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Strategies & Market Trends : Value Investing

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To: rjm2 who wrote (11103)	9/1/2000 11:44:01 PM
From: James Clarke	Read Replies (3) of 78740

Sport-Haley (SPOR) fits a regular pattern for my net-net posts that those watching me for the last few years will recognize. They almost always work very nicely, and almost always within six months. 1) Below 2/3 of net working capital 2) Positive free cash flow (in this case VERY positive). A share buyback is a bonus, and in this case a very big one. 3) Significant real estate assets outside of the net current asset valuation. In this case we don't have that, but the share buyback makes up for it. When you see a company trading at half of net working capital, you say "why don't they just liquidate the thing and give the shareholders the money?" If you study the balance sheet and cash flow statement of SPOR, you'll see management is doing just that. The June quarter is usually their biggest in terms of cash flow. I would guess that when the 10-K comes out, net working capital will be even higher than in the latest financials. I think my exit here is at about 5, probably in a management-led buyout. If that doesn't happen, its hard to see much downside risk from this level.

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