This morning, it was announced that Inforte (NASDAQ: INFT) will sell out to Business & Decision Group for $4.25 in cash. The transaction is expected to closer within 90 days.
I honestly think the price for this acquisition is too low, considering that INFT has $2.55/share in the bank in cash, no debt, and is cash flow positive. I thought we would see something closer to the $5.50 range.
Regardless, rack up another win for me - and any loyal Terence followers. The key to the success in this investment was 'averaging down', which is typically not a suggested strategy. I originally bought at $4.02 and continued to buy more during its demise down to as low as $3.11.
I do believe this is somewhat of an act of desperation by management and likely a move in the best interest of the shareholders. We saw INFT close down Provantis in December 2006, a company they invested in and watched go to zero. Recently, an 8-K was filed regarding the termination of a person's employment and the subsequent payout of $1M+ and 66,000+ shares of stock. This originated from INFT acquiring an analytics business and the resulting deal via an earn out that should have happened. For whatever reason, it did not end well.
INFT runs a solid business, but they have not been able to yield significant shareholder value. Long term, this one has been a big loser - going public and trading as high as $80 per share back in early 2001. Of course, they were also somewhat victimized by the bad timing of the Internet bubble collapse, but they were never really ever to get back on their feet, even with all of that cash in the bank. They also paid out nearly $20M in cash in 2005 via a special dividend, so at one point, they had even more.
I think B&D Group saw this weakness and offered a price that was likely a lowball offer, but an effective offer considering INFT's situation in the marketplace, management inability to turn things around from a shareholder value perspective, and the recent events that were starting to take their toll on the INFT balance sheet. Reports about the acquisition also indicate that INFT's cash balance declined by more than $2M from Dec 31, 2006 to present - not a good sign for INFT.
I believe the 1Q 2007 report will be less than positive and feature some elements that may have stood to drive the price on INFT further down - perhaps under $3. If that is the case, the announcement of this acquisition is good timing as whatever is in the 10-Q, regardless of how bad, will have minimal impact on the stock price. INFT will likely trade in the $4.10-$4.15 range and get closer to $4.25 as the final acquisition date draws near.
So, INFT comes to an end and although management was not able to do anything to make INFT a home-run investment, I must give them credit for swallowing their pride (30%+ is owned by the management/founders) and recognizing that the timing of this announcement is critical to maintaining shareholder value considering the further risk to the stock price. It likely was not an easy decision and a gut-wrenching one for them, but despite the problems INFT has had, they took the high-road in this case.
Sometimes, it is just time to move on and as bad as INFT has been for many investors over the years, it was good for me, especially since I averaged down from my initial purchase. As mentioned previously, averaging down is typically not a good strategy, but to me made sense in this case, as the cheaper INFT got, the more compelling its value proposition was.
To succeed in investing, you often have to stick to your guns, despite it being very difficult. It was downright hearbreaking to watchin INFT continue to falter, regardless of how low I thought I bought it. I continued to think - if it was a good buy at $3.75, it is a better buy at $3.50. The fundamental reason why I bought (strong cash value, low price to book, immient take over target, etc.) never changed. It did weaken some and did not become as attractive as they filed their 10-K annual report for 2006 and some developments indicated those propsects may have gotten weaker, but nevertheless, I hung in there and came out with a win.
Not a home run - not a huge win - I wish I would have bought SEB with my INFT money, but you never went broke taking a profit and my upward climb continues.
Showing posts with label inft. Show all posts
Showing posts with label inft. Show all posts
Monday, May 14, 2007
Wednesday, February 21, 2007
NBG - Financial Results; ASHG Acting Up; Other Notes; Lessons Learned
This morning, National Bank of Greece (NYSE: NBG) posted their 2006 financial results. Results were very impressive. Net income rose 36% from 2005 to $1.29B. Results were towards the upper end of the analyst estimate range, but fell short of the high estimate by about 1%. Hence, the stock did not blow up today, but actually did end close up by a modest 0.3% after spending most of the day in the red. This activity is not uncommon. The financial results of NBG were being watched like a hawk by the world marketplace and anticipating a very strong showing. The market then 'prices' this activity in for the most part, so if it ends up where everyone thought it was going to go, it tends to not move much or even decline, sometimes sharply. Tomorrow, on Feb. 22, NBG, will be presenting its 2007-2009 3 year outlook, which is supposed to continue to be very positive as already indicated by NBG, though we will not see full details until tomorrow. Long term, NBG is a great buy and when I say long term, I could be talking several years and I do not believe it will disappoint in 2007. While I do not see a double in 2007, I think NBG getting to $14-$16 sometime before the end of the year is possible. I am considering adding to my position.
It is officially dividend time for Ash Grove Cement (Pink Sheets: ASHG). This stock does not trade very often or at least post trades. I think that this stock trades daily behind the scenes, but the market makets will only post a trade in 100+ share blocks. So, I often think the 100 share blocks is a consolidated trade posting of many small trades. Anyway, activity always picks up around dividend time, which is the first week of March. ASHG is pretty sneaky about this - I am able to see their dividend declaration information at www.pinksheets.com, but it is not anywhere else to be seen. For 2007, dividend is $0.42 per share, a 5% increase over 2006, so that is good stuff.
