried again.

This year,  the now 12 year old Jhon greeted me on our first work day, and I saw him frequently as we worked. The day we left this year he did not cry; Jhon has grown up. But he did make a request; not just from me, but several from our team. He wanted our full Facebook names so that he could friend us. I could not understand what he was asking me at first; he spoke no English, and I no Spanish. But after he said “Faybuk” several times, I finally got it, and was somewhat astonished.

Here, in a very poor Dominican city, well known as one of the most polluted cities (due to a former battery factory) in the world, a twelve year-old, lacking most if not all of the conveniences we take for granted living in the United States, wanted to connect on Facebook. And young Jhon was not the only one; several other children made the same request of me and others.  If nothing else, I dramatically underestimated how wide reaching the Facebook phenomenon is.

Lest you think that this value investor, however, has completely lost his mind, my opinion of Facebook the stock is unchanged. I still believe it is vastly overpriced, and can’t fathom the $195 billion market cap that the market has blessed the company with. 

However, I am impressed with the companies reach and name recognition. That still does not make it a great stock, though.

But what do I know; I'm just a value investor.

Richardson Electronics: Back in Net/Net Land

It's the slimmest of pickings this day in the net/net land, a place that no publicly traded company would go by choice. With just three U.S. companies with market caps in excess of $100 million currently trading below net current asset value, Richardson (RELL) appears to be the best of the bunch. The others are Trans World Entertainmant (TWMC), and Imation (IMN).

Richardson currently trades at just .86 times NCAV, and the quality of the balance sheet is excellent, including $130.5 million, or $9.30 per share in cash and short-term investments.Considering the company's current $10.23 price, that's compelling. The company has no debt, and trades at .81 times tangible book value, and currently yields 2.4%

While still profitable, which can sometimes be uncommon for net/nets, revenues and profits have been sliding.

Richardson is scheduled to report fourth quarter and full year results on July 23rd.We'll be particularly interested in whether the company has maintained or grown its cash and short-term investment balances.

Richardson Electronics (RELL)
Price: $10.23
Market Cap: $143.5 million
NCAV: $166.3 million
Mkt Cap/NCAV: .86
Cash: $97.2 million
S/T Investments: $33.3 
Tangible Book Value/Share: $12.56P/TBV: .81
Trailing P/E: 85
Dvd Yield 2.4%

 *The author has a position in Richardson Electronics. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only

Value Investing Congress Discount for Cheap Stocks Subscribers- 9/8 &9/9 in NYC: It's not too late!

The Top Benefits of Attending the Value Investing Congress

The 10^th Annual New York Value Investing Congress is just weeks away (Sept. 8-9), ​but there’s still time to ​get your seat and enjoy the many benefits of attending the Congress in-person:

·         Speaker ​Wisdom – Congress speakers explain their stock ideas with detailed, well-reasoned analysis.  But the presentations are not live-streamed or distributed afterwards, so only onsite attendees benefit from the ​brilliance of these ​successful money managers.

·         Audience Q&A – Congress attendees are savvy, professional investors and their insightful questions often clarify and expand on a speaker’s investment thesis.  As with speaker commentary, live Q&A is only available to onsite attendees.

·         Exclusive Information – The Congress is closed to the media and live bloggers-- our attendees benefit first from actionable information.

·         Great Networking –  The VIC Cocktail Reception has become a favorite among attendees for sharing new ideas, creating new business opportunities and making friendships that ​can last a lifetime.

Register now and benefit from attending the Congress in-person.  But seats are strictly limited to 275, so we encourage Cheap Stocks readers to register now, before we sell out.

For a special Cheap Stocks Discount, register now with Offer Code: CHEAPSTOCKS  at  http://www.valueinvestingcongress.com/congress/register-now-partners/

Confirmed Speakers include:

• Leon Cooperman, Omega Advisors
• Sahm Adrangi, Kerrisdale Capital Management
• Carson Block, Muddy Waters Research
• Andrew Left, Citron Research
• Alexander Roepers, Atlantic Investment Management
• Jeffrey Smith, Starboard Value
• Amitabh Singhi, Surefin Investments
• Guy Spier, Aquamarine Fund
• David Hurwitz, SC Fundamental
• Michael Kao, Akanthos Capital
• Guy Gottfried, Rational Capital Management
• Adam Crocker, Metropolitan Capital Advisors
• Whitney Tilson, Kase Capital
• John Lewis, Osmium Partners
• Tim Eriksen, Eriksen Capital Management
• Cliff Remily, Northwest Priority Capital

• With more to come!

