It was brought to my attention so figure ill post the results. An equal weighting of these names has returned 11% (14% IRR) vs. LD Micro Index 4.9% (6.25% IRR) and SP500 13% (16.5% IRR). Any portfolio with heavier allocation into the favorite and second favorite idea has returned 19-23% (25-29% IRR). ELXS, FLL, and PDEX are up the most. The 3 names down the most MHH (down 15%), ALJJ (down 30%), ISIG (down 30% adj for dividend) I think are still interesting at their new lower prices. Not really interested in CRVP and DTRK anymore. Been working on some new ideas as well.

Not bad considering small and value factors have been underperforming.

BCI, care to elaborate on tech precision, Seaspine, Dynatronics and Mastech?

four microcaps that look ugly now but have large upside potential are hemacare, Spanish broadcasting, onvia and wireless telecom.

TPCS: Bet on new mgmt + decent biz + low valuation

SPNE: should be able to do 20% ebitda margins. Medtech that does 20% gets 3-4x revenue multiple, not 1x like spne. Mgmt is good here as well. Not as excited about it at $13 here but was crazy cheap at $7. Only concern is they need to get to breakeven soon rather than later but the upside will be huge if they build this thing to scale at 20% ebitda margins.

DYNT: Bet on new mgmt + decent biz + low valuation. They are trying to recreate the success they had at previous company

MHH: Bet on new mgmt + decent biz + low valuation. They are trying to recreate the success they had at their previous company which they sold. Currently transforming business from low margin staffing company to higher margin digital IT implementation team, currently priced as low margin staffing company.

Some common themes with me. (have to like management - usually new mgmt, want above avg business quality, want low valuation)

Seems like plan was with SPNE to grow into profitability instead of cut R&D. Did that change with new management? lack of growth so far seems discouraging.

Mastech looks most interesting. Seems that they have about 800k non economic amortization as well. And a 800k severance cost. So trading at 7.2x 2016 FCF.

But there are 800k new shares, and $29m more debt. One thing that slightly bothers me is that owners of acquired company did not take equity. They sold out their growing company for what seems to amount to 5.5x EBIT. And took cash + some earn outs. that seems on the cheap side.

Seems Ebit of their acquisition is about $10 million. So that gets me to $4m + $0.8m + $10m - (6% interest on $42m in debt) = $2.5m -35% taxes + $0.8m in amortization = $8.8m in FCF on a $36m market cap. That looks really cheap.

But seems they do have some growth expenses, so it is probably closer to $6-7m. Which is still cheap. This is before synergies. Is that the same number you got?

Yeah plan at SPNE was to grow to profitability, some of their older products started declining faster than their new products could ramp up so yeah sales growth has disappointed but i don't think all is lost.

Still looking at the MHH acquisition so although the sellers aren't taking equity I do like how they structured the deal with the 2 year earn outs and also the fact that the majority owners of MHH, who is really who you are betting on here, are willing to put up more of their own money at current market prices to fund the deal I think is encouraging.

Cashed out of RAIL, ODP, FBRC, NVTR, for a grand total of a 40% gain.

Still bagholding RAD. Forgot that I still own PDEX and PRSC preferreds.

Bought DS (cicakman's idea) and DGLY (ToothSayer's idea)

Current longs (based on size)
AGO, SLP, RAD, PDEX, NXPI, FELP, DGLY, DS, PRSC preferreds

Short TSLA from $340.

If you are interested or invested in HOS, this write up might interest you:
https://www.valueinvestorsclub.com/i...rilling/140308

I think BUD is priced right to add to my long position.

Cliffs?

Thoughts on AAP advanced autoparts @ $102?

thx for sharing

Isn't the short thesis here that autoparts stocks were overpriced to begin with? And that electric cars will reduce need for auto parts + amazon probably slowly muscling in and taking certain types of customers. 18x PE is not exactly cheap for a slow growth business with serious long term headwinds.

bought a decent chunk of AIRT today at $16.50ish. Looks like someone got spooked by the delay in their annual report, based on the filings sounds like its an issue with the accounting for the delphax investment which i already considered a $0 so when the stock tanks 20% related to something i already thought was worth $0 I bought. They also switched auditors which its not uncommon for the first annual report to take longer with a new auditor. I might be misreading the situation but I see this as a long term hold i'm not worried about the Q4 numbers.

I don't know.. I'm looking at all the insider buys made at 135 and 150, I can see that the dividend is 0.2% and payout is 4% so this can go easily up. The debt is 1B and free cash flow is 200m, currently rsi(14) is very oversold. I don't think it's deep value or a good pick long term because the amazon threat is real obv, but right now it's at decent discount to its intrinsic value imho.

