Monthly Archives: December 2012

Exited ACME Communications

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ACME Communications started trading ex-dividend today. The company was trading at $1.03 before the weekend, and after paying a $0.93 dividend trading started today at $0.25. I wasn’t able to exit my position at this price, but I was fast/lucky enough to sell at $0.16. Initially I intended to hold my position until the liquidation was complete, but if the market is unable to subtract it’s time to change the plan…

I’m going to keep an eye on ACME Communications because I do think it could become an attractive opportunity again in the future. With the liquidation almost complete I can imagine that some shareholders think it’s time to exit the position without caring too much about the price they get for the remaining piece. At this point it’s probably a minuscule position for most shareholders (the market cap of the complete company is currently just $1.44M). Evaluating how much the remaining company is worth today is quite hard, if not impossible. While I don’t like investing in something I can’t really value I imagine that this could also create a situation that offers a favorable risk/reward ratio if other shareholders are equally clueless, and happy to sell. Maybe I should just buy my position back?

Disclosure

No position in ACME anymore

My pick for 2013

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Since it looks like we survived the predicted apocalypse it’s time to look forward, and figure out what to buy to get rich in 2013. Some of my fellow bloggers already published a few lists with boring, well capitalized and undervalued stocks that could perform well next year. But we all know that that’s not going to cut it if you want to make serious money. To hit it big you need to be investing in the next hot thing, and what’s hotter than nanotechnology?!?!

This is where Nano Labs (CTLE) enters the picture, to quote their latest 10Q:

The Company is pursuing opportunities for global market leadership in the field of nanotechnology, a sector with the prospect of $2.6 trillion in global revenues – representing 15 per cent of all projected global manufacturing – by 2014.

With a current market cap of $165 million CTLE is the steal of the century. The mobile handset market is smaller than a TRILLION dollars (added some emphasis to make it clear just how big that number is), and we all know how valuable Apple is! A quick look at the balance sheet illustrates the tremendous opportunity available:

Nano Labs Corp balance sheet

The company has literally zero assets: so it’s all upside from here! The income statement shows an equally promising picture with zero revenues. How the company will be able to develop the next generation of technology without any assets is a question that remains to be answered, but only a naysayer would focus on those trivial details. Nano Labs obviously doesn’t foresee any problems given the roadmap we can find in the latest 10Q:

Nano Labs roadmapLooks like a plan that can’t fail. With such a tight schedule I image that I’m rich in time for the summer holidays so I can finally buy my own tropical island (surprisingly affordable: for a half million USD you got your own little island). Or maybe I should start with a zombie proof house: better safe than sorry. Or an even better plan: simply do both!

Disclosure

No position. If you are stupid enough to buy this BS you deserve to lose your money.

A follow-up letter to Argo

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Wexboy has sent a follow-up letter to Argo Group with a more focused and concrete proposal to create shareholder value. With the company trading significantly below net cash/investments per share management has a great opportunity to create value by buying back shares, or paying a special dividend. So this is certainly a proposal I fully support!

Disclosure

Long Argo Group

Picking up some easy money (ADVC)

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Advant-E Corporation (background) is offering small investors a nice opportunity to make a few bucks. The company is going private and cashing out shareholders who own less than 10,000 shares at $0.27/share. The company also announced a $0.02 special dividend per share that will be paid before small shareholders will be cashed out. With the shares currently trading at $0.26 you can make an easy $300 with limited risk by buying 9,999 shares and just waiting for the dividend and to get cashed out.

Disclosure

Long ADVC

Asta Funding reports FY2012 results

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Asta Funding (ASFI) announced today the results of the 2012 fiscal year. While the share price has gone up a bit since I initiated my position (just ~10%) I think the company is actually cheaper today than a year ago. The following quote from the CEO illustrates nicely how much value was realized last year:

Mr. Stern continued, “At September 30, 2012 our cash and cash equivalents and investments totaled $106.3 million as compared to $106.9 million at September 30, 2011. During the fiscal year 2012 we invested over $20 million in personal injury claims and repurchased over $16 million of Asta Funding, Inc. shares.

So what we see is that the cash balance has basically remained constant last year implying that the company managed to generate ~$36 million in free cash flow. Combine the free cash flow and the cash on the balance sheet with the current market cap ($120 million) and I think it should be quite obvious that Asta Funding is still very undervalued. Given the aggressive share repurchases that’s actually great news for me!

In the category “who the hell cares?”:

In addition, I am announcing that the Board of Directors of Asta Funding, Inc. has approved the payment of the 2013 annual dividend totaling $0.08 per share, payable to shareholders of record on December 24, 2012 and payable on December 31, 2012. The special dividend reflects the confidence of the Board of Directors in the strong cash position and the Company’s solid balance sheet. The management team and Board of Directors would like to thank the shareholders for their continued support.

Moving the 2013 dividend forward sounds great until you realize that it’s less than a 1 percent yield and it’s going to cost the company just one million dollar. They could have paid ten years worth of dividends and it’s still wouldn’t significantly impact the balance sheet.

Disclosure

Long ASFI