Addi,
Sorry to see you lose so much on ADIC. I too am invested in the company and have been since before the spinoff, but yet don't approach the number of shares that you do. While things don't look terribly promising this quarter, there are some things to hang your hat on when you crunch the numbers (without taking into account business prospects going forward for the purposes of this simple analysis):
1) As you have stated I believe, book value as of 4/30/98 was about $6.50 per share, or just $3.00 per share under the current price. But, I don't know how this will be affected by the EMass deal (probably adversely if what I understand in the press release is right).
2) Market cap is now about $90 million, and sales for ADIC and EMass during 1997 were $157 million. In addition, the press release states that ADIC expects the deal to be accreitve to earnings immediately, which I take to mean that EMass can provides profits greater than the interest paid on ADIC's large post-seconday cash balance. If ADIC earned 4% on the $25 million in case, that's about $.06/share after-tax income. Thus, EMass should be able to generate a profit above this figure.
3) According to a Thompson Financial Services report date 7/24/98, CEO Peter Van Oppen owns 89,000 shares and hasn't sold any since January 1997. Don't know if it is or is not true, but I thought I'd throw it out there since everyone else seems to be saying that he owns about 200+ shares.
So is it time to buy some more? Good question. I used such a strategy on FOSL during their first three years of being a public company since every temporary sales slowdown would send the stock reeling back to its IPO price. I accumulated shares each time, and now the stock is four times above this price. If you believe in the company, product, and management, the numbers say that this is a potential low downside-risk play. |
