What is Ore Pharmaceuticals?

Over the years Ore, originally Gene Logic, has morphed into a company whose future relies on four licensed  drug compounds. ORXE is re-positioning these compounds for other disorders than the original companies envisioned. Their lead drug ORE1001 is a potential treatment for Inflammatory Bowel Disease (IBD), a condition that afflicts 4 million persons worldwide. ORXE “ initiated a Phase Ib/IIa clinical trial in patients with ulcerative colitis – one of the two main disorders comprising IBD – in the fourth quarter of 2009.”

What are the risks of investing in ORXE? As always these are not all the risks of purchasing stock in ORXE. But these are risks that I think are significant.

1. Ore Pharmaceuticals is not profitable. The only exceptions I make to this Ben Graham rule, are if a company has operating profits, but has one time charge-offs like IFON or if it is a Pharma stock. The reason for the exception on the Pharma stock side is that the potential upside on these stocks is so much higher than a regular company that it makes sense to take on  a little extra risk on the down side. I do not expect Ore to become profitable soon.

2. ORXE was delisted from the NASDAQ on March 25th. The price of the stock dropped from approximately .70/share to .28/share. The price has fluctuated between $.28/share and $.40/share ever since. Radical moves are part of the daily cycle. The stock is not for the faint of heart. The stock price could continue down.

3. The company’s business plan has failed, so far. As they said in their 3-31-10 10K, “Our intention at the time of the reorganization was to explore and, if feasible, implement a strategy by which we would finance development of our portfolio through establishing alternative investment and program development vehicles, with Ore receiving program management fees from, and equity interests in, these vehicles.  To date we have not formed any of these vehicles and we are uncertain that we will be successful in implementing this strategy and business model in the future, in which case we may determine to take other actions designed to preserve, increase and realize the value of these assets.”

4. Non of their drug candidates has completed even Phase II trials, meaning that more capital will need to be raised. If the capital can’t be raised then they will not be able to bring the drug candidates to a profitable stage. They only have enough money to get through Q1 2011, including the ongoing Ib/IIa trials for ORE1001.

5. The company is subject to litigation by former landlords. The lawsuits stem from leases for a former subsidiary that ORE sold in 2006. The potential loss is $4 million, if required to pay leases through term.

6. The conversion to a holding company has restricted the value of the NOL’s for an acquiring company, since the terms of this conversion restrict how much ownership can change over the next three years.

So despite the fact that I have already made money from ORXE the why of investing in this company seems higher than usual.

1. NCAV stock. The net current asset value of the company is currently approximately $.58 share so the margin of safety of 33% means it is a buy under $.38/share. I used limit orders to protect myself from the huge price swings.

2. Net operating loss carryforwards- The company has $329 million in NOL’s. Whether or not the value of these will be extracted or what the actual value of these is in the current environment is beyond my estimation. In any case, I did not use them in my asset valuation, although they certainly have some value. Particularly for an acquiring firm.

3. Volatility- I have listed that as reason to purchase not a risk for a specific reason. In this case it was clear the volatility hinged around the de-listing and I felt that it was something that could be exploited in a short term way. This is why I considered ORXE a special situation. The company had not changed, but any investment funds that held the company stock that required its equities to be only in exchange  listed companies, were forced to sell. It was a catlyst to realize profit by artificially lowering the stock price, in the short term. This was not a speculative venture. I was happy to hold the stock and let it appreciate slowly, but I thought that it was more likely that I could make 25% – 30% in  a very short term, if I used limited orders wisely and let the volatility trigger my orders on the buy side and then the next day on the sell side.

4. The four leading compounds have already been tested in humans- Although they have not been tested for the treatments Ore is investigating, the fact that the compounds were previously well tolerated in humans, reduces the risk of the compound failing in further clinical trials.

5. Additional research for free- Ore’s lead drug candidate ORE1001 is also being investigated for radiation enteritis.” In October 2009, we entered into a research material transfer agreement with the Armed Forces Radiobiology Research Institute (AFRRI) where ORE1001 will, without cost to us, be evaluated for potential utility in countering the adverse effects of radiation.”

