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Paul Sonkin on Finding Micro-Cap Value: Steinway Musical Instruments Inc., Fortress International Group Inc., and Rand Logistics Inc.

December 19, 2009 | About:
(GuruFocus, December 19, 2009) Paul Sonkin, a former student of Columbia University’s value investing program, is very well regarded in the value investing world. He now also teaches at Columbia University.

Sonkin has since founded hedge fund Hummingbird Value Fund. He finds value in so called “micro-cap” arena. In his owns words “we fish deep, we fish alone”. Back in August, 2009, Sonkin was interviewed by Forbes’ Robert Lenzner, discussing his investment style. Sonkin thinks finding value among the micro-cap gives him an informational advantage as sell-side analysts typically do not cover those companies.

Sonkin named three companies that he liked at the time: Steinway Musical Instruments Inc.(LVB), Fortress International Group Inc. (FIGI), and Rand Logistics Inc. (RLOG)

Here is a brief survey of these companies:

Steinway Musical Instruments Inc. (LVB)

Steinway Musical Instrum., through its Steinway and Selmer subsidiaries, is one of the world's leading manufacturers of musical instruments. Steinway produces high quality pianos and has one of the most widely recognized and prestigious brand names. Selmer is one of the leading domestic manufacturers of band and orchestral instruments and related accessories, including a complete line of brasswind, woodwind, percussion and stringed instruments. Steinway Musical Instruments Inc. LVB has a market cap of $129.3 million; its shares were traded at around $15.16 with a P/E ratio of 54.2 and P/S ratio of 0.3. Steinway Musical Instruments Inc. Ordina had an annual average earning growth of 1.3% over the past 5 years.

Buy:: Pres, Steinway & Sons Americas Ronald Losby bought 5,000 shares of LVB stock on 09/02/2009 at the average price of 11.08, the price of the stock has increased by 36.82% since.

Fortress International Group Inc. (FIGI)

Fortress International Group Inc. formerly Fortress America Acquisition Corporation, was formed and organized as a blank check company. In June 2005 FIGI successfully completed an initial public offering and raised $48 million for the purpose of acquiring an operating business that performed services to the homeland security industry. FIGI was successful completing its first acquisition of two companies, Total Site Solutions Inc. and Vortech LLC. Both companies operated in tandem and specialize in the design, construction and maintenance of mission critical facilities for both government clients as well as private industry. Fortress International Group Inc. has a market cap of $8.2 million; its shares were traded at around $0.64 with and P/S ratio of 0.1.

Rand Logistics Inc. (RLOG)

RAND LOGISTICS, INC. is a leading provider of bulk freight shipping services throughout the Great Lakes region. Rand Logistics Inc. has a market cap of $39.7 million; its shares were traded at around $3.04 with and P/S ratio of 0.3.

Recently, Buy:: CEO Laurence S Levy bought 30,000 shares of RLOG stock on 09/09/2009 at the average price of 3.15; Buy:: President Edward Levy bought 5,000 shares of RLOG stock on 12/01/2009 at the average price of 3.10; he bought 10,200 shares on 11/25/2009, and 8,000 shares back in August; Buy:: 10% Owner Llc Ramius bought 213,207 shares of RLOG stock on 09/22/2009 at the average price of 3.00 Buy:: 10% Owner C4s & Co LLC bought 213,207 shares of RLOG stock on 09/22/2009 at the average price of 3, the price of the stock has increased by 1.33% since.

About the author:

Ravi Nagarajan is a private investor and Editor of The Rational Walk website. Ravi focuses on applying value investing techniques to find securities trading well below intrinsic business value. Ravi has over 15 years of experience in the financial markets and started investing on a full time basis in 2009. From 1996 to 2009, Ravi held a number of technical and executive level positions in the commercial software industry. Ravi graduated Summa Cum Laude from Santa Clara University with a degree in finance. Visit his website The Rational Walk

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