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Strategies & Market Trends : Value Investing

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From: MCsweet	4/8/2014 12:56:26 PM
	Read Replies (2) of 78704

Speculative micro-cap roach-motel stock ASDS -- Former private equity company that is basically a pharmacy company now. In the past, this company made a bunch of private equity and real estate investments. Most of those were losers, but they are now focusing on running one of their operating companies, a pharmacy company Dougherty Holdings. Stock is trading $0.24-$0.28 range (wide bid-ask). Accounting book value is $0.39 per share, but with deferred tax asset taken out is $0.25 per share. I put economic book value somewhere in between there, as I don't give full credit to deferred tax assets. Looks like core earnings were roughly $0.04 last year. If you can buy at or below 0.25 (I did, but took awhile), you'd be buying at/below adjusted book value and at roughly a 6 PE. Caveats: Management has a bad long-term track record in private equity. Positive operating performance is only in the last year or so and could revert back. Disclosures are not that substantial. It is a roach motel pink sheet stock -- if something goes wrong you could be stuck. My thought is that if the pharmacy business continues to do well the market will begin to trust the company's performance and trade it more in line with the market, resulting in PE expansion and price trading up to say accounting book value. Might be worth just tracking to see how they do the next few quarters. MC

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