There are, of course, other more speculative reasons to purchase shares of ORXE such as a buy out,  partnership with larger Pharma company etc. But, since this is an investment blog, not speculative blog, I will leave those stories for someone else.

Strategy; But and sell if profit hit 30% in a short period, say less than a month. I plan on repurchasing the stock if possible if the volatility persists to hold for a longer period or if in the case of another 30% swing to sell in the short term.

Disclosure: Although I do not own ORXE in my Chroma Small Investor Portfolio, I intend to buy it in the 80-20 portfolio as a special situation. As with this posting, I may post my purchase of the stock after the fact, or not at all. I work in the film business and am not an investment advisor, make sure you do your own research before making any investment, even if this looks like a good idea to you, no, particularly if this looks like a good idea to you.

Related Posts:

• DUCK – Duckwall-ALCO Stores a NCAV stock BUY – Small Investor Portfolio
• IFON – InfoSonics NCAV stock BUY – Small Investor Portfolio
• Linktone (LTON) NCAV Stock – Buy
• Qiao Xing Universal Telephone, Inc. (XING) Net Net Stock – Buy
• Warren Buffett’s advice in a Crisis

What is Duckwall – Alco? They are, what was originally called, a “dime” store. The first store was established in 1901 in Abilene, Kansas by A.L. Duckwall. The Alco stores began in 1968. From their fiscal 2009 10K, ” The Company’s overall business strategy involves identifying and opening stores in towns that will provide the Company with the highest return on investment.  This strategy includes opening ALCO stores. As of February 1, 2009, the Company operates 258 stores located in the central United States, consisting of 208 ALCO stores and 50 Duckwall stores.”

As always lets start with the risks of purchasing DUCK. This is NOT a list of all possible risks, just a list that struck me as significant. If you see risks that I have not mentioned, please post a comment.

1. Broad macro economic risk. This is really a risk for most businesses right now. I think it goes without saying, unless you are a firm believer we are already climbing out of a “V” shaped recession the economy faces some serious headwinds. I do not subscribe to the “V” shaped view. Another downturn could have adverse effects on the companies bottom line. I do not think we are out of the woods with regards to the housing crisis and unemployment is still very high and unlikely to drop significantly very soon. If you agree, then you should make sure you have an overall hedging strategy. But that is the subject of another posting.

2. The bulk of DUCK’s current assets are Inventory and the Inventory’s have been increasing while Sales have been stagnant for the past couple of years. While this does not mean they are in trouble it is certainly worth watching.

3. While the stock is a NCAV stock it does not have my usual 33% margin of safety. At my purchase price there is only  approximately a 25% discount to intrinsic net current asset value. This was my fault. When I filled out my initial spreadsheet for DUCK I used data from Morningstar. I always check the data and correct based on the latest 10k and 10Q before I buy a stock, because Morningstar’s data is so often wrong. I have posted about this problem previously. I thought I had taken this step. But I did not. So my calculation was based on the morningstar data of 3 million shares not the 3.798 million shares they actually have. Quite a rounding error on their part. But the ultimate responsibility of my mistake was mine. Now that I own the stock, I do not think the mistake was signigicant enough to warrant selling the stock immediately. But I will need to keep a close eye on the results they post on 4/16/10.

4. Liquidity. The average daily volume is only 3000 shares. I don’t consider this a great risk for small investors because the share price will keep the number of shares low enough to not move the price needle.

5. Management- Duckwall – Alco has recently hired a new CEO. I do not yet know if that is good, bad, or neutral.

Why invest in Duckwall – Alco?

1. Net Net stock. So with my mistake out in the open, let me run through the real numbers. I am estimating that their Net Current Asset Value is about $18.18/share. I purchased at $13.75/share which is about a 24.4% discount to intrinsic value.

2. No value is given to the company apart from its assets. But Duckwall – Alco  is a profitable, 100 year old business.

3. Growth Strategy. They plan  on opening new stores in smaller towns where there is no competition seems sound given the size of their average store which is approximately 26,000 square feet. It seems like niche without competition. Eventually this could translate to better margins.