Anyway, although trades may not occur, the inside market, or bid vs. ask spread, will sometimes change during the day. This is indicative of someone stepping in to buy or perhaps some trades took place behind the scenes and are not yet posted. There are very, very few shares out there, so 5-10 share trades, that seem to be invisible to the market, can effect the spread. I know this because I have personally experienced and seen this first hand. So, yesterday, Feb 20, ASHG opened up the morning at $217 x $220. During a meeting at work, I noticed the spread ticked up as high as $250 x $350!!! I almost lost it and took every ounce of sanity to keep my clothes on and to restrain from humping the desk.
Today, the stock closed as $280 per share, up 24.4% to an all time high. The closing spread was $240 x $272.50 (the bid ticked up from $230 to $240 in some small increments through the day) and the only trade that posted was 125 shares at $295. Now, I have seen the inside market change with some rigor during dividend times, but NEVER like this in the nearly 2 years I have owned and followed this security.
I think this one will pull back some post March dividend, but we will see. I still plan to add to my position, regardless, and somewhat regret not adding more than I did along the way, but again, it's always better to wish you bought more than wish you bought less! I am not sure what is in store for ASHG tomorrow or even for the rest of the year - I thought reaching $240 would take all year - I was wrong. Next year? Who knows....5 years? $700 per share. This is a fantastic retirement investment.
Seaboard Corporatiion (AMEX: SEB) had a very strong day. Up 2.6% to an all-time closing high of $2,154 and touched on an all time high of $2,190 today. Volume today was very strong - double than usual. I am not sure of the activity, but in 7-10 years, do not be surprised to see this one at $6,000-$8,000 per share. There is certainly long term value here and I am considering adding more to my position, but it's tough, because 1 share at this stage chews up $2,154 of capital, which is well, a lot. If I were to buy more, it would be for the real long haul. At some point, the appreciation on this one will have to take a breath and slow down, at least short term. I am trying to figure out what the deal is with this one in terms of the short-term activity and what is means long-term for the stock. Perhaps it is institutions loading up for the long haul as dry bulk shipping, one of SEB's divisions, was very hot today thanks to a mention on CNBC. There is no question SEB is going higher, but under what terms? Timeframe? Retracement? Short and sweet, I like the shareholders equity and cash this beast produces.
On other notes, I added to my positions in INFT at $3.57 and WNC at $16.99. INFT has disappointed me thus far, but it just has to go somewhere. I know, famous last words, but the last time I had that feeling, I was buying up shares of CECE at $3.75-$4.25. It took many years, and I was fortunate to start adding shares just in time, but the metrics said CECE absolutely had to go higher. It did...and ran to $12 last spring and today closed at an all time high of $17. I sold out last spring on the way up to $12.
Watching CECE today - I ALMOST jumped back in at $8-$9 several weeks ago, but I didn't. I wish I did, but honestly, the money I took out of CECE (and others that maybe I sold too soon) I put into other winners:
SVVS: in at $10, out at $17; now at $48.
ASTE: in at $23, out at $34; now at $39.
Thinking about this, did I miss the boat? Well, yes and no, but not really. I took the bulk of my CECE, SVVS, and ASTE proceeds and invested in big winners like ASHG, NBG, SEB and what will hopefully become big winners, like INFT and WNC. My patiences for investments has grown tremendously. I am amazed that I have held and accumulated ASHG for 20 months now, which is a world record for me. It is tough at a young age to have a huge time horizon mentality. Plus, with the in your face of 'gotta have it now' and my need to fend off my other situation, well, as much as I would have loved to have waited the extra year for CECE to turnaround, but honestly, last spring, I didn't have a year.
Going forward, it is important to look at the scope of your investments. Of course, you can never predict the market, but sometimes, bigger gains are out there if you can open your mindset to maybe waiting 3-5 years. I have somehow been able to do that with ASHG. I think part of that has to do with the lack of activity the stock has. Unlike other issues that move up and down, I am better able to keep the fear and greed out of my decision more than the others. Regardless, it is important to set your own price targets and goals - but more importantly, how long you are willing or might have to wait. Are you willing to wait 1 1/2 years for a 75% return? That is what it would have taken for ASHG. A 300% gain requires 18 months? Well, that is SVVS for you.
Opportunities for huge gains are out there, so look for them, and if you have to wait it out, then wait it out. Of course, never underestimate the power of taking profits and successfully re-investing the proceeds in other big winners. Plus, there is only so much capital to go around. If I would have kept my hands on CECE and didn't bother buying more ASHG or SEB, I'd be feeling just as silly, but, I'd really be in the same place I am now from a numbers standpoint.
Simplistically, if you take money out of an investment, make sure you have a solid purpose for it - specifically, another investment that you feel will perform well. If you sell, that's fine, just don't piss it away, because that is when seeing the stock 100% higher than you sold it at will get to you.
