Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: J Mako who wrote (44799)	10/4/2011 9:50:46 PM
From: Jurgis Bekepuris	Read Replies (3) \| Respond to of 78673

ADVC - on first glance and second glance it looks good. Couple nitpicks: - I don't particularly like software companies that have been around for 17 years and have not grown to big size. Last couple decades have been enormously favorable for software companies, so anytime I see an old company at 15M market cap, I imagine it to be run by incompetent old fogies and/or by a guy in a basement for his own fun. (ADVC does have 67 employees, so it's not a guy in a basement ;). Its CEO holds 54% of shares, so it might be that he is incompetent and/or running it for his own fun.). - They say that they only spend nominal amount for R&D. Does this mean that they are not developing any new products? (It's tough to get real understanding of their R&D due to funky SW development cost accounting.) - I also wonder what their competition is and whether they are falling behind in technology. 15M is a very small market cap, so obviously they don't have the whole EDI field to themselves. Who is their competition and will they eat ADVC's lunch tomorrow? - I am somewhat concerned that large part of their revenue is "Maintenance contracts ". If they are running subscription model, then they might be putting subscriptions there. - I don't understand 10:1 stock split in 2009. Why it was done and what it accomplished? - It is not particularly cheap for current time. E/EV is at 12%, P/book and PSR are somewhat high for a micro cap. I understand that they have high margins, but still. It would be a great buy for April 2011, but right now there are tons of companies at low prices, so buying illiquid microcap becomes a tough choice. It did not drop much yet, so it might not go up much either compared to some potential V shaped recoveries. Note that these are nitpicks. I am not being negative, I am raising some potential questions. The company does look attractive otherwise. It would be perfect investment for someone investigative, who would call the company, call the customers, get scuttlebutt, etc. I'm not good at that. :)

To: J Mako who wrote (44799)	10/5/2011 12:13:48 AM
From: Paul Senior	Read Replies (2) \| Respond to of 78673

ADVC. Could work out very well. I'll pass on it though. I agree with Jurgis Bekepuris's conclusions. If a person were to do the research and get comfortable enough with this thinly-traded .ob stock, to become confident and comfortable enough to hold on if the stock got slammed, it might be a buy now. I would not be such a person. For me, in this market, I want the big low-hanging fruit. There are so many, many of them. I don't want the risk of being in another roach motel. I'm in several already. ============== "A supplier typically pays a couple of hundred dollars per monthly. There is no incentive for them to switch EDI vendor. (It's a bit like once you use an accountant, you are reluctant to switch.) It increased price in 2010. That shows the pricing power." I don't understand this. A small grocery supplier? You mean a small grocer that sells to folks? Or is it a small wholesale supplier who sells to grocery stores? The margins in the grocery business are so small. And the big guys seem to be beating up the little guys worse and worse. I have to assume that small companies -- small grocers -- have to fight for each penny of profit. If I were one of them I certainly would look at the benefits of switching my EDI to a cheaper firm or doing business differently if I could, than just without question routinely paying a couple hundred dollars a month to ADVC for its services.