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Strategies & Market Trends : Value Investing
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To: Jurgis Bekepuris who wrote (29230)12/13/2007 1:13:09 AM
From: EACarl  Read Replies (1) of 78890
 
RE " I would prefer for the company to show profits"

I don't think I've ever seen that in a price to net cash stock.
A company that is profitable would never get as cheap as selling for net cash. The reason(s) a company does trade as low as net cash is because there are problems/losses or something negative like high cash burn.

As for calculating net cash, your method is overly strict in my opinion. Obviously debt (if any) needs to be deducted, but deducting current liabilities from cash isn't required because some or most of current liabilities can be offset with accts recv and inventory, prepaids and other current assets. Now if inventory is extremely high that would need to be discounted.

In any event GNSS was a quick lucky winner I'm happy to say, but the bottom line is when stocks get that low, unless the cash burn rate is high, there's not much room for them to fall, and if the downside is minimal, there's only one way for them to move. :-)
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