I've owned and covered mysterious under-the-radar cotton farming giant JG Boswell for several years now. Time was that no one knew about, or discussed this highly illiquid pink sheet company. There was good reason for that, too. Although publicly traded, Boswell behaves more like a private company, and keeps information close to the vest. You'll never see an earnings release, company guidance or any other communications associated with many public companies. The fact is that Boswell is not required to file with the SEC because it has fewer than 300 registered shareholders. Even annual financial data is somewhat difficult to find.
Owning such companies is risky. This is a risk that I'm willing to take, because I believe that the company is worth significantly more than it's current $780 million market cap. But I am taking a lot on faith; not the least of which is the belief that the company will ultimately convert valuable assets, such as water rights, into cash. But there are no guarantees this will happen.
Lately, the message boards have been hopping with activity related to BWEL. For years, there was nothing. Now, there are some fairly wild claims being made about the company and it's ultimate value; claims about the value of the land, the water rights, and other assets that I'm not certain the company even posesses.
Don't get me wrong, I am long this company and believe there is value there. But the true value of the land, and even the size and scope of the water rights is unknown. I've seen claims of $100 earnings this year due to higher cotton prices (BWEL earned $31 per share last year), that the dividend will be raised, that a special dividend will be paid, that shares are worth $10,000 or more. Don't get me wrong, there are few that would be happier if BWEL was truly worth $10,000 per share, but I'm certain that much of this is being perpetuated by one or more individuals, and I'm not sure where they are getting their "facts".
The bottom line is to be careful what you read, and what you believe.
*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.
Friday, April 29, 2011
Tuesday, April 05, 2011
Net/Nets Becoming Rarer than a Blue Moon
Just when you think that the ranks of net/nets can't get any smaller, they do just that. This site was originally dedicated to the identification and research of companies trading below net current asset value, and at the time of launch in 2003, was the only site, at least that we were aware of, that covered net/nets.
Since then, interest has grown, and there are several websites that now cover net/nets. All of this coverage has brought the concept more into the mainstream. Ten years ago, net/net was a foreign term, even to some value investors. That's not so much the case any longer.
We believe that all of the additional coverage along with rising markets, have acted in tandem to reduce the universe of net/nets.
At ths writing, we can only identify 2 net/nets with market caps above $100 million, ADPT Corp (ADPT) and perennial net/net Audiovoxx (VOXX).
It's not much better between $50 million and $100 million. There, we find Myrexis (MYRX), Gencor Industries (GENC), Parlux Fragrances (PARL), Heely's (HLYS), Integrated Electrical Services (IESC), Trans World Entertainment (TWMC), and Planar Systems (PLNR).
We are starting to sound like a broken record, but that's the fewest number of net/nets we ever seen above $50 million in market cap. This will change. When? We don't know.
*The author has no position in the 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.
Since then, interest has grown, and there are several websites that now cover net/nets. All of this coverage has brought the concept more into the mainstream. Ten years ago, net/net was a foreign term, even to some value investors. That's not so much the case any longer.
We believe that all of the additional coverage along with rising markets, have acted in tandem to reduce the universe of net/nets.
At ths writing, we can only identify 2 net/nets with market caps above $100 million, ADPT Corp (ADPT) and perennial net/net Audiovoxx (VOXX).
It's not much better between $50 million and $100 million. There, we find Myrexis (MYRX), Gencor Industries (GENC), Parlux Fragrances (PARL), Heely's (HLYS), Integrated Electrical Services (IESC), Trans World Entertainment (TWMC), and Planar Systems (PLNR).
We are starting to sound like a broken record, but that's the fewest number of net/nets we ever seen above $50 million in market cap. This will change. When? We don't know.
*The author has no position in the 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.
Thursday, February 03, 2011
Flashback: Investment Lessons Learned From a Bully
This is a little light on ideas, but happens to be our favorite column in the history of this site. This originally ran on January 26, 2008.