4. Year over year increase in sales- This is not a very strong positive given that the comparison of last March was of a country jumping off a cliff. It would have been scary had they not posted better results.

5. Investing guru Michael Price owns 6.97% of the company. At least I am going against him in a short position.

What is my strategy?

This will depend. If Earnings have declined or their asset position has deteriorated I will sell and take my loss. If the company’s position is neutral or positive, I will hold to see if the company appreciates in value.

Disclosures: I am long DUCK. As with any investment decision you should do your own homework. I am not an investment advisor, but a film business Producer.

Related Posts:

• ORXE – Ore Pharamceutical Holdings – NCAV pharma stock – Bought and Sold
• IFON – InfoSonics NCAV stock BUY – Small Investor Portfolio
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• Qiao Xing Universal Telephone, Inc. (XING) Net Net Stock – Buy
• Warren Buffett’s advice in a Crisis

Here is what IFON says about themselves from their latest 10k

“We are one of the premier distributors and providers of wireless handsets and accessories in Central and South America. We provide end-to-end handset and wireless terminal solutions for carriers in those markets. We distribute products of original equipment manufacturers (OEMs), including Samsung and others. We are also involved in the designing, sourcing and distributing of a proprietary line of products under our own verykool® brand, which includes entry-level, mid-tier and high-end products.”

What that statement doesn’t say is that Infosonic, halted distribution in the United States and Mexico and that now it derives approximately 87% of their revenue from Argentina. That seems like a good segue to what could scare you away from making this investment.

So what are some of the risks of an investment in IFON? These are not all the risks. You may in your own risk assessment discover some that are more important to you. These are ones that I think are important to note.

1. A 30% tariff in Argentina targeting imported headsets could decimate IFON’s business there. Or as IFON says, “…we expect it will reduce significantly the overall OEM sales volume in Argentina. We believe that this tariff will have a material adverse effect on our sales, results of operations and prospects for our OEM products in Argentina. ” Given the proportion of overall business, this could have catastrophic results for  Infosonics. In fact the tariff has already begun to effect its business. “Our three largest customers in 2009, all carriers in South America, represented 28%, 28% and 18% of our net sales in fiscal 2009. In 2010, a customer accounting for 28%, has begun significantly reducing its purchases from us as a result of the newly enacted Argentina tariff on wireless handsets, among other electronic devices. ” This will certainly effect Infosonic’s margins. It does seem that much of this fear is baked into the current price of the stock given the drop from over $1.00 just a little more than two weeks ago. If you are interested, you may want to wait and see if the stock dips back into the low .60′s again before buying in.

2. This almost goes without saying, but the wireless communication business is a brutally competitive industry and IFON is a no-moat business. For some investor’s this is enough to scare you away. But most cigar butt type, Net Net stocks, are no, or thin moat companies.

3. IFON had a net loss in 2009 of $1.5 million. Ordinarily, this would get the company tossed to watchlist only pile, but since InfoSonics had positive income from continuing operations, I made an exception. This is probably also the other reason the stock price got flushed almost 40% in less than three weeks.

4. Stock Price Volatility. From their 10k, “the closing price of our common stock has fluctuated between $2.51 and $0.10 from January 1, 2009 through March 19, 2010, and we anticipate significant volatility in such price to continue for the foreseeable future.” This is not actually a risk to me. I expect and hope to capitalize on it. So, I obviously bought shares too early, but I bought on a day that in which the price dropped 20%. As the saying goes, it is hard to time the bottom of a market.

5. Margin pressure. I touched on this briefly in Risk #1, but IFON’s margin pressure is not limited to the Argentine tariff issues. As Infosonics says of its own performance, “… in 2008, although we had higher sales, we were not profitable due to lower gross margins, as well as, among other things, higher operating expenses.” In such a competitive industry, margin pressure is not a risk, it is a certainty. But that does not mean they will succumb.