It is officially dividend time for Ash Grove Cement (Pink Sheets: ASHG). This stock does not trade very often or at least post trades. I think that this stock trades daily behind the scenes, but the market makets will only post a trade in 100+ share blocks. So, I often think the 100 share blocks is a consolidated trade posting of many small trades. Anyway, activity always picks up around dividend time, which is the first week of March. ASHG is pretty sneaky about this - I am able to see their dividend declaration information at www.pinksheets.com, but it is not anywhere else to be seen. For 2007, dividend is $0.42 per share, a 5% increase over 2006, so that is good stuff.
Anyway, although trades may not occur, the inside market, or bid vs. ask spread, will sometimes change during the day. This is indicative of someone stepping in to buy or perhaps some trades took place behind the scenes and are not yet posted. There are very, very few shares out there, so 5-10 share trades, that seem to be invisible to the market, can effect the spread. I know this because I have personally experienced and seen this first hand. So, yesterday, Feb 20, ASHG opened up the morning at $217 x $220. During a meeting at work, I noticed the spread ticked up as high as $250 x $350!!! I almost lost it and took every ounce of sanity to keep my clothes on and to restrain from humping the desk.
Today, the stock closed as $280 per share, up 24.4% to an all time high. The closing spread was $240 x $272.50 (the bid ticked up from $230 to $240 in some small increments through the day) and the only trade that posted was 125 shares at $295. Now, I have seen the inside market change with some rigor during dividend times, but NEVER like this in the nearly 2 years I have owned and followed this security.
I think this one will pull back some post March dividend, but we will see. I still plan to add to my position, regardless, and somewhat regret not adding more than I did along the way, but again, it's always better to wish you bought more than wish you bought less! I am not sure what is in store for ASHG tomorrow or even for the rest of the year - I thought reaching $240 would take all year - I was wrong. Next year? Who knows....5 years? $700 per share. This is a fantastic retirement investment.
Seaboard Corporatiion (AMEX: SEB) had a very strong day. Up 2.6% to an all-time closing high of $2,154 and touched on an all time high of $2,190 today. Volume today was very strong - double than usual. I am not sure of the activity, but in 7-10 years, do not be surprised to see this one at $6,000-$8,000 per share. There is certainly long term value here and I am considering adding more to my position, but it's tough, because 1 share at this stage chews up $2,154 of capital, which is well, a lot. If I were to buy more, it would be for the real long haul. At some point, the appreciation on this one will have to take a breath and slow down, at least short term. I am trying to figure out what the deal is with this one in terms of the short-term activity and what is means long-term for the stock. Perhaps it is institutions loading up for the long haul as dry bulk shipping, one of SEB's divisions, was very hot today thanks to a mention on CNBC. There is no question SEB is going higher, but under what terms? Timeframe? Retracement? Short and sweet, I like the shareholders equity and cash this beast produces.
On other notes, I added to my positions in INFT at $3.57 and WNC at $16.99. INFT has disappointed me thus far, but it just has to go somewhere. I know, famous last words, but the last time I had that feeling, I was buying up shares of CECE at $3.75-$4.25. It took many years, and I was fortunate to start adding shares just in time, but the metrics said CECE absolutely had to go higher. It did...and ran to $12 last spring and today closed at an all time high of $17. I sold out last spring on the way up to $12.
Watching CECE today - I ALMOST jumped back in at $8-$9 several weeks ago, but I didn't. I wish I did, but honestly, the money I took out of CECE (and others that maybe I sold too soon) I put into other winners:
SVVS: in at $10, out at $17; now at $48.
ASTE: in at $23, out at $34; now at $39.
Thinking about this, did I miss the boat? Well, yes and no, but not really. I took the bulk of my CECE, SVVS, and ASTE proceeds and invested in big winners like ASHG, NBG, SEB and what will hopefully become big winners, like INFT and WNC. My patiences for investments has grown tremendously. I am amazed that I have held and accumulated ASHG for 20 months now, which is a world record for me. It is tough at a young age to have a huge time horizon mentality. Plus, with the in your face of 'gotta have it now' and my need to fend off my other situation, well, as much as I would have loved to have waited the extra year for CECE to turnaround, but honestly, last spring, I didn't have a year.
Going forward, it is important to look at the scope of your investments. Of course, you can never predict the market, but sometimes, bigger gains are out there if you can open your mindset to maybe waiting 3-5 years. I have somehow been able to do that with ASHG. I think part of that has to do with the lack of activity the stock has. Unlike other issues that move up and down, I am better able to keep the fear and greed out of my decision more than the others. Regardless, it is important to set your own price targets and goals - but more importantly, how long you are willing or might have to wait. Are you willing to wait 1 1/2 years for a 75% return? That is what it would have taken for ASHG. A 300% gain requires 18 months? Well, that is SVVS for you.
Opportunities for huge gains are out there, so look for them, and if you have to wait it out, then wait it out. Of course, never underestimate the power of taking profits and successfully re-investing the proceeds in other big winners. Plus, there is only so much capital to go around. If I would have kept my hands on CECE and didn't bother buying more ASHG or SEB, I'd be feeling just as silly, but, I'd really be in the same place I am now from a numbers standpoint.