Charlie was the consumate bully. One of the older kids in the neighborhood, and also the paperboy, he had a bad reputation and it was well earned. The event that occurred on one snowy day in our small quiet town in central NJ some 30 years ago can today be used as a metaphor for an important investment lesson.
We'd spent much of the day building a huge snow fort--my brother and I, Jimmy and Jon, brothers who lived across from us, and a few other assorted neighborhood kids. We could all fit inside this circular structure, but the walls were so high that we could not see out, save for a "window" or two built into the wall. Definitely the best snow fort we'd ever built.
But we soon realized that our snow structure's hours of existence were limited. Not because of the sun, but because of something much more menacing: Charlie. We realized that he was due to make his afternoon newspaper deliveries, and as soon as he saw our fort, he would very likely destroy it. At 15 or 16, Charlie was a big kid, and could severely damage our fort with one flying leap.
We thought quickly. If Charlie was going to take down our fort, he was going to do so at his own peril. We quickly loaded that snow fort with everything we could find--rakes, shovels, other garden implements standing upright, even a full size garden tractor. He might take down the fort that we spent all day building, but that bully was not going to walk away unscathed.
We hid in the bushes, and along came Charlie. He saw our snow fort, but could not see what was contained within. He stopped, he sprinted, he jumped, and landed, destroying our fort. How proud he must have been as he hit that wall of snow--until a split second later when he landed on a tractor, several garden implements, and half the contents of Jimmy and Jon's garage. Charlie got a big, painful surprise that snowy afternoon. What appeared to be a harmless, ultra white snow fort, was actually much more. It's contents could not be seen from the outside; hidden within it's walls were dangerous, unseen risks.
That day, Charlie the bully cried like a baby. I don't remember seeing him all that much after that. He didn't suffer any permanent damage, and in hindsight, I'm glad he was not injured. We all (I hope) learned important lessons that day.
Hopefully the investment lesson is clear. During those times of financial crisis, when companies are beaten down, we as investors have the propensity to be fooled by the "It's down 50%, it can't go any lower" sentiment. That's the time to be aware of what might really be contained within a given company's situation. Is their peril lurking behind snowy white walls? Is it really worth the risk?
Charlie, if you are out there, I'd bet you wouldn't go near the Radians (RDN), MBIA's (MBI), or other such companies that have been trounced, yet may still conceal the unexpected. There may ultimately be reward, but how much risk are you willing to take?
*The author does not have positions in any of the 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. The author will not trade any of the securities mentioned (buy, sell, short) for at least two weeks following the date of this post.
Charlie was the consumate bully. One of the older kids in the neighborhood, and also the paperboy, he had a bad reputation and it was well earned. The event that occurred on one snowy day in our small quiet town in central NJ some 30 years ago can today be used as a metaphor for an important investment lesson.
We'd spent much of the day building a huge snow fort--my brother and I, Jimmy and Jon, brothers who lived across from us, and a few other assorted neighborhood kids. We could all fit inside this circular structure, but the walls were so high that we could not see out, save for a "window" or two built into the wall. Definitely the best snow fort we'd ever built.
But we soon realized that our snow structure's hours of existence were limited. Not because of the sun, but because of something much more menacing: Charlie. We realized that he was due to make his afternoon newspaper deliveries, and as soon as he saw our fort, he would very likely destroy it. At 15 or 16, Charlie was a big kid, and could severely damage our fort with one flying leap.
We thought quickly. If Charlie was going to take down our fort, he was going to do so at his own peril. We quickly loaded that snow fort with everything we could find--rakes, shovels, other garden implements standing upright, even a full size garden tractor. He might take down the fort that we spent all day building, but that bully was not going to walk away unscathed.
