I am struggling to find good investment opportunities. As such, my cash levels have been rising, as I have continued to sell companies that have risen to levels that are near my estimates of their fair values. One recent example is Biorem (TSXV:BRM, Financial), a stock I discussed as a potential value investment five years ago.
Shares remained range-bound for years while the company continued to deliver reasonable returns on its capital, and very good returns on its share price. But in the last few months, the share price basically doubled. I still like the company, but it's at a point now where I'd rather have the cash in hand than the stock when it trades at these levels.
My one disappointment with the company has been the lack of return (i.e. opportunity cost) of its cash holdings. Biorem has built up a lot of cash over the last few years. The company would be worth much more if they had done something productive with it. They could have repurchased shares when they were cheap, made a strategic acquistion, or even paid some out to shareholders. The cash balance is still there though, so it will probably play a big role in what happens to the stock in the future.
Disclosure: No position.
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