Simplistically, if you take money out of an investment, make sure you have a solid purpose for it - specifically, another investment that you feel will perform well. If you sell, that's fine, just don't piss it away, because that is when seeing the stock 100% higher than you sold it at will get to you.
Wednesday, January 24, 2007
Updates - NBG and INFT
National Bank of Greece (NYSE: NBG)
This one has been fun and I hope people took my advice - the buy anything under $9.50 price threshold. I did - though not as much as I'd like to, but always better to wish you bought more than wish you bought less. NBG is trading at $10.24 today, up on the news of an upgrade from an analyst saying it's Athens Stock Exchange counterpart has a target of 48 Euros (currently, it is around 42 Euros). The ADR (see prior blogs) represents 1/5 of an actual share of NBG in Athens. So, to basically get the price per share of an ADR, take the price in Euros, divide it by 5, and take the quotient (the answer) and multiply by the exchange rate (e.g., # of dollars per 1 euro; currently, US$1.296 = 1 Euro). So, if 48 Euros is where it's heading, NBG will be trading at around $12.40-$12.50. I think NBG is headed to $15 in 2007 and has the potential to be $60-$70 in the next several years. We'll see - in the mean time, I am enjoying the upgrade and am raising by slash and burn target - anything under $9.90 is a buy.
Inforte (NASDAQ: INFT)
One of my more frustrating holdings, but I feel has the best chance to be a double or triple in 2007 - most likely related to some form of a going private offer or just pure value. I added to my position at $3.58-$3.59 the other day (it's currently at $3.67 - not a huge gain, but I sure love stacking nickels). The biggest development is that one of their larger institutional holders, Royce & Associates, purchased an additional 50,000 shares during the past 3 months, bringing their total holdings to 1,090,600 and on January 31, they will be announcing their financial numbers and having a conference call at 4:30pm. I will be certain to be listening in on that and see if any developments happen, but I think we are going to have to wait until the Summer or Fall of 2007.
This one has been fun and I hope people took my advice - the buy anything under $9.50 price threshold. I did - though not as much as I'd like to, but always better to wish you bought more than wish you bought less. NBG is trading at $10.24 today, up on the news of an upgrade from an analyst saying it's Athens Stock Exchange counterpart has a target of 48 Euros (currently, it is around 42 Euros). The ADR (see prior blogs) represents 1/5 of an actual share of NBG in Athens. So, to basically get the price per share of an ADR, take the price in Euros, divide it by 5, and take the quotient (the answer) and multiply by the exchange rate (e.g., # of dollars per 1 euro; currently, US$1.296 = 1 Euro). So, if 48 Euros is where it's heading, NBG will be trading at around $12.40-$12.50. I think NBG is headed to $15 in 2007 and has the potential to be $60-$70 in the next several years. We'll see - in the mean time, I am enjoying the upgrade and am raising by slash and burn target - anything under $9.90 is a buy.
Inforte (NASDAQ: INFT)
One of my more frustrating holdings, but I feel has the best chance to be a double or triple in 2007 - most likely related to some form of a going private offer or just pure value. I added to my position at $3.58-$3.59 the other day (it's currently at $3.67 - not a huge gain, but I sure love stacking nickels). The biggest development is that one of their larger institutional holders, Royce & Associates, purchased an additional 50,000 shares during the past 3 months, bringing their total holdings to 1,090,600 and on January 31, they will be announcing their financial numbers and having a conference call at 4:30pm. I will be certain to be listening in on that and see if any developments happen, but I think we are going to have to wait until the Summer or Fall of 2007.
Monday, December 4, 2006
Pfizer (NYSE: PFE) - Buy @ $24.80 & Other Updates
Today's big story in the stock market was the 11% decline of Pfizer (NYSE: PFE). On Saturday, PFE announced that it was ceasing development of its new cholesterol drug. This was a huge development because it has been said that this new drug was going to be a huge homerun for PFE and was going to be key in replacing lost revenue from Lipitor once the patent protection expires in 2010. So, with all of this being said, let the panic begin.
In the company's press release, the CEO of PFE was cognizant of the impact of the lost revenues that this event would have on PFE and the stock price. The CEO emphasized strong revenue growth to return in 2009, returning shareholder value through raising dividend & repurchasing shares, and noted the deep product line that is in the PFE pipeline (though admittedly, none had the alleged potential that the new PFE cholesterol drug would have). So, despite this set back, things do not look too bad, right?
Well, the media jumped all over this story all weekend - analysts and stock brokers were hyping the 'end of Pfizer' and the potential for an up to 25% fall in the stock price today. The stock did open low - yes - down 15% at around $23.50, but at that price, the buyers were ready in mass. Funny how EVERYONE says the stock is finished and going to collapse on the heels of this news, yet the buying at the open was huge. In fact, despite a couple of blips down to this price of $23+, you would have to go back to 1997 or thereabouts to when PFE actually first hit this price.
I think PFE is a long-term buy at these levels, but probably best through its direct stock purchase plan as there are absolutely no fees and the key to this one is long term focus. Close to a 4% dividend yield, less than 11x next year's earnings, $1.75/cash on hand (some say to more aggressively purchase shares and to potentially raise the dividend), and over $17B in operating free cash flow.