We hid in the bushes, and along came Charlie. He saw our snow fort, but could not see what was contained within. He stopped, he sprinted, he jumped, and landed, destroying our fort. How proud he must have been as he hit that wall of snow--until a split second later when he landed on a tractor, several garden implements, and half the contents of Jimmy and Jon's garage. Charlie got a big, painful surprise that snowy afternoon. What appeared to be a harmless, ultra white snow fort, was actually much more. It's contents could not be seen from the outside; hidden within it's walls were dangerous, unseen risks.
That day, Charlie the bully cried like a baby. I don't remember seeing him all that much after that. He didn't suffer any permanent damage, and in hindsight, I'm glad he was not injured. We all (I hope) learned important lessons that day.
Hopefully the investment lesson is clear. During those times of financial crisis, when companies are beaten down, we as investors have the propensity to be fooled by the "It's down 50%, it can't go any lower" sentiment. That's the time to be aware of what might really be contained within a given company's situation. Is their peril lurking behind snowy white walls? Is it really worth the risk?
Charlie, if you are out there, I'd bet you wouldn't go near the Radians (RDN), MBIA's (MBI), or other such companies that have been trounced, yet may still conceal the unexpected. There may ultimately be reward, but how much risk are you willing to take?
*The author does not have positions in any of the 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. The author will not trade any of the securities mentioned (buy, sell, short) for at least two weeks following the date of this post.
Tuesday, January 25, 2011
Discount to Value Investing Congress West
Our friends at the Value Investing Congress are once again extending Cheap Stocks readers a discount to attend May's conference (May 3rd and 4th) in Pasadena. The current offer will expire on February 17th. To learn more, please click on the ad to the left of this post. Hope to see you in Pasadena!
Tuesday, January 18, 2011
Where are All the Net/Nets Part II
We've received several subscriber inquiries regarding the othernet/nets, those with market caps above $50 million, that we referenced last week. The pickings are slim, but here the are:
Myrexix Inc
Ticker: MYRX
Price: $4.21
Market Cap:$106
NCAV: $121.5
Mkt Cap/NCAV: .87
Cash & ST Invest: $124.8
P/E:NA
HQ Sustainable Maritime Ind
Ticker: HQS
Price: $4.75
Market Cap:$85
NCAV: $111
Mkt Cap/NCAV: .77
Cash & ST Invest: $64.5
P/E:7
Insmed Inc
Ticker: INSM
Price: $.65
Market Cap:$84.5
NCAV: $123
Mkt Cap/NCAV: .69
Cash & ST Invest: $124.3
P/E:50
Parlux Fragrances
Ticker: PARL
Price: $3.44
Market Cap:$70.5
NCAV: $91
Mkt Cap/NCAV: .78
Cash & ST Invest: $14.2
P/E:NA
Gencor Industries
Ticker: GENC
Price: $7.36
Market Cap:$70
NCAV: $76.3
Mkt Cap/NCAV: .78
Cash & ST Invest: $256.8
P/E:24
Trans World Entertainment
Ticker: TWMC
Price: $1.74
Market Cap:$55
NCAV: $114
Mkt Cap/NCAV: .48
Cash & ST Invest: $6.1
P/E:NA
Integrated Electrical Services
Ticker: IESC
Price: $3.64
Market Cap:$54
NCAV: $66
Mkt Cap/NCAV: .82
Cash & ST Invest: $32.9
P/E:NA
Duckwall Alco
Ticker: DUCK
Price: $13.87
Market Cap:$53
NCAV: $63
Mkt Cap/NCAV: .85
Cash & ST Invest: $5.4
P/E:NA
Not to sound like a broken record, but this is among the shortest list of net/nets with market caps above $50 million that we've seen in the dozen or so years we've been researching net/nets.
The author has no position in the 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.
