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March 2013 Ben Graham Net-Net Newsletter: Management is intent on returning shareholder value with this British net-net

March 03, 2013
gurugk

GuruFocus

370 followers
The Ben Graham: Net-Net Newsletter’s March 2013’s pick was hit by an industry wide downturn and is trading as if it has no hope. Yet despite pricing pressure the company has found ways to generate cash flow. Management is focused on returning cash to shareholders and is open to liquidating portions of the business.

The newsletter is ready for download for GuruFocus Premium Members. If you are not a Premium Member, you are invited for a Free 7-Day Trial.

The Ben Graham: Net-Net Newsletter’s March 2013 pick is a global OEM hard drive manufacturer.

This month’s pick:

1. The company trades at 66.7% of NCAV.

2. The company had been profitable up until a supply glut pushed them into a loss-making position.

3. Management appears to be capable operators and stated they expect to return cash to shareholders in Q2 2013.

4. The company has €124m in cash, against a market cap of €54.7m.

5. Management expects the company to operate at breakeven in 2013, and be cash flow neutral.

6. The company is pursuing payment from two customers who owe for delivery under contract. It is unknown if a recovery is possible, but it could be a sweetener to the investment.

Download your copy of the Ben Graham: Net-Net Newsletter today

“It always seemed, and still seems, ridiculously simple to say that if one can acquire a diversified group of stocks at a price less than the applicable net current assets alone...the results should be quite satisfactory. They were so, in our experience, for more than 30 years.”- Ben Graham

What’s a Net-Net?

A net current asset value bargain—or net-net—is a stock selling for less than the value of its current assets—cash, receivables, and inventory—minus all liabilities. Basically, it’s a stock selling for less than its liquidation value.

What’s the Ben Graham: Net-Net Newsletter?

GuruFocus’s Ben Graham: Net-Net Newsletter is written by Nate Tobik. It picks one new net-net every month. The newsletter goes out to subscribers on the first Friday of the month. The newsletter looks for stocks that have both a tangible margin of safety and reasonable upside potential.

So, get your copy of the Ben Graham: Net-Net Newsletter today.


Rating: 3.2/5 (6 votes)

Comments

batbeer2
Batbeer2 premium member - 1 year ago
Hi Gordon,

I'm having some problems.

1) I get an error trying to open this letter (pdf) on my apple. Older issues are fine.

2) The link embedded within:

"GuruFocus’s Ben Graham: Net-Net Newsletter is written by Nate Tobik."

works fine but it's not this month's issue.

soule45
Soule45 premium member - 1 year ago
I can confirm Batbeer post......PDF appears to be corrupted or defective. Cannot download. Thx
gurufocus
Gurufocus premium member - 1 year ago
The author is still Nate Tobik.

The link has been fixed.
batbeer2
Batbeer2 premium member - 1 year ago
Thanks!
cor7997
Cor7997 premium member - 1 year ago
Hi, I'm having some issues regarding the list of BUY stocks in your last Net Current Asset Bargains.

You mention IMN @ 48.07% price/ncav but looking at the last 10k I see:

Cash and cash equivalents 108.7

Accounts receivable, net 220.8

Inventories 166

Total liabilities 393.1

and so 357 - 393 return a negative NCAV. Where am I wrong?
gurufocus
Gurufocus premium member - 1 year ago
Hi Cor7997,

this is the response from the Author of the newsletter:

Thanks for the email, for my information in the last newsletter I had used the 10-Q filed in November, the most recent information at the time. As of then they had a NCAV of 285m, and their market cap at the time of writing the newsletter was 137m. I divided the 137/285 to get 48.07%.

I looked at the 10-K filed recently and it does look like NCAV has decreased some, but not to the level you are showing. Total current assets are 557m, subtract out all liabilities of 393 and NCAV equals 164m. The company is trading at 157m, so they're at a slight discount to NCAV currently."

Please leave your comment:


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