Give credit where its due. Our newcomer rjm2 brought SPOR to our attention. If this is the guy I think it is, I see him regularly on Yahoo and he is a very savvy and bold buyer of net-nets. Hope to see more from him.
On SPOR, inventory is the story, though there is a whole bunch of cash in that net current asset number as well. The company makes custom-embroidered golf shirts. They got stuck with a whole season of inventory. What are year old custom-embroidered golf shirts worth? Well, we're getting some idea because they're liquidating them and getting good money. The company had the sense to shut down production of new ones - i.e. when you find yourself in a hole, stop digging. I don't know this for a fact, but common sense would tell me that management isn't stupid. The inventory isn't custom embroidered. I'd think they'd do that when they get the order, so I think the inventory is "blanks". Do golf shirt styles change that much season to season? I don't think so.
Another issue here is you've got a family in control, with the son succeeding the father. When I saw where the son worked before it nearly made me barf - he was the marketing director for a company that was probably the worst investment I ever made, about three years ago.
The size of the share buyback, and the impact of a share buyback at a valuation like this, is what made me pull the trigger.
I will be buying another net-net aggressively on Tuesday and will post it after I get my position. |
