There are some investors who purchase stocks that are trading below their liquidation value because they believe they can make gains out of their investments after the market has reassessed the share prices up to a value near or above the liquidation value in the short term. In theory, shareholders will still be able to earn a profit from the liquidation should the business fail.
The liquidation value of these so-called net-net working capital stocks is computed as "cash and short-term investments plus 75% of accounts receivable plus 50% of inventory, minus total liabilities."
Here are some results of my research for stocks whose share prices are trading below their net-net working capital.
The first stock short-term investors may be interested in is CCUR Holdings Inc. (CCUR, Financial), a Duluth, Georgia-based provider of advances on future merchant receivables and a manager of a portfolio of real estate operations to develop.
The stock traded at a price of $3.09 per share at close on Friday, standing nearly 22% below the net-net working capital of $3.96.
GuruFocus assigned a score of 8 out of 10 to the company's financial strength rating and a score of 2 out of 10 to its profitability rating.
As a result of an 11.7% decline over the past year, the stock has a market capitalization of $27.82 million and a 52-week range of $2.9 to $5.
One analyst on Wall Street issued a hold recommendation rating for this stock.
The second stock short-term investors may want to consider is GigaMedia Ltd. (GIGM, Financial), a Taiwanese provider of digital recreational services through a portal operating in Taiwan and Hong Kong.
The stock traded at a price of $2.85 per share at close on Friday, which is nearly 41% below the net-net working capital of $4.81.
The company holds a GuruFocus financial strength rating of 10 out of 10 and a profitability rating of 2 out of 10.
After a 20.8% increase over the past year, the stock has a market capitalization of $31.5 million and a 52-week range of $1.91 to $3.75.
The company's top fund holder is Morgan Stanley with 2.72% of shares outstanding. It is followed by JBF Capital Inc. with 0.51% and Acadian Asset Management LLC with 0.45% of shares outstanding.
One analyst on Wall Street has recommended a hold rating for this stock.
Happiness Biotech Group
The third stock short-term investors may want to consider is Happiness Biotech Group Ltd. (HAPP, Financial), a Chinese health care manufacturer and seller of functional food and dietary supplement products.
The stock traded at a price of $1.96 per share at close on Friday, which is about 5.3% below the net-net working capital of $2.07.
GuruFocus assigned a score of 9 out of 10 to the company's financial strength and a score of 5 out of 10 to its profitability.
Following a 56.44% decrease in the share price over the past year, the market capitalization is now $49 million, and the 52-week range is $1.9 to $6.1.
One sell-side analyst on Wall Street has recommended a buy rating for this stock.
Jim Simons is the leader amid the company's top fund holders as he owns 0.71% of shares outstanding. The investor is followed by Marshall Wace LLP with 0.25% and Virtu Financial LLC with 0.07% of shares outstanding.
Disclosure: I have no positions in any securities mentioned.
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