adios
12-26-2002, 03:05 AM
For the record I did trade in and out of Linear Tech, LLTC, for a small loss. There are some stocks that I consider opportunities. First one is Criimi Mae Inc., CMM, a commercial mortgate company. It went into chapter 11 a while back and has come out. It closed yesterday at $10.22. It has a book value of $21.96 a share. All assets are tangible assets. I do have a position in CMM at around $10. The company is doing a recapitalization and has received some overtures regarding a buyout. I'm speculating that the company will merge with another for a significantly higher price than $10 a share.
The second one is CoSine Communications. CoSine does the following (taken from Yahoo):
CoSine Communications, Inc. develops, markets and sells a communications platform designed to enable network service providers to rapidly deliver computer applications and communications services from within their networks. The Company's Internet Protocol (IP) Service Delivery Platform consists of the following hardware elements: a chassis, including the Company's IPSX 9500 and IPSX 3500 Service Processing Switches (IPSXs); electronic circuit boards, known as IP Service Generators (IPSGs), which support various IP services, and software elements consisting of InVision Service Management software for network management and InGage Customer Network Management software.
This company has been losing a lot of money and is burning through cash rapidly. They received a buyout offer from an outfit called Wyndcrest LLC. for originally $9.11 a share and the $9.50 a share. CSON went out yesterday at $6.00 a share. The book value for CSON is $11.08 a share with cash of $11.30 a share (without the cash they have a negative BV). I don't have a position in this one but I'm contemplating it seriously. The problems I see is the obvious one, why give somebody $11.30 to get $9.50. However, the cash burn rate on CSON is very fast and a deal doesn't happen the cash will evaporate quickly. I believe Wyndcrest wants to liquidate the company as well. Wyndcrest has made statements that they aren't going away and that they will try to get this proposal in front of the share holders for a vote. I'm trying to evaluate how likely that is. CSON shares outstanding are listed at 10.1 million with a float of 9.5 million.
Wyndcrest is involved in a couple of other offers but I doubt that they will go through but they're worth looking at. The first company is called Netro Corporation, NTRO, and here's a description of it's business:
Netro Corporation is a provider of broadband, point-to-multipoint, fixed wireless equipment. Telecommunications service providers use the Company's equipment to provide voice and high-speed data access connections to end users or between locations in the metropolitan telecommunications network as an alternative to using wired or other connectivity. Netro's products are designed to provide access connectivity to residences and small and medium-sized businesses, as well as to provide infrastructure transmission connections between mobile phone service hubs and the core mobile telecommunications network. The Company began commercially shipping its first point-to-multipoint product, AirStar, in 1998. AirStar is mainly targeted at service providers offering voice and high-speed data services to small and medium-sized enterprises and mobile phone service providers for infrastructure applications.
And business is terrible. However, this company is selling at $2.72 a share with a book value of $5.01 a share and cash of $3.25 per share. NTRO has rejected the overtures of Wyndcrest but has hired Goldman Sachs as a financial advisor to pursue "strategic alternatives."
The other company that Wyndcrest is pursuing is Casa Ole Restaurants, CASA. CASA has a book value of $4.75 a share and is actually making money with a PE of 9.92. CASA went out at $3.53 a share yesterday so they are trading at a discount to book. After looking at the balance sheet most of the assets are in Property, Plant and Equipment which is their restaurants. These assets are most likely being depreciated over time so they in actuality may be worth a lot more since they are basically commerical real estate but I don't know. I have no positions in NTRO or CASA.
Another company I find interesting is Hanover Capital Mortgate Holdings, HMC. HMC is a mortgage REIT yeilding a not too shabby 14%. Although other Mortgage REITs have a higher yield I don't think any of them are trading at such a discount to book value. The current book value of HMC is $9.81 a share and went out on Tuesday at $7.14. I've been studying the financial statments of HMC and I don't see how this one should be trading at such a discount to book value. The thing about these Mortgage REITs is that when they trade at such a discount they should buy back stock because it is accretive to earnings. Although HMC doesn't state explicitly the leverage it uses, from what I calculate so far it is much less than other Mortgage REITs and HMC is hedged against spikes in interest rates that would flatten the yield curve which reduces the spread that they leverage. HMC is very small and is traded thinly which I'm sure accounts for part of the reason that they trade at such a discount to BV. It looks to me like this one has little downside, is yielding a very nice 14%, and could have some upside if management decides to buy back shares. I don't have a position in HMC but I probably will make a small investment in it.
Here's one that has been killed due to claims of impending problems and accounting improprieties by short sellers. It's Nautilaus Group Inc., NLS. They make the bowflex machines among other things that you see advertised on TV. They have had a nice growth rate in revenue and earnings for the past 4 qtrs at least. Now they currently trade at $13.52 a share after hitting $45+ a share earlier this year. They have a PE of 5.2. I've reviewed some of the claims made by the short sellers and quite frankly I find them to be without merit so far although I'm digging deeper. Of course the problem with this one is that they don't pay divis (they have started buying back stock) so whether or not an investor will ever get their fair share of the profits in their hands is open to debate. I don't have a position in NLS but it looks cheap.
