I'll "bite".
First, for disclosure, I own this stock and it is extremely thinly traded. If that offends anyone, please click the next button.
The company is Diamond Hill Investment Group (DHIL) and it has a market capitalization of approximately $50mm and average shares traded of about 2000 per day.
So, what's so interesting about this company?
They are an investment manager which manages several mutual funds which are rated 4 and 5 stars per morningstar. The investment management business is one where the manager has quite a bit of fixed costs. In the 1st Quarter of 2005, DHIL garnered enough Assets Under Management to overcome these fixed costs and has shown an operating profit in the first two quarters of last year. In the 3rd Quarter, they would've shown an operating profit, also, but the company accrued a bonus which wiped out all profits.
Assets under management have been growing quite rapidly. As of December 2004, the company had about $500mm under management. In December 2005, the company had $1.5B under management.
As for the second negative (first was the bonus accrual), their funds carry a sales load at this point in time. However, the majority of their AUM growth has come by means of individually managed accounts. |
