Monday, July 28, 2014

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.

Friday, July 18, 2014

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

Wednesday, July 16, 2014

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 10th 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
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 SinghiSurefin 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!