Myrexix Inc
Ticker: MYRX
Price: $4.21
Market Cap:$106
NCAV: $121.5
Mkt Cap/NCAV: .87
Cash & ST Invest: $124.8
P/E:NA
HQ Sustainable Maritime Ind
Ticker: HQS
Price: $4.75
Market Cap:$85
NCAV: $111
Mkt Cap/NCAV: .77
Cash & ST Invest: $64.5
P/E:7
Insmed Inc
Ticker: INSM
Price: $.65
Market Cap:$84.5
NCAV: $123
Mkt Cap/NCAV: .69
Cash & ST Invest: $124.3
P/E:50
Parlux Fragrances
Ticker: PARL
Price: $3.44
Market Cap:$70.5
NCAV: $91
Mkt Cap/NCAV: .78
Cash & ST Invest: $14.2
P/E:NA
Gencor Industries
Ticker: GENC
Price: $7.36
Market Cap:$70
NCAV: $76.3
Mkt Cap/NCAV: .78
Cash & ST Invest: $256.8
P/E:24
Trans World Entertainment
Ticker: TWMC
Price: $1.74
Market Cap:$55
NCAV: $114
Mkt Cap/NCAV: .48
Cash & ST Invest: $6.1
P/E:NA
Integrated Electrical Services
Ticker: IESC
Price: $3.64
Market Cap:$54
NCAV: $66
Mkt Cap/NCAV: .82
Cash & ST Invest: $32.9
P/E:NA
Duckwall Alco
Ticker: DUCK
Price: $13.87
Market Cap:$53
NCAV: $63
Mkt Cap/NCAV: .85
Cash & ST Invest: $5.4
P/E:NA
Not to sound like a broken record, but this is among the shortest list of net/nets with market caps above $50 million that we've seen in the dozen or so years we've been researching net/nets.
The author has no position in the 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.
Thursday, January 13, 2011
Last Call For JG Boswel Fundamentals Spreadsheet
We've decided to offer this spreadsheet, which includes the past 8 years of as-reported fundamental data taken directly from the annual reports, until February 1st only. Data includes the most recent fiscal year end.
If you are interested in obtaining this, please contact us at:cheapstocks@verizon.net for pricing.
*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.
If you are interested in obtaining this, please contact us at:cheapstocks@verizon.net for pricing.
*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.
Tuesday, January 11, 2011
Where Are All The Net/Nets? Ben Graham asked the Same Question in 1968
At this writing, we've never seen so few net/nets at any point in the decade plus that we've been studying and researching them. In fact, we currently count a total of 12 with market caps in excess of $50 million. Unfortunately (or fortunately, depending on your perspective) a rising market tide tends to lift all boats, including net/nets. We've also seen a growing population of websites covering net/nets since we started this site in 2002, which may also partially explain the lack of opportunity; there are simply more investors that have caught on to this fascinating sub-culture.
Periods of low net/net opportunity are not uncommon; even Ben Graham wriote about one such period that occurred in 1968 in the 1973 edition of Intelligent Investor. Ben wrote:
In our experience, it's more than likely that the univerese of net/nets will only grow if there is a significant market pullback. I'm not wishing that on anyone, but will continue to look for opportunity in the current crop of net/nets. Having some dry powder available is not a bad idea.
Top 5 Net/Nets by Market Cap
Imation Corp
Ticker: IMN
Price: $10.59
Market Cap:$408
NCAV: $412
Mkt Cap/NCAV: .99
Cash & ST Invest: $256.8
P/E:NA
ADPT Corp
Ticker: ADPT
Price: $2.88
Market Cap: $317
NCAV: $368.6
Mkt Cap/NCAV:.86
Cash & ST Invest: $365.8
P/E: NA
Volt Information Sciences
Ticker: VOL
Price: $8.92
Market Cap: $186
NCAV: $199
Mkt Cap/NCAV: .93
Cash & ST Invest: $145.6
P/E: 4
Audiovox
Ticker: VOXX
Price: $7.91
Market Cap: $184
NCAV: $212
Mkt Cap/NCAV:.87
Cash & ST Invest: $73.1
P/E: 9
Maxygen
Ticker: MAXY
Price: $4.04
Market Cap: $121
NCAV: $142.5
NCAV/Mkt Cap: .85
Cash & ST Invest: $152.4
P/E: NA
The author has no position in the 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.
