Monthly Archives: November 2013

JCP – what went wrong

JCP – what went wrong

As a value investor, you are likely to come across many struggling companies when doing research. These tend to be the ones trading at low Price/Earnings ratios due to pessimism about the future, so will frequently appear in stock screens. Some will inevitably have the attention of an activist investor who believes they can turn the business around, and in the process produce outsized returns for shareholders. It is easy, as an individual, to believe their assertions and they will often have a good track record to back them up too. But it doesn’t always go to plan as was the case with JCPenney (JCP), and it is an interesting case study to review so that hopefully investors don’t get caught out in this same trap in future.read more

Collectors Universe (NASDAQ:CLCT)

Collectors Universe (NASDAQ:CLCT)

Collectors Universe has an Enterprise Value of $110m, and the companies free cash flow has averaged $10m over the last 4 years. It also boasts a 10% dividend yield. But what is most interesting about this investment is its competitive advantage. In a niche industry it is already a dominant player, with significant barriers to entry. The industry is likely to last for decades and will not become obsolete. Going forward the company is expanding internationally and potentially more than doubled its market by opening an office in China.read more

Social media frenzy

Social media frenzy

I haven’t had a lot of time to look at stocks recently, so with the markets hitting all time highs I thought I’d do a post about some of the ludicrous valuations in the market today, and cap it off with one extraordinary story I read in the news.

Anyone that keeps tracking of whats going on in the market will know there is currently a lot of hype around social networking websites that reminds one of the dotcom IPO’s back in the 90s. Facebook for one was offered last year for a whopping 100x earnings. Any value investor will have avoided that one, and the subsequent 50% drop that happened in the next few days. It’s strange how the market can go from loving a stock, to hysterical paranoia about mobile revenue and completely change its mind. Early investors can breathe a sigh of relief now however, Facebook is now back over its IPO price.read more

Ithaca Energy (TSE:IAE)

Ithaca Energy (TSE:IAE)

Ithaca Energy is a stock I looked at quite a while ago. I wrote the following article and was about to buy shares, but in an extreme case of bad luck, just before I could initiate a position the shares rallied 30%. I haven’t since initiated a position but think the shares are still compelling so thought I would post the write up. They have just reported Q3 2013 results which showed record cash flow, putting them at a EV / Annualised Cash flow multiple of just 3.5.read more

Craven House share issue

Craven House share issue

For those that aren’t aware, Craven House Capital is far and away my largest holding, and sat at 22% of my portfolio yesterday. I have no other holdings above 10% which should give you an idea of how much I like this stock.

In my previous post I spoke of how management issuing new shares at 1.25p (a premium to today’s share price) was beneficial for existing shareholders and that I expected management to drastically increase the size of the balance sheet. Well today has confirmed that assumption was correct, as they have just announced a new deal which I calculate has increased my adjusted book value from £2.6m to £3.8m, a 45% increase.read more

Emerson Radio (AMEX:MSN)

Emerson Radio (AMEX:MSN)

Emerson Radio Corp (AMEX:MSN) is one stock that appears to be a no-brainer. Its market cap, at $51m, is less than its net cash of $61m, yet the business is profitable, generating $7m of pre-tax profit in the last 12 months. Who wouldn’t be tempted by such numbers, until you learn the unpleasant truth about why this company deserves to be trading at such low multiples. Its management and owners are surrounded by countless accusations of corruption, so much so that if all are to be believed, shareholders of Emerson should expect nothing more than to be conned out of what is rightfully theirs. This is a warning to investors – an investment in Emerson as it currently stands is nothing more than a gamble on a change of ownership.read more


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