Of course, with this, I feel even better about my decision to buy MRK over PFE, although the experts said PFE was the better buy. You can see my blog on this from October 13, 2006 (when I went up 1-0) and the original blog on September 5, 2006 (when the article came out and my discussion points).
Regardless, I see this dip as an opportunity to enter into PFE and start accumulating a stake for myself and my daughters. This is certainly a long term one that you want to put a chunk of money in every month or even once a year (Dogs of the Dow Theory), re-invest the dividends, and then just commit to fund your position every year.
Regardless, look for PFE to return to $28 within 6 months - on to other updates.
INFT - At Last We Will Reveal Ourselves to the Jedi
Well, I can see nobody jumped on the announcement and bought any INFT before I bought today. I know this because my trade was the first of the day. I picked some up at $3.69 and $3.70 and it closed at $3.72. I suppose it didn't really bounce up all that much as I thought it had the chance to, but that is a good thing. This provides more time to acquire shares at these levels. In all honesty, it probably will not move up much until 2007 sometime - we may even seen it decline some as we plow through the usual December tax selling. I will strategically and incrementally add to my position during this time.
SEB - Breaking $1,700 - We're Gonna Need a Bigger Boat
Another banner day for SEB - closing at $1,715, up 2.7%. Of course, I wish I bought more at $1,290 when I first blogged on it and I really wish I first bought when it was at $1,200 when I first started looking at it - but, better to wish you bought more than wish you bought less. So, with that being said, I grabbed the sack and picked up a little more today at $1,703.89. The fundamentals for SEB are making it look outrageously cheap from a long term standpoint and there continues to be heavy buying of shares out in the marketplace. Of course, there are shares for sale, but someone is buying them away. Rumor has it that it is the company that is doing so or value investors. I still think SEB is a $2,000+ stock by the end of 2007 and possibly as much as $3,000-$3,500 per share over the next 3-5 years. So, if it gets there, I'll wish I bought more, of course, but I'll feel better knowing I could have had even less than if I didn't pull the trigger at these levels. It probably was not the wisest move to buy near the upper end of the day's range on a very strong day, but I think in the end, I'll be glad I bought some more.
NBG - More Value at $9.20 - BORK! BORK! BORK!
NBG had a tough day down 1.8% to $9.15. I purchased some more last week between $9.26-$9.32, which was well off from its $9.60 highs. The pull back was not at all unexpected following the earnings announcement (buy on rumors, sell on news) and a welcome one. I might look to pick up a little more tomorrow. From a present day value, with the stock at $9.60, analysts said it was 'inline' with its peer group. So, that fact alone should make it a screaming buy at $9.15. Plus, NBG is assembling a massive growth strategy like no other bank in their region. It will be a couple of years before we see the real value from their acquisitions take hold - perhaps even longer - but this is still a $15-$20 stock or has a very viable chance to be within the next 12-24 months.
In the company's press release, the CEO of PFE was cognizant of the impact of the lost revenues that this event would have on PFE and the stock price. The CEO emphasized strong revenue growth to return in 2009, returning shareholder value through raising dividend & repurchasing shares, and noted the deep product line that is in the PFE pipeline (though admittedly, none had the alleged potential that the new PFE cholesterol drug would have). So, despite this set back, things do not look too bad, right?
Well, the media jumped all over this story all weekend - analysts and stock brokers were hyping the 'end of Pfizer' and the potential for an up to 25% fall in the stock price today. The stock did open low - yes - down 15% at around $23.50, but at that price, the buyers were ready in mass. Funny how EVERYONE says the stock is finished and going to collapse on the heels of this news, yet the buying at the open was huge. In fact, despite a couple of blips down to this price of $23+, you would have to go back to 1997 or thereabouts to when PFE actually first hit this price.
I think PFE is a long-term buy at these levels, but probably best through its direct stock purchase plan as there are absolutely no fees and the key to this one is long term focus. Close to a 4% dividend yield, less than 11x next year's earnings, $1.75/cash on hand (some say to more aggressively purchase shares and to potentially raise the dividend), and over $17B in operating free cash flow.
Of course, with this, I feel even better about my decision to buy MRK over PFE, although the experts said PFE was the better buy. You can see my blog on this from October 13, 2006 (when I went up 1-0) and the original blog on September 5, 2006 (when the article came out and my discussion points).
Regardless, I see this dip as an opportunity to enter into PFE and start accumulating a stake for myself and my daughters. This is certainly a long term one that you want to put a chunk of money in every month or even once a year (Dogs of the Dow Theory), re-invest the dividends, and then just commit to fund your position every year.
Regardless, look for PFE to return to $28 within 6 months - on to other updates.
INFT - At Last We Will Reveal Ourselves to the Jedi
Well, I can see nobody jumped on the announcement and bought any INFT before I bought today. I know this because my trade was the first of the day. I picked some up at $3.69 and $3.70 and it closed at $3.72. I suppose it didn't really bounce up all that much as I thought it had the chance to, but that is a good thing. This provides more time to acquire shares at these levels. In all honesty, it probably will not move up much until 2007 sometime - we may even seen it decline some as we plow through the usual December tax selling. I will strategically and incrementally add to my position during this time.