6. Potential De-listing from NASDAQ. Obviously, the price of IFON is currently trading below the required $1.00/share price. If this persists then IFON could be delisted, which will almost certainly result in a drop in the share price, at least in the short run. Again, I don’t necessarily view this as a long term risk, since this would actually provide an opportunity to buy additional shares at an even better discount.

So after all these risks, why would anyone in their right mind buy this stock? Let’s turn next to the case for investment.

1. IFON is a NCAV stock. Their current assets are $66 million with total liabilities of $41.6 million. This means they have $24.4 of Net Current Asset Value. Divide that by the 14.577 million shares and you get a per share value of $1.67. Because I use the old school, as in Ben Graham depression era, margin of safety of 33%, that reduces my buy in price to anything under $1.10. Or if you like to use another, more conservative version of Net Net Valuation that I learned from Jae Jun at OldSchoolValue, you still have a buy price of approximately $.79/share. We could also assume that the company will lose another $1.5 million for 2010, but, even this would only reduce the buy price to $1.03/share from $1.10/share. There is a margin of safety on the margin of safety.

2. The Altman Z- non manufacturing score is over 2.6, which suggests that the likelihood of bankruptcy in the next two years is very unlikely. So while the company is certain to face some turbulence, I don’t think, in my suggested holding period of two years,  that the stock price will go to zero.

3. The CEO has a large stake in the company. As of the latest 10k, Joseph Ram, the CEO, owned 30% of the outstanding shares. While this is no guarantee of his interests aligning with shareholders, it often is.  I like to see large ownership stakes by management.

4. Continuing operations were positive. While IFON had a net loss the company was slightly profitable in continuing operations. This is a reverse from the past few years. I don’t put a lot of faith in this.

5. The company has recently completed a stock buy back program. While the amount $500,000 was not huge, the average purchase price of $.63/share (below its current share price) shows that management understand when it is a good time to buy its own shares. Often share buy backs are extremely negative to me. When the buyback is done at peak share price, the shareholders value is depleted. This buy back was positive for shareholders.

Investing Strategy

I don’t believe in making up a story of how IFON’s share price will rise. Stories often get in the way of proper valuation of a company.  There is not any immediate catalyst to drive the price up. But my overall strategy is borrowed from Ben Graham: Hold until it appreciates to fair value or 50% or 2 years, whichever happens first. In other words, if this stock has not appreciated within two years I will sell it. If it appreciates to fair value, I will sell it. The only other factor that may effect this is if I need to sell this stock because another better deal comes along.

Disclosures: I own 650 shares of IFON as mentioned earlier. If the price drops further I intend to purchase more shares, I may or may not post about this additional purchase, if it should happen. Remember only a fool would invest based on someone else’s advice without checking it out first. Please verify all information for yourself and do your own analysis before investing in any security.

Related Posts:

• ORXE – Ore Pharamceutical Holdings – NCAV pharma stock – Bought and Sold
• DUCK – Duckwall-ALCO Stores a NCAV stock BUY – Small Investor Portfolio
• Linktone (LTON) NCAV Stock – Buy
• Qiao Xing Universal Telephone, Inc. (XING) Net Net Stock – Buy
• Warren Buffett’s advice in a Crisis

In January ENWV bought back all the preferred shares from Oak Investments for $36 million. This was discounted from Oak’s original Investment by $9 million. This was a huge step in the right direction for shareholders for two reasons. First, it took the slightly submerged overhang of the preferred shares off the books, and at a discount. But more importantly the company is not beholden to Oak any more. This frees the company to be acquired by another company. That is not a prediction. But another company did not really have the option prior to the buy out of the preferred shares.

Since then, a whole lot interest has been paid to ENWV. On 2/8/10 Dimensional Advisors disclosed a 7.8% position in the company. On 2/10/10 Portolan Investment disclosed a 4.3% position in the company. On 2/16/10 Potomac Capital disclosed a 6.19% position. Empire has also increased its holdings, although some of that may have been a year end loss, and repurchase after 30 days. In any case, if you are the type of investor that likes to see other investors buying, then you would like this news. I am only interested in what investors I respect are doing, or company officers. Nothing in the 13G/A’s to indicate management is interested in their own stock.