Periods of low net/net opportunity are not uncommon; even Ben Graham wriote about one such period that occurred in 1968 in the 1973 edition of Intelligent Investor. Ben wrote:
But the picture changed in the 1970 decline, and at the low prices of that year a goodly number of common stocks could have been bought at below their working capital value.
In our experience, it's more than likely that the univerese of net/nets will only grow if there is a significant market pullback. I'm not wishing that on anyone, but will continue to look for opportunity in the current crop of net/nets. Having some dry powder available is not a bad idea.
Top 5 Net/Nets by Market Cap
Imation Corp
Ticker: IMN
Price: $10.59
Market Cap:$408
NCAV: $412
Mkt Cap/NCAV: .99
Cash & ST Invest: $256.8
P/E:NA
ADPT Corp
Ticker: ADPT
Price: $2.88
Market Cap: $317
NCAV: $368.6
Mkt Cap/NCAV:.86
Cash & ST Invest: $365.8
P/E: NA
Volt Information Sciences
Ticker: VOL
Price: $8.92
Market Cap: $186
NCAV: $199
Mkt Cap/NCAV: .93
Cash & ST Invest: $145.6
P/E: 4
Audiovox
Ticker: VOXX
Price: $7.91
Market Cap: $184
NCAV: $212
Mkt Cap/NCAV:.87
Cash & ST Invest: $73.1
P/E: 9
Maxygen
Ticker: MAXY
Price: $4.04
Market Cap: $121
NCAV: $142.5
NCAV/Mkt Cap: .85
Cash & ST Invest: $152.4
P/E: NA
The author has no position in the 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.
Wednesday, December 01, 2010
JG Boswell Fundamentals
Thanks to the addition of the most recently available data, we've now reviewed 8 years of data, crunched a lot of numbers for JG Boswell, and have been able to string together eight years worth of fundamentals. Due to the complexity, and growing size of our spreadsheet, we've decided to share just some of the data that will put BWEL's current valuation in perspective.
JG Boswell (BWEL)
8 Year Averages Based on Annual Data:
P/E: 27.3
Price/Sales: 1.56
Price/Book Value: 1.41
Net Profit Margin: 7.49%
EV/EBITDA: 9.71
Dividend Yield: 2.31%
Market Cap: $596 million
Enterprise Value: $718 million
Current Data (2010 Annual)
Price: $699 (11/30 close)
P/E: 22.5
Price/Sales: 1.72
Price/Book Value: 1.48
Net Margin: 7.7%
EV/EBITDA: 10.06
Dividend Yield: 2.0%
Current Market Cap: $692.7 million
Current Enterprise Value: $857 million
We now have compiled 8 years of JG Boswell as-reported fundamental data (balance sheet, Cash Flow, Income Statements, Summary Valuation Data and ratios) in an excel spreadsheet. If you are interested in obtaining this, please contact us at:cheapstocks@verizon.net for pricing.
*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.
JG Boswell (BWEL)
8 Year Averages Based on Annual Data:
P/E: 27.3
Price/Sales: 1.56
Price/Book Value: 1.41
Net Profit Margin: 7.49%
EV/EBITDA: 9.71
Dividend Yield: 2.31%
Market Cap: $596 million
Enterprise Value: $718 million
Current Data (2010 Annual)
Price: $699 (11/30 close)
P/E: 22.5
Price/Sales: 1.72
Price/Book Value: 1.48
Net Margin: 7.7%
EV/EBITDA: 10.06
Dividend Yield: 2.0%
Current Market Cap: $692.7 million
Current Enterprise Value: $857 million
We now have compiled 8 years of JG Boswell as-reported fundamental data (balance sheet, Cash Flow, Income Statements, Summary Valuation Data and ratios) in an excel spreadsheet. If you are interested in obtaining this, please contact us at:cheapstocks@verizon.net for pricing.