Well it's a long post so I'll quit here. I want to discuss some sleazy practices by theStreet.com and a renouned short seller that owns 10% of theStreet.com (he's heavily active in shorting NLS) sometime later. Just wanted to let you all know I read this forum but I've been busy so I haven't posted in a while.
The second one is CoSine Communications. CoSine does the following (taken from Yahoo):
CoSine Communications, Inc. develops, markets and sells a communications platform designed to enable network service providers to rapidly deliver computer applications and communications services from within their networks. The Company's Internet Protocol (IP) Service Delivery Platform consists of the following hardware elements: a chassis, including the Company's IPSX 9500 and IPSX 3500 Service Processing Switches (IPSXs); electronic circuit boards, known as IP Service Generators (IPSGs), which support various IP services, and software elements consisting of InVision Service Management software for network management and InGage Customer Network Management software.
This company has been losing a lot of money and is burning through cash rapidly. They received a buyout offer from an outfit called Wyndcrest LLC. for originally $9.11 a share and the $9.50 a share. CSON went out yesterday at $6.00 a share. The book value for CSON is $11.08 a share with cash of $11.30 a share (without the cash they have a negative BV). I don't have a position in this one but I'm contemplating it seriously. The problems I see is the obvious one, why give somebody $11.30 to get $9.50. However, the cash burn rate on CSON is very fast and a deal doesn't happen the cash will evaporate quickly. I believe Wyndcrest wants to liquidate the company as well. Wyndcrest has made statements that they aren't going away and that they will try to get this proposal in front of the share holders for a vote. I'm trying to evaluate how likely that is. CSON shares outstanding are listed at 10.1 million with a float of 9.5 million.
Wyndcrest is involved in a couple of other offers but I doubt that they will go through but they're worth looking at. The first company is called Netro Corporation, NTRO, and here's a description of it's business:
Netro Corporation is a provider of broadband, point-to-multipoint, fixed wireless equipment. Telecommunications service providers use the Company's equipment to provide voice and high-speed data access connections to end users or between locations in the metropolitan telecommunications network as an alternative to using wired or other connectivity. Netro's products are designed to provide access connectivity to residences and small and medium-sized businesses, as well as to provide infrastructure transmission connections between mobile phone service hubs and the core mobile telecommunications network. The Company began commercially shipping its first point-to-multipoint product, AirStar, in 1998. AirStar is mainly targeted at service providers offering voice and high-speed data services to small and medium-sized enterprises and mobile phone service providers for infrastructure applications.
And business is terrible. However, this company is selling at $2.72 a share with a book value of $5.01 a share and cash of $3.25 per share. NTRO has rejected the overtures of Wyndcrest but has hired Goldman Sachs as a financial advisor to pursue "strategic alternatives."
The other company that Wyndcrest is pursuing is Casa Ole Restaurants, CASA. CASA has a book value of $4.75 a share and is actually making money with a PE of 9.92. CASA went out at $3.53 a share yesterday so they are trading at a discount to book. After looking at the balance sheet most of the assets are in Property, Plant and Equipment which is their restaurants. These assets are most likely being depreciated over time so they in actuality may be worth a lot more since they are basically commerical real estate but I don't know. I have no positions in NTRO or CASA.
Another company I find interesting is Hanover Capital Mortgate Holdings, HMC. HMC is a mortgage REIT yeilding a not too shabby 14%. Although other Mortgage REITs have a higher yield I don't think any of them are trading at such a discount to book value. The current book value of HMC is $9.81 a share and went out on Tuesday at $7.14. I've been studying the financial statments of HMC and I don't see how this one should be trading at such a discount to book value. The thing about these Mortgage REITs is that when they trade at such a discount they should buy back stock because it is accretive to earnings. Although HMC doesn't state explicitly the leverage it uses, from what I calculate so far it is much less than other Mortgage REITs and HMC is hedged against spikes in interest rates that would flatten the yield curve which reduces the spread that they leverage. HMC is very small and is traded thinly which I'm sure accounts for part of the reason that they trade at such a discount to BV. It looks to me like this one has little downside, is yielding a very nice 14%, and could have some upside if management decides to buy back shares. I don't have a position in HMC but I probably will make a small investment in it.
Here's one that has been killed due to claims of impending problems and accounting improprieties by short sellers. It's Nautilaus Group Inc., NLS. They make the bowflex machines among other things that you see advertised on TV. They have had a nice growth rate in revenue and earnings for the past 4 qtrs at least. Now they currently trade at $13.52 a share after hitting $45+ a share earlier this year. They have a PE of 5.2. I've reviewed some of the claims made by the short sellers and quite frankly I find them to be without merit so far although I'm digging deeper. Of course the problem with this one is that they don't pay divis (they have started buying back stock) so whether or not an investor will ever get their fair share of the profits in their hands is open to debate. I don't have a position in NLS but it looks cheap.
Well it's a long post so I'll quit here. I want to discuss some sleazy practices by theStreet.com and a renouned short seller that owns 10% of theStreet.com (he's heavily active in shorting NLS) sometime later. Just wanted to let you all know I read this forum but I've been busy so I haven't posted in a while.