Remembering Clyde: One of our All-time Favorite Posts

Today we are re-running one of our favorite all-time posts, which was originally published seven years ago today. It was dedicated to my grandfather Clyde in recognition of his 100th birthday.  Today would have marked 107.


Remembering Clyde 

June 16th marks the 100th birthday of one of this site’s namesakes, my grandfather, friend, mentor, buddy, and the list goes on. The man exerted a great deal of influence on my life, and our time together -including the day he passed away in my presence 13 years ago- is forever etched in my mind.

Today we jettison the typical Cheap Stocks investment related drivel, and instead pay tribute to a great man who left countless people better than he found them. If he were alive today, he’d be puzzled by his grandson’s website. “Value” to him had to do with doing an honest day’s work, keeping your word, and serving others. “Growth” was about the tomatoes and peas in his garden, and “investing” was related to the time you spent serving others needs. The only stock he ever owned was the 20 shares of Ringling Brothers stock one of his sons purchased for him in the 1960’s. The circus was everything to him— at an early age when the circus was in town he’d work all day helping them to set up just for a ticket to that evening’s show--and his canceled Ringling Brothers stock certificate (Ringling was acquired by Mattel in the early 70’s) is proudly displayed in my home in tribute.

He never made it much past the eighth grade. That’s what happens when you get kicked out of school for knocking your school’s principal on his rear-end. Oh, and by the way the principal happened to be his Uncle Ed. As the story goes, young Clyde was accused of something he did not do, and good old Uncle Ed took a switch to him in the school office. Clyde wasn’t standing for that, and you know the rest—down went Uncle Ed. The incident stood with my grandfather—I recall him telling me on one of our frequent weekend ventures to his old stomping ground in Easton, PA about the dream he’d had the night before; here he was in his late 70’s and he’d dreamt of urinating on Uncle Ed’s grave. The past died hard for him. Being kicked out of school in many ways shaped his future—fueling a success story not measured in dollars, because there weren’t many of those, but measured instead by service to others, hard work, pride in all that he did, and sons and grandchildren who revered him.

He was part of the greatest generation. During World War II the GM plant, where he served as Master Heat Treater, made the conversion from autos to airplanes, and his ingenuity-not learned in any classroom- earned him awards, and helped GM build Grumman Avengers more quickly and efficiently.

After moving to Ewing NJ in the late 1930’s, he and a few buddies realized that this growing area needed a rescue squad. They became educated about wound care and emergency medicine, bought a used Hearse to serve as an ambulance, and The Pennington Road Rescue Squad was born. Born out of guts, ingenuity, fortitude, and a desire to serve others. 

My grandmother preceeded him in death, and it was then that we found out what “investing” meant in my grandmother's eyes. It meant hiding cash from her husband. The several thousand dollars in cash we found, including bills from the 1930’s through the 1960’s, bore witness to this. Evidently, the combination of living through the Depression, and fear that my grandfather would give it all away to anyone in need prompted my grandmother to keep a secret stash.

You really couldn’t blame her. A great woman in her own right, she’d seen it all. She’d seen my grandfather stop to help a stranger who’d run out of gas during the war, syphon it out of his tank and into the stranger’s, then run out of gas himself a few minutes later. Anything to help someone in need.

My resume' may be a lot longer than his, not that he ever had one. I had the opportunity to graduate from college, grad school, earn other professional designations, etc. But My grandfather, Clyde, was way smarter, way more accomplished, more ingenious and a better "investor" than I will ever be.

Happy 100th birthday, Clyde. I miss you, think of you often, am grateful for the times we had together, and for the lessons you taught me.

Imation: Back to Net/Net Land

Imagine our surprise to finally identify another net/net with a market cap in excess of $100 million. Now as rare as a Phillies win over the Mets (much to my chagrin), this was a big find. Not really. We are just getting desperate for net/nets. Not really, either.

Imation IMN has been what we would term a perennial net/net. The company was a member of our Cheap Stocks 26 Net Net Index, and perhaps the epitome of the proverbial "cigar butt". Imation has not generated a positive bottom line on an annual basis since 2009, and the main attraction- a healthy amount of cash- has dwindled from $305 million at year end 2010, to $126 million as of the latest quarter. The level of cash has stabilized in the past six quarters, a good sign, but this company still has its work cut out for it.