I'd have to have a closer look to the balance sheet. AZO on the other hand is playing way much more aggressively, buy back shares and having much higher margins through levearege, probably I'd short AZO to partially hedge AAP...

Right now I just bought AAP around 102, let's see what happens next...

AIRT is about 10% above Net-Net at current market cap and last Q-10.

You're probably looking at book value but even then to calculate book value you have to back out the Delphax financials that are consolidated in their results right now. Either way, couldn't help myself and bought more at $14.50-$15.50 today. There's at least 3 large institutions that could be dumping for no reason or because they can't hold companies who miss filing deadlines (Fidelity, Renaissance, CALPERs) and held more shares than have traded hands in the last two days (60k). If the trading dries up here going forward the seller was most likely CALPERs who held just over 60k shares if it keeps going could be Fidelity or Renaissance or some private individual who held over 60k shares. I'm guessing their 10-K gets filed in the next couples weeks then the 10-Q in mid August. Two good catalysts to stabilize things as it doesn't appear to be related to any change in business outlet unless i've missed something. FedEx had a cyberattack at its newly acquired TNT business in Europe but that shouldn't affect the FedEx Feeder program in the US I wouldn't think.

Yeah, I was, my bad. I loaded up as well.

Thoughts on GURE at $1.62?

170M in cash, with 0 debt

Mkt cap is 76M, down 40% from 52w high, selling at 2x earnings, 0,22 book value..

https://finance.yahoo.com/news/gulf-...120000177.html

While this is a short-term set back, the Company believes this will not change the intermediate to long-term opportunities for natural gas production in Sichuan Province.

There are loads of chinese companies like this on US exchange. But you actually have worse protection on US exchange vs chinese exchange or HK exchange, as it is easier for them to just steal the company. They can just dividend the cash to themselves, and then delist at some point. Or 'invest' in something and then write it off. Renaissance seems to love these things though.

I think a catalyst might be if Jinping pushes through serious legal reforms after his power consolidation. If it becomes seriously dangerous to commit fraud like this, these things might go up a lot. But now you can get away almost risk free just stealing the company. So you really need to have a good reason to trust management. They seem shady, because saying they cannot pay dividends because of capital controls is a really poor excuse.

btw, thanks for the lead on MHH BCI, that was a quick gainer .

Take a look at this Chinese stock, CYD traded at $21, a major diesel engine manufacturer controlled by a Singapore company. This is one Francis Chou is into. It will make $4 this year this year and has $7-8 a share in cash. It pays a consistent dividend.
The other one is JP, much more speculative but is on the safer side compared to a lot the other Chinese no name ones.

I'm new to following this thread and value investing.

When a stock is up ~35% since posted/purchased instead of considering it a long-term value play do you just complete the trade and take the win even though it was originally positioned as a longer term investment?

Does it more come down to needing an exit strategy or target before even investing in the first place?

depends on your thesis going forward and opportunity costs.
if you think it should be valued higher, stay in.
if you find a better spot and need cash, you might want to exit.

There may be differing opinions, but value investing mainly comes down to "value."

There could be investments like LAKE that went from $8 to $30 during the Ebola scare -- I don't remember the exact numbers. If you held on to the company when the stock price barely moved for years and suddenly saw it at $30, it would probably be a good idea to sell it and take the profits off of a huge move like that. That's a decision you have to make.

If you own a company like BRK that has a steady climb over many years, it might be worth holding since their value generally goes up every year.

If you have an idea of the real value of a business and can buy it for much less than that, then you sell when something value related changes, or you sell it when it becomes overvalued. Nobody knows the true value of a business. Discounted Cash Flow models get thrown around, but nobody really knows.

If a company makes $1 billion every year and their market cap is $1,000, you can eyeball that and see it's under valued.

If a company makes $100 every year and their market cap is $1 billion, you can eyeball that and see it's overvalued.

A company I've owned for 4 years recently announced they were going to issue more shares. The last time they did that, the stock went down 50%. I still like the company, but I told myself if they ever issued more stock, I was going to sell. So I did. I made 180% on that investment.

So, long story short, value investing to me is about whether a company is undervalued or overvalued and the economics of the business. You're buying real businesses, not just looking at numbers and share prices.

Is all about how confident you are about forward earnings, and what bottom is in earning power. Seems that legacy business is very stable with low fixed costs, and the two large shareholders previously sold Igate for a large amount. So they have a history of creating shareholder value and are not idiots. So I think in this case it is worth a shot to stick around and see what this merger will throw off in earnings a year from now. My guess somewhere between $7.5-10m. Stock will show up on screeners and likely trade at 10x+ earnings. So between $15-20. I'd probably sell just under 10x forward earnings though.

Generally if a company trades at 9-10x earnings with a decent moat and there likely isn't going to be much growth, I can find something better elsewhere.