SEB - Breaking $1,700 - We're Gonna Need a Bigger Boat
Another banner day for SEB - closing at $1,715, up 2.7%. Of course, I wish I bought more at $1,290 when I first blogged on it and I really wish I first bought when it was at $1,200 when I first started looking at it - but, better to wish you bought more than wish you bought less. So, with that being said, I grabbed the sack and picked up a little more today at $1,703.89. The fundamentals for SEB are making it look outrageously cheap from a long term standpoint and there continues to be heavy buying of shares out in the marketplace. Of course, there are shares for sale, but someone is buying them away. Rumor has it that it is the company that is doing so or value investors. I still think SEB is a $2,000+ stock by the end of 2007 and possibly as much as $3,000-$3,500 per share over the next 3-5 years. So, if it gets there, I'll wish I bought more, of course, but I'll feel better knowing I could have had even less than if I didn't pull the trigger at these levels. It probably was not the wisest move to buy near the upper end of the day's range on a very strong day, but I think in the end, I'll be glad I bought some more.
NBG - More Value at $9.20 - BORK! BORK! BORK!
NBG had a tough day down 1.8% to $9.15. I purchased some more last week between $9.26-$9.32, which was well off from its $9.60 highs. The pull back was not at all unexpected following the earnings announcement (buy on rumors, sell on news) and a welcome one. I might look to pick up a little more tomorrow. From a present day value, with the stock at $9.60, analysts said it was 'inline' with its peer group. So, that fact alone should make it a screaming buy at $9.15. Plus, NBG is assembling a massive growth strategy like no other bank in their region. It will be a couple of years before we see the real value from their acquisitions take hold - perhaps even longer - but this is still a $15-$20 stock or has a very viable chance to be within the next 12-24 months.
Thursday, November 30, 2006
ASTE - The End of the Road
It is a very bittersweet day - I have officially closed out my position in ASTE - exiting with approximately a 45% gain over the course of 10 weeks. It is always difficult to part with your winners - there is always the fear that they will go higher and that you will miss the boat on it. However, you have to keep your strategy in check. When I originally purchased ASTE back in September, the vision was a rebound into the mid 30s range after getting whacked down 50%+ following an excellent earnings report that did not meet Wall Street expectations. My September 5, 2006 blog highlighting ASTE at $24.71 discusses this. So, it's time to move on.
My reasoning is as follows. First, it hit my short-term target of the mid $30s. Also, although prospects for the company remain strong and ASTE could very well continue its upward trend, it appears that the current trend is running out of gas. $35+ has been challenged a couple of times, but on relatively light volume - at least compared to what brought it up to $30+.
Additionally, the downside seems to be more of a risk, especially now that the market is expecting ASTE to overperform in the 4th Quarter 2006 as that information was disclosed in the conference call regarding 3Q 2006 numbers. Basically, the bulk of the potential upside to a strong 4th Q may already be priced in.
So, now with ASTE gone, I need to find another position to fill up my day and replace ASTE in the portfolio. I will also be evaluating how I would like to use the principal and proceeds from this trade to strengthen my positions in NBG, INFT, ASHG, and possibly SEB. NBG looks very attractive right now after it reported strong earnings and is down 3.5% on the news - buy on rumors, sell on news as they say.
My reasoning is as follows. First, it hit my short-term target of the mid $30s. Also, although prospects for the company remain strong and ASTE could very well continue its upward trend, it appears that the current trend is running out of gas. $35+ has been challenged a couple of times, but on relatively light volume - at least compared to what brought it up to $30+.
Additionally, the downside seems to be more of a risk, especially now that the market is expecting ASTE to overperform in the 4th Quarter 2006 as that information was disclosed in the conference call regarding 3Q 2006 numbers. Basically, the bulk of the potential upside to a strong 4th Q may already be priced in.
So, now with ASTE gone, I need to find another position to fill up my day and replace ASTE in the portfolio. I will also be evaluating how I would like to use the principal and proceeds from this trade to strengthen my positions in NBG, INFT, ASHG, and possibly SEB. NBG looks very attractive right now after it reported strong earnings and is down 3.5% on the news - buy on rumors, sell on news as they say.
Saturday, November 4, 2006
SEB - Hits $1,540. ASTE and INFT updates.
Who bought SEB when I told everyone too when it was at $1,290? Anyone? Anyone? Bueller? Bueller? Didn't think so....biggest crickets.
I initially suggested that SEB would hit $1,500 by the end of the year...I lied. It did it Friday, Nov. 3. Today, SEB closed at $1,540 per share...up 19.3% from my mention. Well, too bad for me I bought some when I announced it :-). Anyway, solid company and reported solid financials, again. Nothing spectacular in terms of growth, but SEB is just producing a lot of cash and appears to be grossly undervalued trading at less than 7 times earnings. This really is a $3,000+ per share stock. It will take patience though - maybe 2-3 years. I hope I can buy some more.