*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.
Thursday, November 18, 2010
Lazare Kaplan Lives; Still No Balance Sheet, Though
No sooner did we part ways (for the second time) with LKII than the company announced a settlement agreement with ABN AMRO Bank and the Royal Bank of Scotland, which, as we understand it, resulted in $64 million in obligations being deemed "satisfied in full". ABN also agreed to transfer 2,151,103 shares of outstanding LKII stock, more than 25% of outstanding shares, back to the company. Lazare Kaplan forked over $14 million in cash to ABN and RBS as part of the settlement.
Shares jumped on the news, and now "trade" in the $1.41 range. With such a small float, trading volume is extremely light, and the bid ask spread very wide; $1.30/$1.75 at this writing.
Certainly sounds like some positive developments for Lazare, which has suffered in the aftermath of some missing inventory (diamonds), but we still don't know what shape the company is in, and have not seen a balance sheet in ages. We also don't know that status of the company's $640 million lawsuit with it's insurers.
This could get interesting, but there are still many unknowns.
Stay tuned.
*The author has no position in the 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.
Shares jumped on the news, and now "trade" in the $1.41 range. With such a small float, trading volume is extremely light, and the bid ask spread very wide; $1.30/$1.75 at this writing.
Certainly sounds like some positive developments for Lazare, which has suffered in the aftermath of some missing inventory (diamonds), but we still don't know what shape the company is in, and have not seen a balance sheet in ages. We also don't know that status of the company's $640 million lawsuit with it's insurers.
This could get interesting, but there are still many unknowns.
Stay tuned.
*The author has no position in the 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.
Tuesday, October 19, 2010
Parting Ways with Lazare Kaplan (LKII)
One of the great frustrations with the companies that end up in net/net land, is that you never know what might happen. This comes with the territory. In the case of diamond company Lazare Kaplan, "lost diamonds" led to a 10 month period where shares did not trade. The company was not talking, either. Shareholders were left in limbo with very little information, and no financial statements. The company was suspended from trading, but ultimately listed on the pink sheets, and began "trading" again in July.
We'd all but given up on Lazare; this was the second time we owned it, and thankfully our cost basis this time was $1.18.
But more details of the company's troubles began to emerge over the summer. We've seen some speculation by others that the company's $640 million lawsuit against its insurers, who are refusing to pay claims over the missing diamonds, may end up handsomely rewarding shareholders. We, however, have decided that the risk-reward is not in our favor in this case, and have closed our position.
While a lawsuit victory would be a huge windfall to the company, we believe that the fundamentals continue to deteriorate. The company's most recent 8K suggested that Q1 revenue will be about $33.2 million, down from $74.2 million last year. Meanwhile, we don't know what shape the balance sheet is currently in; it's been ages since we've seen one. In any event, we would rather walk away with $.80 or $.90 per share of our original $1.18 investment than take the chance of total loss.
*The author has no position in the 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.
We'd all but given up on Lazare; this was the second time we owned it, and thankfully our cost basis this time was $1.18.
But more details of the company's troubles began to emerge over the summer. We've seen some speculation by others that the company's $640 million lawsuit against its insurers, who are refusing to pay claims over the missing diamonds, may end up handsomely rewarding shareholders. We, however, have decided that the risk-reward is not in our favor in this case, and have closed our position.
While a lawsuit victory would be a huge windfall to the company, we believe that the fundamentals continue to deteriorate. The company's most recent 8K suggested that Q1 revenue will be about $33.2 million, down from $74.2 million last year. Meanwhile, we don't know what shape the balance sheet is currently in; it's been ages since we've seen one. In any event, we would rather walk away with $.80 or $.90 per share of our original $1.18 investment than take the chance of total loss.
*The author has no position in the 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.
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