I estimate their current NCAV value at $3.19- $3.52, depending on how you calculate it. Taking the Graham Margin of Safety of 33% gives you a purchase price somewhere around $2.32 on the high side. The shares closed yesterday at $2.60/share. But if you are willing to take a smaller margin of safety you might be interested. But I would caution you as always to think twice before making any investment. Do your own research. Double check everything. Since ENWV is still losing money on operations of $3.4 million per quarter, as reported in their latest 8k, ENWV still seems like a risky proposition to me.

Related Posts:

• ORXE – Ore Pharamceutical Holdings – NCAV pharma stock – Bought and Sold
• DUCK – Duckwall-ALCO Stores a NCAV stock BUY – Small Investor Portfolio
• IFON – InfoSonics NCAV stock BUY – Small Investor Portfolio
• Linktone (LTON) NCAV Stock – Buy
• Audiovox (VOXX) a Net Net – Buy

Linktone is, according to their latest 6k, ” one of the leading providers of wireless interactive entertainment services to consumers in China.  Linktone provides a diverse portfolio of services to wireless consumers and corporate customers, with a particular focus on media, entertainment and communications.  These services are promoted through the Company’s strong distribution network, integrated service platform and multiple marketing sales channels, as well as through the networks of the mobile operators in China.  Through in-house development and alliances with international and local branded content partners, the Company develops, aggregates, and distributes innovative and engaging products to maximize the breadth, quality and diversity of its offerings.” Linktone is based in China. But don’t hold that against them.

Why buy LTON?

1) Net Net stock. I know I sound like a broken record. But I love NCAV stocks. As a group they tend to outperform the general market. My estimate of  Net Current Asset Value is between $2.46 – $2.63/share, depending on if you use Graham’s original formula or a modified version of the formula.  More importantly, for LTON is to include Graham’s margin of safety which was always 1/3. That puts the buy price at between $1.62 & $1.73/share. My buy price being on the high side of this range.

2) Linktone is a technology/media company. I like these kind of companies because often there are larger positive swings in the stock price, to the upside when a positive surprise is announced.

3) LTON has regained profitability according to their 6k dated 12/4/09. Although it is not explosive it has improved from it’s losses of 2008. Also in the same 6k, “Gross margin increased to 39% of net revenues, or gross revenues minus business tax, compared with 34% for the second quarter of 2009. The sequential increase was primarily due to relatively higher profit margin service fees from Linktone’s Indonesia VAS project.”

Risks?

1) Chinese stock. If you believe the bubbles scenarios, then the whole Chinese market needs a major correction. I am not buying the whole Chinese stock market, but  a piece of this one asset rich company.

2) Dilutive share practice- The number of shares of LTON has increased from approx 23 million ADS shares in 2007 to over 42 million in Q3 of 2009.

3) Growth Through acquistions- As I have stated previously, I am not a big fan of growth through acquistion. LTON purchased 50.1% of  Letang a Chinese, a mobile gaming company. The terms have not been fully disclosed but it seems their is only a couple million cash down. I am reserving judgement on this purchase.

Disclaimer: I own shares of LTON. I wasn’t discussing this company hypothetically. Whether you should buy this stock is entirely up to you. You shouldn’t trust anyone without doing your own research. Yeah, even if that person is me. I am not obliged to notify you in any fashion if I change my mind about this stock. Although since this is a personal blog, the only that would prevent me is probably my paying job.

Related Posts:

• ORXE – Ore Pharamceutical Holdings – NCAV pharma stock – Bought and Sold
• DUCK – Duckwall-ALCO Stores a NCAV stock BUY – Small Investor Portfolio
• IFON – InfoSonics NCAV stock BUY – Small Investor Portfolio
• Qiao Xing Universal Telephone, Inc. (XING) Net Net Stock – Buy
• Warren Buffett’s advice in a Crisis

What is Audiovox? According to their latest 10Q it, “is a recognized leader in the marketing of automotive entertainment, vehicle security and remote start systems, consumer electronics products and consumer electronics accessories. The company is number one in mobile video and places in the top ten of almost every category that it sells.” It was established in 1965 and went public in 1987. You have probably heard of some of the brand names they own including, RCA, Jensen, Acoustic Research, Energizer, Advent, Code Alarm, TERK, Prestige and SURFACE brands.

