I was reviewing a stock, Mind C.T.I. Ltd (MNDO), because it came across a screener as a Net Net opportunity. I wondered why it had so recently turned up.

MNDO is an Israeli company that, “a leading provider of convergent end-to-end billing and customer care product based solutions for service providers as well as telecom expense management (call management) solutions.”

As usual I went to Morningstar  TTM and latest year information including 3rd Quarter (Q3) Balance sheet info. Mind had $34.6 million in current assets and just $6.9 million in total liabilities for a Net Asset Value of $27.7 Million. MNDO has a little over 19 million shares making per share NCAV value (unadjusted) of approximately $1.45/share. So far, so good.

Then I went to the latest 6k, which is a form used for “reports by foreign issuers.” MNDO has just issued a special dividend of $.80/share in December. So the NCAV value isn’t $1.45/share it is closer to $.62/share. MNDO is no longer a Net Net company. Does that mean it is not worth investing in? I can’t tell you. But this example points out why you must read the SEC paperwork yourself. In this case Morningstar Q3 balance sheet was accurate, but no longer current. In MNDO’s case it made a very big difference and it is clear why it recently appearted on the screener I was using.

Mind C.T.I. needs further evaluation to see if it is worthwhile on either Discounted Cash flow basis or Low price to book basis. Both of these require more research, which I will try to do this week.

Disclaimer: I obviously did not purchase shares of MNDO, because it has not met my investing criteria so far. That does not mean it won’t in the future. Make sure you always do your own research and don’t make investment decisions based on something someone else tells you.

2 Responses to “MNDO – Mind C.T.I. Why you must mind the details”

1. steve
   January 7th, 2010 @ 10:24 am

   The street rated it on the 4th for 1.25 so that
   is current

2. chroma
   January 7th, 2010 @ 10:47 am

   Steve, Thanks for coming by Chroma Investing. I don’t follow the street so I am not sure what 1.25 is. Is that $1.25 value or is that some other metric they attach to it. My valuation in this post was based solely on Assets and not ongoing business operations, which I admit may have some different valuation, but I have not gotten around to doing a DCF valuation yet. My caution was that not everything that turns up on a screener actually is suitable and everyone needs to do their own research before investing.

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