End of year portfolio update

The end of the year is always a good time to look back, and even though I started this blog a little bit more than a month ago there is actually something to talk about since two of the three companies in the blog portfolio have released new financial reports.

Asta Funding (ASFI)

Asta Funding reported its results for the fiscal year 2011, and financial performance was roughly as expected. The cash flow from the zero basis portfolio’s remains strong and predictable and the company had as of 14 December $108.8M in cash and securities versus a market cap of 122M right now.

What they are doing with the cash is a more mixed story though. The results of the share buyback program have been very disappointing so far: they practically didn’t buy any shares back. On the conference call the CFO indicated that this was because of liquidity and legal constraints, but personally I find that hard to believe. If this doesn’t improve next quarter I’ll probably reduce my position a bit, since the share buy back for $20M was originally one of the attractive points of the stock. At the same time 13M of cash has been moved in securities, and 3.5M has been invested in the litigation funding business, something the company had never been active in previously. While it’s hard to know how this is going to work out I think it’s positive that the company is starting relatively small.

Allen International Holdings (0684.HK)

Allen International released it’s Interim Report 2011/2012 in the beginning of this month, and while sales for were up 5% compared to the previous period net profit was down 43.5% (but still above the 5yr average) due to the following factors:

The increase in raw material costs, double-digit increase in labour wages in Guangdong Province, the PRC and the continuing appreciation of Renminbi were amongst the adverse factors that contributed to the erosion in the gross profit margin. On top of this, the shortage in both electricity and labour supply had further increased the difficulties and challenges in our operations.

Most of these factors would also impact competitors and should not permanently impact the viability of the underlying business. We should never expect great profit margins from a commodity business like this, but there is also no reason to be overly negative, and the company remains cheap with a very strong balance sheet.

Urbana Corporation (URB.TO/URB-A.TO)

The discount between NAV and share price has increased a bit more the past month. The share price for URB-A.TO is currently 0.88 while NAV/share is 1.73. Even though it currently doesn’t look pretty in my portfolio it’s actually positive news. The company is steadily buying back shares, and the bigger the discount the better for remaining share holders. I bought the company less than a month ago and since then the share count has already been reduced from 75.5M to 74.4M (December 16 report date).

Disclosure

Long ASFI, 0684.HK, URB-A.TO

2 thoughts on “End of year portfolio update

  1. Wexboy

    Hi Alpha Vulture,

    Congrats on the blog – I like the focus, and your level of detail. I look forward to seeing some more stocks being added.

    I posted an article to my (fairly) new value investing blog about Asta, just after the latest results. You may have seen it posted also to Seeking Alpha. I also added to my position, increasing to 3.7% of my portfolio.

    If you have a spare moment, I hope you’ll take a look at the Asta article and the blog – there are/will be a lot of non-US stocks covered also, so won’t be posting articles through to Seeking Alpha a lot of the time. All comments welcome, and if you become a regular reader all links/recommendations/etc. would be greatly appreciated!

    Cheers,

    Wexboy

    Reply
    1. Hielko

      Thanks for the compliment, I’am actually already a reader of your blog and I like that you are not only focussed on US companies :).

      Reply

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