I bought UTStarcom (UTSI) a bit more than one and a half year ago. My main reason for buying the stock was the cash rich balance sheet combined with a history of share repurchases. I’m not very pleased with how I valued the cash balance of the company in my initial analysis. Focusing more on NCAV would have been a better idea since it accounts for all liabilities on the balance sheet. Buying a stock at 1.1x NCAV doesn’t sound as attractive as buying a stock with more than $4.5/share in cash for less than $3/share.

Since then the amount of cash/share has steadily dropped thanks to a combination of investments in ‘exciting’ new ventures (so far all with negative earnings), capex, negative operating cash flow and some share repurchases. Those investments might work out in the end, but I have no idea on how to value them and how to track them. I also don’t really want to take a leap of faith with the current management team. Given that the stock has been going up for no apparent reason the past month I thought that this was a decent time to exit.

Disclosure

No position in UTSI anymore