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Jae Jun
Jae Jun
Articles (5983)  | Author's Website |

Global Sources LTD and Heidrick & Struggles International: Negative Enterprise Value Screen for Net Nets:

I was reading a post by Magic Diligence on Why and How to Use Enterprise Value in Evaluating Stocks and realized I could find companies trading at less than cash per share quite quickly. By searching for companies with negative enterprise values, the screen would also ensure that the companies have manageable debt as well as the business being non capital intensive e.g. airlines and oil industry. Add in a couple of extra criterias such as an enterprise value/revenue < than 1 and a ROE of > 0 to try and filter out unduly cheap companies.

You can run the screen yourself at Yahoo.

Screen & Results

The screen criterias are:

Enterprise value <= 25m

Enterprise value/Revenue <= 1

ROE >= 0

From the results, there were two that stood out.

Global Sources LTD (NASDAQ:GSOL)

Global Sources Ltd. is a business-to-business (B2B) media company that provides information and integrated marketing services, with a particular focus on the Chinese market. Buyers rely on the Company’s media to stay up to date with available purchasing opportunities. Suppliers use its media to find new buyers and markets for their products. Suppliers using the Company’s four primary channels: online marketplaces, print magazines, trade shows and direct online sales, are supported by its advertising creative services, education programs and online content management applications.

Current Price: $3.67

Cash per share: approx $3.55 (according to Yahoo)

Other Quick Points:

FCF positive

Recently completed a tender process at $8 per share

Impressive margins and performance metrics

Heidrick & Struggles International (NASDAQ:HSII)

Heidrick & Struggles International, Inc. (Heidrick & Struggles) is a provider of executive search and leadership consulting services. The Company helps its clients build leadership teams by facilitating the recruitment, management and deployment of senior executives for their executive management and board positions. In addition to executive search, Heidrick & Struggles provides a range of leadership consulting services to clients.

Current Price: $14.33

Cash per share: $14.03

Other Quick Points:

FCF positive for past 3 years

Fair value somewhere around $20-$30

Other Results

These companies are not trading at negative enterprise values but are very close.

Tandy Leather (NASDAQ:TLF)

Horsehead Holding (ZINC) - One of Pabrai’s holdings

Tuesday Morning (NASDAQ:TUES)

Build a Bear Workshop (NYSE:BBW)

DivX Inc (DIVX)


No holdings at time of writing

Jae Jun

Old School Value

About the author:

Jae Jun
Jae Jun is the author of Old School Value, a value investing blog dedicated to the Old School methodologies and teachings of the investment greats such as Graham, Buffett and Fisher. The blog deals with finding intrinsic value, fundamental stock analysis and special situations including spinoffs and merger arbitrage.

Visit Jae Jun's Website

Rating: 3.8/5 (12 votes)


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GuruFocus has detected 3 Warning Signs with Global Sources Ltd $GSOL.
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