ASTE has been relatively flat and has been somewhat soft since it's huge run up to $33.99 intraday. It has trickled down, but after a so-so trading day, it closed strong at $31.69 (up $0.18). Right now, we are seeing a natural breather following the very aggressive run up and probably some profit taking on valuation and just stock timing. 2 items to consider with ASTE: (1) the cup and handle; (2) trade shows and Don Brock's retirement.
1. CUP AND HANDLE
A pattern on bar charts resembling a cup with a handle. The cup is in the shape of a "U" and the handle has a slight downward drift. The right-hand side of the pattern has lowtrading volume. It can be as short as seven weeks and as long as 65 weeks. As the stock comes up to test the old highs, the stock will incur selling pressure by the people who bought at or near the old high. This selling pressure will make the stock price trade sideways with a tendency towards a downtrend for four days to four weeks... then it takes off. The chart on ASTE is showing just that formation. I think we will see another strong upward move in the next 6-10 weeks and it might take it closer to $37-$38, my personal price target for it. Unfortunately, it is not a perfect U shape - the closer it is to the U shape the better, but the technicals are lining up that way. No promises.
2. ASTE INVESTOR SHOWS & DON BROCK
ASTE was founded by Dr. Don Brock, 67, who remains the company's CEO today. He is also a significant shareholder with 11% of the company. ASTE recently announced their attendance at an investor show. I would not be surprised to see ASTE pursuing suitors in light of his possible retirement. This is pure speculation, but he may be ready to diversify and have an exit strategy for his estate and 'golden' years. A fair purchase price for ASTE would probably be in the $38-$48 range; probably closer to the lower end of the spectrum. It appears that ASTE may be on the path to considering offers.
Inforte (NASDAQ: INFT) has not moved much. In fact, it has actually come down some, but there appears to be a lot of buyers ready in the $3.92-$4.02 range. I took the opportunity of INFT falling to $3.90 today and purchased a little more. I hope it makes me look like I made a good decision.
NBG, which I raised my buy everything you can price limit to $9.50 almost crossed that threshold this week by touching $9.40. NBG closed today at $9.23. It is still a good buy under $9.50 and I believe we will see $11 by the spring of 2007.
I initially suggested that SEB would hit $1,500 by the end of the year...I lied. It did it Friday, Nov. 3. Today, SEB closed at $1,540 per share...up 19.3% from my mention. Well, too bad for me I bought some when I announced it :-). Anyway, solid company and reported solid financials, again. Nothing spectacular in terms of growth, but SEB is just producing a lot of cash and appears to be grossly undervalued trading at less than 7 times earnings. This really is a $3,000+ per share stock. It will take patience though - maybe 2-3 years. I hope I can buy some more.
ASTE has been relatively flat and has been somewhat soft since it's huge run up to $33.99 intraday. It has trickled down, but after a so-so trading day, it closed strong at $31.69 (up $0.18). Right now, we are seeing a natural breather following the very aggressive run up and probably some profit taking on valuation and just stock timing. 2 items to consider with ASTE: (1) the cup and handle; (2) trade shows and Don Brock's retirement.
1. CUP AND HANDLE
A pattern on bar charts resembling a cup with a handle. The cup is in the shape of a "U" and the handle has a slight downward drift. The right-hand side of the pattern has lowtrading volume. It can be as short as seven weeks and as long as 65 weeks. As the stock comes up to test the old highs, the stock will incur selling pressure by the people who bought at or near the old high. This selling pressure will make the stock price trade sideways with a tendency towards a downtrend for four days to four weeks... then it takes off. The chart on ASTE is showing just that formation. I think we will see another strong upward move in the next 6-10 weeks and it might take it closer to $37-$38, my personal price target for it. Unfortunately, it is not a perfect U shape - the closer it is to the U shape the better, but the technicals are lining up that way. No promises.
2. ASTE INVESTOR SHOWS & DON BROCK
ASTE was founded by Dr. Don Brock, 67, who remains the company's CEO today. He is also a significant shareholder with 11% of the company. ASTE recently announced their attendance at an investor show. I would not be surprised to see ASTE pursuing suitors in light of his possible retirement. This is pure speculation, but he may be ready to diversify and have an exit strategy for his estate and 'golden' years. A fair purchase price for ASTE would probably be in the $38-$48 range; probably closer to the lower end of the spectrum. It appears that ASTE may be on the path to considering offers.
Inforte (NASDAQ: INFT) has not moved much. In fact, it has actually come down some, but there appears to be a lot of buyers ready in the $3.92-$4.02 range. I took the opportunity of INFT falling to $3.90 today and purchased a little more. I hope it makes me look like I made a good decision.
NBG, which I raised my buy everything you can price limit to $9.50 almost crossed that threshold this week by touching $9.40. NBG closed today at $9.23. It is still a good buy under $9.50 and I believe we will see $11 by the spring of 2007.
Friday, October 6, 2006
Inforte (NASDAQ: INFT) - $3.98
Inforte (NASDAQ: INFT) is currently trading at $3.98/share, which is awfully close to it's 52-week low of $3.68.
Inforte provides business consulting, strategy, and analytics services and their web site is http://www.inforte.com/. This company went public back in 2000 at $32 per share and then went up as high as $80 or so back in the Internet craze days.
