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Microcap & Penny Stocks : Mortgage Bankers Holding Corp (MBHC)
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To: Scott Kelly who wrote ()4/3/2000 8:26:00 PM
From: bruceski  Read Replies (1) of 1241
 
MBHC valuation.

I have received a bunch of emails on today?s press release and trading. Here is a summary of how I read it.

1) Two strategic alliances ? most of the time when companies form alliances, it is a sole source agreement. So my take on it is MBHC will be the sole source provider of Estate Planning for these two companies. Could be sole source for Strong Fund, Clarke-Bardes, or whoever.
2) One of these may lead to acquisition ? my opinion on this is one of the partners has agreed to spinoff / sell this portion to MBHC if everything works out.
3) In addition, management has begun a series of acquisitions ? to me this means first two are essentially done and there are more to follow. Three more by the end of third quarter.
4) Significantly increasing earning ? high percentage increase in profits
5) One of these could result in merger ? after acquiring these others companies, someone big wants to partner with them.
6) IPO partnership ? MBHC will provise ¬ of financing to get IPO off the ground and share in the revenues. This could mean either the company gets IPO profits or shareholders get spinoff IPO shares. Either is very good IMO.
7) $75 million in revenues and $8.2 million in earnings - Not sure how to translate other than minimum of 0.30 per share earnings.

Now the big question of what value does this give MBHC?

I will use CLKB as a comparison (Clarke-Bardes) since many of you are familiar with them.

Clarke Bardis has ¬ the number of shares outstanding and has earnings of 0.50 per share. Divide that by 4 and you have 0.125 per share. MBHC almost three times as much projected. CLBK trades at P/E ratio of 15:1. For MBHC that means $4.50 per share equivalent.

Clarke-Bardes closed today at $14.75 divided by 4 = $3.69 per share equivalent.

Regardless of how you interpret the PR a minimum of 0.30 per share is expected.

Now in addition to this you have to somehow equate the IPO offering. I would assume that any IPO would be at least $10. I would also assume that since MBHC has three partners in the deal, they would receive the equivalent of $2.50 per share. Assuming that the shares are spinoff at a worst case 10:1 that is equal to 0.25 per share. Assuming MBHC keeps the shares and makes a mere 10% on it, you get 0.25 earned. At 10:1 dilution (same as if shares were distributed) that 0.025 earned. Times 15 and that?s 0.37 per share value.

Now the Growth Fund has some value but I will not use them because MBHC may have used the shares for the $20 million secondary as collateral or sold them. But they could add $1+ per share to MBHC value.

So where does that leave us? IMO $4.06 - $4.87 (3.69 + 0.37)- (4.50+0.37) as a very conservative estimate. That puts us on NASDAQ just as Maloney has said all along.

These are just my opinions and how I try to value MBHC in my mind. You can interpret the PR however you would like.
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