With $3.09 per share in cash ($2.61 net of debt), Imation currently trades at .96 times net current asset value and .63 times tangible book value. While that may appear enticing, this is a company in transition; one that generates 65% of revenue from what management terms "declining businesses". They continue to try and cut costs, and divest lower margin businesses- they sold Memorex last year- in favor of those that management believes will provide higher margins.

For the current price of $3.32, investors theoretically receive $2.61 and net cash, the fixed assets (on the books at $50 million) and call option on the company's prospects for 72 cents. That assumes that the intangible assets and goodwill are worthless.

Of course, the above is meaningless if the company resumes burning through it's cash.

While Imation is back on our radar, we've seen this story often in net/net land; and are not yet convinced that it will have a happy ending.

Imation
Ticker: IMN
Price: $3.31
Market Cap: $139 million
NCAV: $144 Million
Price/NCAV: .96
TBV: $5.28
P/TBV: .63
Cash: $126.2 million
Cash/Share: $3.09
Debt: $19.8 million
Net Cash/Share: $2.61


*The author has no positions in companies mentioned. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only

More Action in the Wine Business- Treasury Wine Estates (TSRYY) Acquisition Bid by KKR

We like the wine business, having been attracted primarily due to vineyard acreage ownership at cheap prices. We have done well with pink sheet name Scheid Vineyards (SVIN) over the past couple of years.Very recently, we took a position in Australian winemaker Treasury Wine Estate, which received a buyout offer earlier this week from KKR. See more below.

http://www.thestreet.com/story/12715705/1/treasury-wine-rejects-kkrs-buyout-offer.html



*The author has positions in Scheid Vineyards and Treasury Wine Estates. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only

Number of Net/Nets at an All-Time Low-Purgatory For Value Investors

When we started this site back in 2003, it was primarily focused on stocks trading below net current asset value. Over the years, we've covered other areas of deep value, but it all started with net/nets. Interestingly, in the current environment, it would make no sense to start such a site, given the dearth of companies trading below net current asset value.


In fact, we've never so few in the umpteen years that we've been researching, writing about, and investing in net/nets.


To construct a third net/net index, in the footsteps of the Cheap Stocks 21 Net/Net Index which we unveiled in February of 2008 and the Cheap Stocks 26 Net/Net Index which we rolled out in September of 2011, would be extremely difficult at this writing.


In fact, we currently find just two companies with market caps in excess of $100 million that are trading below net current asset value, Richardson Electronics and Trans World Entertainment. Next in terms of market cap at $92.5 million is Gencor Industries. From there, its a mish mosh of smaller names, which may or may not deserve a deeper dive.


Suffice it to say that the net/net cupboard is bare. The reasons, in our view are the following:
1. A rising tide has lifted all boats. Rising markets have lifted many companies out of net/net territory, which is typical coming out of the upheaval we saw in 2008 and 2009. But even that does not tell the whole story.
2. There's also been a renewed interest in net/nets over the past several years. New buyers have entered the markets, bid up prices, and many net/nets don't stay there very long. New attention has been brought by websites and other resources that have alerted investors to the potential benefits of net/net investing. This website was one of the first. In essence, we've shot ourselves in the foot, and helped drive net/nets into extinction.


Not to worry though, a market correction will ultimately re-stock the net/net shelves at least temporarily. That's not something we wish for. In fact, despite the fact that many are calling for a correction following a five-year bull run, we don't believe the markets are extremely overvalued at this point. We are certainly struggling to find much that is interesting in terms of deep value, but don't believe there's a huge bubble. It's like purgatory for value investors.



 *The author has a position in Richardson Electronics. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only

Arctic Cat Gets Hammered

http://www.thestreet.com/story/12711635/1/finding-gems-as-investors-ditch-small-caps.html

10th Annual New York Value Investing Congress- September 8 & 9, 2014: Cheap Stocks Readers save 50% if registered by 6/24

Cheap Stocks will again be a media sponsor for this year's New York Value Investing Congress, and they have been kind enough to offer our readers a discount to this year's event.

This year, seating will be limited to 275, so if you are interested in attending what we consider to be value investing's best conference, consider registering ASAP.