The company then traded in the $6-$7 range and then crept back up to $13 in 2002-2003. I know this because back at Stetson when I was in the Roland George Investment Program, this was my pick that I discovered and had to present to the program's other students and board of directors to purchase. I cited their profitability, lack of debt, etc. and the fund picked up 40,000 shares or so around $7-$7.25 and then sold out about a year later at $13.
I also suggested Stamps.com (NASDAQ: STMP) at $3.50 in the same presentation, but that pick was rejected. STMP hit $30+ earlier this year. Too bad I didn't buy any of that one myself.
Anyway, here is Inforte's deal, in my opinion.
The company's business prospects and revenue have slowed, but they have been improving their newly developed customer analyltics line. Analytics is basically using data to track business trends and help make better decisions. Inforte is moving in this direction and has had some success. However, while this is all good, I do not believe this is the factor that will lead them to do well. Although, I do believe that they will improve their revenue and profitability, but we will not see that for 9-12 months.
A going private or acquisition transaction would be a more likely event that would return greater value to the shareholders, and I see that happening in the $7-$8 range. Perhaps as high as $12, but I think $7-$8 is more realistic.
Here is why
1. The company has $2.52/share in cash and $0 debt. The cash alone is about 65% of their stock value. Additionally, the interest on the cash alone will be sufficient to generate postive cash flow for the company. even in the event they do suffer a loss (which is possible for the subsequent quarters). The additional cash should help build this cash stash and make for even a more attractive valuation at $4.
2. The company is trading at 1.1 tim
es sales (a buyout would likely yield at least a 2.0-2.5 times sales valuation, meaning basically double the stock price)
3. The company is trading at 0.88 times book value. This is also attractive. Basically, right now, the book value alonesuggests that the company is worth at least $4.50 per share. Basically, meaning, if you purchase for $4 it is worth at least $4.50 on paper.
4. Institutional purchasing is up since the last quarter, with over 650,000 shares being purchased, or about 5% of the total shares outstanding.
5. The company has put aside about $5M for a stock re-purchase that has already been authorized. The company has said they will wait for the right time to play this card and repurchase shares on the open market. In the past, they got badly burned buying shares back on the open market, so they are more cautious this time around. However, when the time comes, we may very likely see an additional 800,000-1.2M shares, or about 10% of the shares outstanding, repurchased on the open market.
I think this is a great buy now and should be accumulated at any price under $4.50 - at least, that is what I plan to do. This should be an easy 50%-100% gain within the next 12-18 months.
Inforte provides business consulting, strategy, and analytics services and their web site is http://www.inforte.com/. This company went public back in 2000 at $32 per share and then went up as high as $80 or so back in the Internet craze days.
The company then traded in the $6-$7 range and then crept back up to $13 in 2002-2003. I know this because back at Stetson when I was in the Roland George Investment Program, this was my pick that I discovered and had to present to the program's other students and board of directors to purchase. I cited their profitability, lack of debt, etc. and the fund picked up 40,000 shares or so around $7-$7.25 and then sold out about a year later at $13.
I also suggested Stamps.com (NASDAQ: STMP) at $3.50 in the same presentation, but that pick was rejected. STMP hit $30+ earlier this year. Too bad I didn't buy any of that one myself.
Anyway, here is Inforte's deal, in my opinion.
The company's business prospects and revenue have slowed, but they have been improving their newly developed customer analyltics line. Analytics is basically using data to track business trends and help make better decisions. Inforte is moving in this direction and has had some success. However, while this is all good, I do not believe this is the factor that will lead them to do well. Although, I do believe that they will improve their revenue and profitability, but we will not see that for 9-12 months.
A going private or acquisition transaction would be a more likely event that would return greater value to the shareholders, and I see that happening in the $7-$8 range. Perhaps as high as $12, but I think $7-$8 is more realistic.
Here is why
1. The company has $2.52/share in cash and $0 debt. The cash alone is about 65% of their stock value. Additionally, the interest on the cash alone will be sufficient to generate postive cash flow for the company. even in the event they do suffer a loss (which is possible for the subsequent quarters). The additional cash should help build this cash stash and make for even a more attractive valuation at $4.
2. The company is trading at 1.1 tim
es sales (a buyout would likely yield at least a 2.0-2.5 times sales valuation, meaning basically double the stock price)
3. The company is trading at 0.88 times book value. This is also attractive. Basically, right now, the book value alonesuggests that the company is worth at least $4.50 per share. Basically, meaning, if you purchase for $4 it is worth at least $4.50 on paper.
4. Institutional purchasing is up since the last quarter, with over 650,000 shares being purchased, or about 5% of the total shares outstanding.
5. The company has put aside about $5M for a stock re-purchase that has already been authorized. The company has said they will wait for the right time to play this card and repurchase shares on the open market. In the past, they got badly burned buying shares back on the open market, so they are more cautious this time around. However, when the time comes, we may very likely see an additional 800,000-1.2M shares, or about 10% of the shares outstanding, repurchased on the open market.
I think this is a great buy now and should be accumulated at any price under $4.50 - at least, that is what I plan to do. This should be an easy 50%-100% gain within the next 12-18 months.
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