Why buy VOXX?

1) NCAV. As of their most recent 10Q, Audiovox is a classic Net Net  value Investing kind  of company.  Let’s do the math, NCAV = Current Assets $352 million – Total Liabilities $126.9 million = $225.1 million. Their market cap is just $152 million. This means they have a little over $9.80 in Net Current Asset Value. If you discount that by the Graham Margin of Error of 1/3 you arrive at about $6.58 or my purchase price. If you discount Inventory and Account Receivables you get a lower figure, approximating liquidation value of $5.35/share. Let’s call that the downside risk.

2) Profitably in a difficult time. as their CEO said, “Through the first nine months of the year, we have been profitable despite lower sales volumes, which were anticipated and planned for given the current economic climate and the factors which impacted last year’s results. We have taken aggressive steps to lower our overhead and improve margins, while managing our buying programs to position Audiovox for continued profitability in future periods,” stated Patrick Lavelle, president and chief executive officer of Audiovox Corporation. “While our sales may be lower, our margins are up, our overhead is down and in line with expected sales and we are looking forward to our fourth quarter and fiscal 2011 prospects.“

3) Respected Investment “gurus” own VOXX. According to Gurufocus as of 9/30/09 several well known managers have a stake in Audiovoxx. Seth Klarmann owns 8.72%, Irving Kahn owns 9.71%. This kind of ownership is not enough for me to invest on its own, but coupled with a Net Net position, it is certainly makes the company more interesting. More recently, even more big investors are piling on Donald Smith long/short Equities fund disclosed 2million share ownership the beginning of January in a 13G, In another this month Mackenzie financial corp disclosed 5.59% Ownership. Today Dimensional Fund Advsiors disclosed a 8.48% stake. What does all this activity mean. Nothing today. But one of the ways that small caps stock prices rise is when analyst begin to cover a stock. When they see several large stakes by well known hedge funds or money managers, they are more likely to take notice.

Risks

1) the economy could head south again. This is a risk for all companies that sell discretionary products, but worth noting. If we slip into a double dip recession, count on losses and a drop in the stock price.

2) Voxx seems to be making acqusitions. Third Quarter of last year they bought Schwaiger GmbH, a German market leader in the consumer electronics, SAT and receiver technologies. I am leery of a growth through acquisitions strategy. If this trend continues. Be cautious. It is usually a good way to destroy shareholder value.

3) VOXX has been a perennial Net Net company as noted by Greenbackd in post last March. That does not mean that the stock price won’t appreciate, but it is worth noting.

4) Accounts Receivable has increased. Jae Jun, from Old School Value has pointed out in the comments that the quality of assets is important. He is correct of course, and I should have included the increase in Accounts receivable in 2009 as a red flag.

Perhaps you have some thoughts on this stock. If so, please share them. Post a comment or email me chroma at chromainvesting dot com.

Disclaimer: When I say I bought shares of a company, it is not hypothetical. I actually shelled out cash for the stock. Whether you should buy this stock is entirely up to you. You shouldn’t trust anyone without doing your own research. Yeah, even if that person is me. I am not obliged to notify you in any fashion if I change my mind about this stock. Although since this is a personal blog, the only that would prevent me is probably my paying job.

Related Posts:

• ORXE – Ore Pharamceutical Holdings – NCAV pharma stock – Bought and Sold
• DUCK – Duckwall-ALCO Stores a NCAV stock BUY – Small Investor Portfolio
• IFON – InfoSonics NCAV stock BUY – Small Investor Portfolio
• Endwave (ENWV) an update
• Linktone (LTON) NCAV Stock – Buy

After rising to $2.40 from my purchase price of $2.22 the prices have slipped back down to $2.26 again. I discovered a mistake I had made in the original calculations I used for my valuation. I did not have the correct number of shares in my calculations, which when corrected brought the original NCAV value down to  between $2.51 and $2.85. Based on this latest 10Q I estimate the Net Value at between $2.42 and $3.03, definitely toward the higher end of the range. But it has growing Free Cash Flow and because of its micro cap status, no one is following it. The potential catalyst is a surprise in earnings or something that would catch an analyst attention. We will probably have to wait another quarter on this one to see much movement in the price.