Regular Price: $5,995

Special Offer – Over 50% off till 6/24/14

Offer expires: 6/24/14

Discount Code: CHEAPSTOCKS

URL:  http://www.valueinvestingcongress.com/congress/register-now-partners/

More information about the event:

10th Annual New York Value Investing Congress

·         Date:  September 8 – 9, 2014

Confirmed speakers include:

• Leon Cooperman, Omega Advisors
• Alexander Roepers, Atlantic Investment Management
• Carson Block, Muddy Waters Research
• Whitney Tilson, Kase Capital
• Sahm Adrangi, Kerrisdale Capital Management
• David Hurwitz, SC Fundamental
• Jeffrey Smith, Starboard Value
• Michael Kao, Akanthos Capital Management
• Guy Gottfried, Rational Investment Group
• John Lewis, Osmium Partners
• Tim Eriksen, Eriksen Capital Management
• Cliff Remily, Northwest Priority Capital
• With many more to come!

Premier Exhibitions: 4/22 Call a Step in the Right Direction

As a shareholder, The Premier Exhibitions (PRXI) saga has been downright painful at times. It's been the ultimate value investor's dilemma- arguably valuable assets (Titanic artifacts and intellectual property) whose value has yet to be unlocked. The company has done a poor job in managing the situation-including in the communications arena-since the April 2012 Titanic asset auction failed. Quarter after quarter, the earnings calls have been unsatisfying, and shareholder frustrations have grown.

As a result, the company has attracted little attention in recent months, and the share price has languished.

Tuesday's shareholder call, however, shed some much-needed light on the company's future plans, and was a step in the right direction. (Link to the transcript below)

http://www.sec.gov/Archives/edgar/data/796764/000117184314001820/exh_991.htm

Now, Premier needs to execute.

Stay tuned.

*The author has a position in Premier Exhibitions. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only

Scheid Vineyards in the Spotlight, and You'll Never Guess Who They've Teamed up With

High quality pink sheet wine company Scheid Vineyards (SVIN) has fallen off investors' radar since the company went "dark" in 2006, allowing it to remain publicly traded, while avoiding the prohibitive costs of Sarbanes Oxley, and no longer having to file with the SEC.

Scheid has long been fascinating to this site, primarily due to the companies exposure to the wine industry and ownership of  vineyard acres in California. As of late 2013, Scheid owned 1575 acres, which is nearly 2.5 square miles, and leased an additional 1775.

With just 882,000 shares outstanding following a 1 for 4 reverse split in 2006, shares are difficult to come by, and average volume is just 220 shares per day. Data is also difficult to find since SEC filing is not required.

After years of admiring Scheid from a distance, and seeing shares-which traded for $56 (post-split) in 1998, and $39 in 2008- fall all the way to $8 in 2011, I finally took my initial position. I added more in the mid teens. Now trading at $27, the company is starting to get re-discovered.

Some of the attention is due to the recent partnership the company has entered into with none other than Kathy Lee Gifford, and the new Gifft by Kathie Lee Gifford line of wines. She hawked the new venture earlier this week on Late Night with Seth Meyers. Yesterdays volume of 4000 gave a hint that something was happening.

That was certainly a surprise, and should be a positive for the company. As an investor, however, Scheid remains compelling for other reasons, for one the fact the company is trading at just .59 times tangible book value for share, and owns some high quality assets. Scheid Vineyards is also profitable again. Last year, the company earned $8.01 million (which included a $5.8 million gain on the sale of land) on revenue of $36.3 million.

With such a small float, due in part to the Scheid family's ownership interest in the company, the bid/ask spread is usually very wide.

But it's nice to see the company in the news.

Scheid Vineyards
Ticker: SVIN
Shares Outstanding:
Class A: 734,917
Class B: 147460
Price: $27.00
Book Value Per Share: $45.7
2013 Revenue:$36.3 million (year ended 2/28/2013)
Market Cap: $23.8 million (as of 3/26/2014)
Enterprise Value: $81.7 million (cash/debt based on YE 2013 data):
*Data From 2013 annual report

*The author has a position in Scheid Vineyards). 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 Super Six Anti Value Portfolio-

http://www.thestreet.com/story/12546973/1/a-difficult-quarter-for-these-six-highflying-stocks.html

Unveiled this portfolio of what I believe to be six overvalued companies back in December.

PICO Holdings: Still a Value Play After All These (Frustrating) Years

http://www.thestreet.com/story/12405531/1/little-known-pico-showing-signs-of-life.html