Friday, August 17, 2007

Cash Rich Companies

I have been looking through lists of lists of companies and decided I wanted to something a little different than the usual Magic Formula Stock write up. I decided to find companies with rock solid assets. Basically, something I KNOW that the company has and I don't have to analyze or value. Well, there is nothing better for those purposes than cash. Here is a list of companies and a brief summary of companies that have at least 75% of their share price covered in cash + short-term investments net of debt. Thanks to CHEAP STOCKS as some of the companies I found were straight from them.

FORD - Forward Industries designs, markets and distributes carrying cases for portable electronics such as cell phones, cameras and other consumer electronic products. The majority of their business is cell phone cases/accessories and cases/accessories for diabetics. They have had a recent drop off in sales due to the change of strategy at Nokia and Motorola to not package cell phone accessories with their cell phones. They have $2.67 of cash per share, they are currently trading at $2.80. Insiders own 10% of the company. There has been recent insider buying.

USEG - US Energy is involved in a handful of businesses but their main business is in acquiring, exploring, developing and/or selling or leasing mineral and other properties. I can't figure out why they are down, most likely because most of the other miners are down as well. But here is the breakdown, they have $4.44 of cash and short-term investments and marketable securities on their books net of debt. They are currently trading for $4.60 a share. Insiders own 19% of the company.

ANDS - Anadys Pharmaceuticals, don't know anything about this company besides that it's a pharmaceutical. I just know they have $2.40 of cash per share, and they are currently trading at $2.10. 8% of the company is owned by insiders. There has been some major insider buying recently by the CEO.

ADPT - Adaptec provides storage solutions that reliably move, manage and protect critical data and digital content. They were a high flyer in the tech bubble. ADPT has been down trading in this range for a while, it's not new for them. They are sitting on $3.11 of cash and marketable securities net of debt per share and are trading at $3.54 a share. Steel Partners has been aggressively purchasing shares of ADPT, they own roughly 15%.

SCMR - Sycamore develops and markets optical networking products and provide services associated with such products for telecommunications service providers worldwide. Another tech bubble high flyer, they have $3.20 of cash per share, and trading for $3.90. They also have been trading in the lower range as of recent. Almost 36% of the company is owned by insiders. There is also a legendary value investing mutual funded invested in SCMR, Third Avenue Management.

All of these companies are sitting on piles of cash, that's an excellent margin of safety right there. You are buying the operations of these companies on pennies on the dollar. An activist shareholder or a buyout would be the logical solution to value these companies properly in the open market.


Alex said...

It's nice to trade close to cash value when you dont' burn it.

Couple comments after glancing through recent 10Q
- marketable securities $22mm
and 2Q 2007 loss on sale of marketabel securitities $6.8mm

- huge 2Q income came from profit on uranium lease - that was shown as asset for sale as of March 31 $9mm. and this is what is driving the company.

Woudl be great if you could share more insights on the type of properties the company has to see if its really a bargain

Thanks, Alex

Anonymous said...

One more

- almost $20mm of capital gain tax payable could be deducted from current Cash position