For all newcomers wondering whether to buy DSSI:
A few things worth considering -
DSSI's closing share price Friday was $3 7/8
Its book value is $5.32/share
Its cash position is $.49/share
It has no long-term debt
Its market cap of $28.8 million is <1 ratio based on last year's sales
DSSI (http://www.dssiinc.com) has a somewhat convoluted "family tree" in its corporate structure (not entirely uncommon in Israel). It has disappointed investors in several investments this decade, most of which have been shut down or sold off. However, the company is grossly undervalued on the basis of performance of its two "star" holdings -- Tower Semiconductor (ticker = TSEMF) and wholly-owned subsidiary Comverge.
Percent DSSI ownership of Tower Semiconductor = 26%
DSSI owns 3.25 million of Tower Semiconductor's 12.4 million shares outstanding, or 26%. As of last quarter, Tower Semiconductor had $66 million, or $5.32/share, in cash and no long-term debt.
Tower Semiconductor, in turn, owns 15% of Saifun, a flash semiconductor producer which was voted "start-up of the year" in Israel this past year. (http://www.globes.co.il/cgi-bin/Serve_Arena/pages/English/1.2.2.30.4)
Comverge (http://www.comverge-tech.com) designs, develops and installs two-way interactive communication solutions based on technologies developed internally and acquired from Lucent Technologies, Inc. that provide real-time, remote automated meter reading ("AMR") and data management capabilities to utilities, energy service companies and other customers. It just won its first significant contract with New Jersey's PSE&G. Worldwide market for this product is estimated by the company at $100 billion.
DSSI's current share price essentially grants zero value to either Tower Semiconductor or Comverge, even after last week's runup. I doubt this situation will remain for long. Semiconductor stocks are on the rebound and the consensus turnaround estimate for Tower Semiconductor is $.38/share in 2000 after an expected deficit $1.45/share in 1999. Meanwhile, with the PSE&G contract in hand and its attending credibility, Comverge ought to be reporting more contract wins in the months ahead. As a holding company, DSSI will not ever carry a premium multiple, but it does seem likely to have a chance to double or triple from current levels by next year if Tower and Comverge perform as expected. |
