Richardson Electronics. (RELL). In at about $9/sh in March. Stock's been moving in the wrong direction -- now about $5.50/sh. I substantially increased my position size today.
Looks like there was one or more motivated sellers yesterday: Yahoo reports 3.1M share volume vs daily avg of 82k. (http://finance.yahoo.com/q/hp?s=RELL+Historical+Prices)
Based on the July Q4 release and fiscal 2015 report, RELL had $109.8M in cash and investments over $13.6M shares = $8.07/sh. There's no ltd. Subsequent to fiscal year-end it looks like RELL made maybe a bolt-on acquisition. It looks small, and I assume so. I can't tell though because the news releases didn't reveal the price paid.
The NCA number is a/o 5/15: total current assets minus all balance sheet liabilities = $161.178 - $28,342, or $9.76/sh. 2/3 of that is $6.54.
Insider Monkey reports one recent insider buy:
On July 30, Director James Benham acquired 5,000 shares at an average price of $6.60. This is the lone purchase of shares by an insider of Richardson Electronics so far this year. However, it’s important to note that the firm has not seen any insider sales this year as well, or for the entirety of 2014 for that matter. Looking at how hedge funds have been treating Richardson Electronics lately, however, we can see that they appear to be bearish on the firm. While the 10.98% quarter-over-quarter decline in the total value of their holdings, to $52.83 million by the end of the first quarter can be explained mostly by the 10.2% decline in the stock’s price in the first three months of the year, the stock saw fewer hedge funds investing in it by the end of said period. Heading into the second quarter, a total of seven hedge funds tracked by Insider Monkey were long in this stock, down from ten entering the preceding quarter. From April 1 to June 30, the stock fell a further 10.02%. Since June 30, the stock has dipped by another 16.6%, most of it after the company reported a net loss of $5.6 million for the 2015 fiscal year ending May 30, larger than the net loss of about half a million for the previous year, on net sales of $137.0 million, down by 0.7%. Gates Capital Management, led by Jeffrey Gates, held the number one position in Richardson Electronics, Ltd. (NASDAQ:RELL) on March 31, owning 2.9 million shares worth about $26 million.
The company's only been profitable sporadically (five times in last ten years). There's a $.06 dividend paid each quarter. (4.3% yield now on the $5.50 stock).
Assuming that not too much cash left the company to pay for the acquisition, and IF one believed it was ok to buy Ben Graham net-nets that aren't currently profitable, and IF one were okay with just having a few or one net-net (There aren't now the many choices (positive earnings companies) that Dr. Graham had in his day), then RELL, in my opinion is worth a speculative buy at current price. Well, for me anyay. If the company can once again show a profit, I am betting the stock will once again sell for at least what I originally paid for it (~$9/sh). Mr. Richardson hasn't had the greatest success in bringing profits to his company. Otoh, he has husbanded cash pretty well. With the stock at $5.50 now, and with cash maybe at that level or more and no ltd, the margin of safety seems pretty good to me. And that dividend for waiting.
rell.com
rell.com
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