What is there in MCRE that I see?
Well, I am most definately NOT a member in the Cult of Kai, so I won't go off on what a marvelous, wondrous, incredible seer he must be, how much I envy his hair, etc., etc. But there is more to MCRE than the Cult of Kai.
1) Cash on hand, no debt. Book value in the low 3's, probably.
2) Unique products in a niche that's not going away. Graphic arts does not seem to be growing particularly, but neither is it shrinking. There will always be a place in the world for a product like Painter. So the company has a reasonable revenue stream which I think will continue.
3) A history of coming up with additional unique apps, such as Goo. Nobody else is doing anything like these $49 apps. If they weren't saddled with really obtuse interfaces, they would have been great successes; in the future, maybe these apps will have less of Kai and more of Joe User. Granted, these new small apps have not made a ton of money for MCRE. But odds are they will crank out some winners some time. Paying 4 1/2 for a company with book value in the 3's is pretty cheap for a company with many possible avenues for growth.
4) They have a lot of room to expand their existing products, specifically on the Windows platform, and overseas. Their international exposure is not what it could (or should) be.
5) The stock itself! It's a trader's dream. Dramatic surgings, sudden falls off cliffs, etc. It has violent swings, which you can make a lot of money trying to anticipate.
6) They basically own 3D on the consumer level. To date, that accomplishment doesn't seem to be very valuable! But, again, they could easily start making unforeseen money from 3D.
7) That goofy RTG stuff that everyone seems to be talking about. I have no clue as to its value, but it's another interesting iron in the fire.
Basically, my arguments come down to: the stock's really cheap; they are doing a bunch of interesting things, many of which could really pan out; the share price has a history of getting killed and then coming back; the company is not going out of business but seems to be priced as though it were. So lots of potential, for which I don't have to pay very much; and the stock price will probably jump back up in any case.
Calibre of management has not yet made my list of reasons to be in this stock, unfortunately.
FWIW,
-- Pete |