Related Posts:

• ORXE – Ore Pharamceutical Holdings – NCAV pharma stock – Bought and Sold
• DUCK – Duckwall-ALCO Stores a NCAV stock BUY – Small Investor Portfolio
• IFON – InfoSonics NCAV stock BUY – Small Investor Portfolio
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If you read the google Finance news on XING, you would say nothing recently was really going on. Just the usual Momentum stuff. Back in December they had an article where XING sent out a Press release with  their unadited results of their “molybdenum mine… and actual operating results are better than our initial forecast.” This was important because the CEO Wu is not much trusted by many shareholders and it wasn’t clear the recent purchase of China Luxuriant Jade Company and XING’s foray into Molybdenum mining was gong to produce revenue. Any revenue. The press release shows that they did and that it was profitable. A sigh of relief from some investors, including me, since the Molybdenum mining operation was one of the items I considered a risk.

Yahoo finance showed even less information. Nothing since December. Sometimes these small cap Net Net stocks will rise on no news, particularly if they are thinly traded like SODI.

But when I dug a little deeper I think I found a reason for the increasing volume and price movement. An article on Seeking Alpha entitled Molybdenum Poised for Massive Comeback, spoke of the under performance of Molybdenum or Moly as it is known affectionately. The price discrepancy when compared to copper was attributed to the fact that Moly has no futures market. This will all change next month, according to the article, when Moly gets a futures slot on the London Metals Exchange (LME). The thinking is that speculators may come in and restore the “normal” price relationship to other precious metals. The Seeking Alpha article says, “Moly a year ago was trading at 8.5x the price of copper, now it’s only 3.5x the price. Moly to nickel was at 2.6x, now at 1.4x. At molybdenum’s peak in 2005, it was trading at a price 28 times that of copper.”

Since XING has been repositioning itself as a mining company, as it divests itself of its phone operations, the price rise may be anticipating some future commodity heat from Moly when it becomes traded as future. I don’t know anything about precious metal trading and have no way of evaluating the company on that basis. I do know that it XING is still a NCAV company and despite the run up in the last month still has an estimated Net Current Asset Value of $4.28/share. This means there is still the required 33% discount off of Net Net value, for your margin of safety.

Disclaimer: As I stated I own 1500 shares of XING. I am not a finance expert, I am a film and television producer. I strongly urge anyone who is interested in XING to do your own research before you invest.  Make sure you understand why you are investing in a company and when you will get out of the investment.

Related Posts:

• ORXE – Ore Pharamceutical Holdings – NCAV pharma stock – Bought and Sold
• DUCK – Duckwall-ALCO Stores a NCAV stock BUY – Small Investor Portfolio
• IFON – InfoSonics NCAV stock BUY – Small Investor Portfolio
• Endwave (ENWV) an update
• Linktone (LTON) NCAV Stock – Buy

In addition to the Ben Graham Screener, Old School Value also has following screeners:

Cheap Magic Formula Stocks- He uses a market cap of $50M

Truly Cheap Stock which have have the following characteristics

• P/B less than 0.5
• P/S less than 0.5
• P/Cash Flow less than 10
• P/FCF less than 15

Profitable but Leveraged companies- He calls this a contrarian screen because no one likes the debt but the companies are generating Free Cash Flow.

Negative Enterprise Value-  Or companies with lots of cash on their balance sheets.

Check out the screeners and let me know what you think, particularly if you find any exceptional companies, I will do a write up one.

Follow the link if you are interested in reading about more Value Investing screeners.

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Related Posts:

• Value Investing Ideas – Companies Passing my Custom Screens
• Finding the Best Value Investing Stock Screener
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• More James Montier via EuroshareLab

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.

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