Net-Nets.
I own & follow quite a few. I try to be a bit more flexable with them as I have had quite a few turn out to be 2,3 & 4 baggers. So I do NOT follow the 50% gain and sell it rule religiously.
Many of mine are very small caps which require patience & limit orders. The good thing about these low float stocks is they can get pumped & dumped fairly easily and that provides some good selling opportunities.
I was accumulating AVCC in the $1.12-1.50 range and last week it was pumped like a big dog and they ran it to $5.75. That was near the top end of my 3 year best case scenario so I was happy to feed the ducks. As expected, it quickly fell back to earth ..$2 3/8.
I will list some of the net-nets I own and/or follow in case anyone wants to discuss them further.
DIYH,EDIN,SPOR,FLD,EBSC,GISH,CRTN,SPZN,RCKY,JPSP,SIF,RAGS
NTRL,NATW,TMTX,MTIN,EZPW.
These kind of stocks have plenty of warts, else they wouldnt be priced where they are.
Interestingly, DIYH, my largest holding, has thrown some cold water on my face regarding the value of Inventory as well as off balance sheet liabilities. They recently announced closing 2 more stores. This was expected. Where I was thrown off was they are only going to net 64% of the wholesale cost of inventory in those 2 stores. Also, a rather large liability was put on the pro-forma balance sheet. This has lowered NCA a good bit and reduced what I thought was a really large margin of safety. I still like the stock and believe it is undervalued and I will make money. Its just not going to come from the NCA as much as it is the real estate & buildings that they own.
Actually, I believe they will sublease the location and either end the lease with a small payment to the landlord or offset the liability with sublease income going forward. Also, they will sell and realize a GAIN on the owned store they are closing.
Insiders continue to buy. Book value as per the 8-k was reduced to $4.22 per share with $1.17 in NCA. They will pay off debt by year end and then, any excess cash flow could be used for a buyback. Float is less than 2 million shares.
An interesting real estate stock I own a lot of is HGPI.
Trades at just over a third of an understated book value.
Had a deal a few months ago (fell through) to sell 7 of their 13 outlet centers for over $10 per share. That would believe it or not also generate a large tax loss and they were planning on buying another business which would utilize the substantial off balance sheet tax assets. Last I heard they were still working on a deal to sell "several" of those 7 properties all of which they believe are increasing in value. The remaining properties are also being marketed.
Insiders are restricted but have a history of being repeat buyers in the past..even at higher prices. |
