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Monday, January 19

Year Ending 2014; Cannibals, Declining Stock Price, Financially Sound, Micro Cap


The goal, find the best stocks based on percentage reduction of outstanding share count comparing the MRQ to the prior year. Stocks with positive 52 week stock price returns, weak financial statement removed. The filter runs for micro cap stocks. 

The following may be worth a closer look














Click for quotes on the stocks above



AETI: “American Electric Technologies is a provider of power delivery solutions to the energy industry. The Company is comprised of three segments: TP&S, E&I and AAT”: Morningstar

AETI, notable value attributes;
Historically cheap valuations based on revenue and book value.
Improving book value per share, Book value per share  2011 = 2.55 Book value per share MRQ = 2.84

PRICE 2011 = 5.08  PRICE 01/20/15 = 4.66

Ariel Investments, John Rogers owns 18.58% purchased at prices greater than current price.

Market Cap: 38.18M , Enterprise Value: 37.73M
Enterprise Value/Revenue: 0.57
Qtrly Revenue Growth (yoy): -12.00%
52-Week Change:   -57.78%
52-Week High:11.19 , 52-Week Low:  4.50
Shares Outstanding: 8.18M , Float:  4.93M
% Held by Insiders:58.56% , % Held by Institutions: 13.30%
Short % of Float : 1.30%

To be continued/completed during the week. 

Sunday, January 4

Ugly 2014 Performance Contributing to 2015 Mean Reverting Candidates

Stocks covered in this post; CTCM,CTG,EPAX,COH,NTP

Before today's post, a quick comment on last week’s mention of Karnalyte Resources. (KRN.TO/ KRLTFStock Trades at 19% of BV and 46% Net Cash


Friday (01/03/15) Karnalyte Resources announced DISCUSSIONS obtaining 700 Million USD financing for the development of Wynyard Carnallite-Sylvite Project. The news should positively impact price; KRN.TO was up 17.50% on Friday. KRLTF changed 12.31%, 10% below the converted exchange rate for Canadian Dollars to USD.


Uncertainty is the major concern. Management’s lack of transparency and dissident shareholder requisition hold back the stock price. Details clarifying the loan’s impact on capital structure; after the price should move higher. A major concern, financing has a lead Indian Bank and would flow through a syndication of other banks. India’s Gujarat State Fertilizers has a 19% stake in the company.


Now today's post. The search started by reviewing all US exchanges;NYSE,AMEX,NAS,OTCBB, OTCPK, about 12,000 listed companies. The universe reduced by selecting the bottom 25% based on stock price returns. The worst or bottom 25% 2014 returns filtered based on financial soundness. Metrics used Z score, Sloan and Beneish to remove companies with possibility of near term bankruptcy or earnings manipulation.Stocks included, Z scores greater than 2.99, adequate interest coverage, and general financial soundness.Further, include only stocks reducing share count from 2011 to MRQ, TTM and debt reducers over the same periods coupled with historical and industry low valuations.


Ideas meeting the criteria and analyzed further are worth a closer look.

CTC Media, Inc (CTCM)

“CTC Media, Inc., is a media company, which operates three Russian television networks CTC, its flagship network, Domashny and DTV”. Morningstar

Mean reverting attributes, 
52 Week Change = -64.19%, 
LTD reduction 39.19M for 2011 to MRQ 14.19M.
Share count reduction 157.23M 2011 to MRQ 155.76M,
EV/Rev = 0.75 trailing dividend yield = 14.20%
% Held by Insiders:63.92%, 
Price near 5 years low coupled with 5 yearlow for P/S and P/B, positive FCF, Z score 4.92
Month end stock price Dec 2011 = 8.77, Dec 2012 = 7.88, Dec 2013 = 13.90, Jun 2014 = 11.05, Price = 4.87 on 01/02/14.


Market Cap: 758.56M , Enterprise Value:    593.95M





















Computer Task Group Inc(CTG)

"Computer Task Group, Inc., is an IT solutions and staffing services company with operations in North America and Europe. The Company's geographical area of operation includes North America and Europe." Morningstar

CTG mentioned in a prior post, November 2014, “Mean Reverting Candidates, Financially Strong”. CTG was $8.80 on post date. Today it sits at $9.53 (01/02/15) still a strong mean reverting candidate for 2015.




Market Cap: 176.65M , Enterprise Value: 128.75M
Trailing P/E: 12.22 , Price/Sales: 0.44
Price/Book:1.52 , Enterprise Value/Revenue:  0.32
Enterprise Value/EBITDA (ttm): 5.50
Profit Margin (ttm):   3.23% , Operating Margin (ttm): 5.43%
Return on Assets (ttm): 8.15% , Return on Equity (ttm): 11.36%
Revenue (ttm):  397.74M , Revenue Per Share (ttm):    26.32
Qtrly Revenue Growth (yoy):  -3.90%
Gross Profit (ttm):   88.71M , EBITDA (ttm):  23.43M
Total Cash (mrq): 28.26M , Total Cash Per Share (mrq):  1.52
Total Debt (mrq):  0.00 , Current Ratio (mrq):    2.80
Book Value Per Share (mrq):  6.24
Operating Cash Flow (ttm): 9.21M per share = .50,
Free Cash Flow (ttm): 10.71M per share = .57
52-Week Change: -47.81%
52-Week High:19.02 , 52-Week Low:8.15
Shares Outstanding: 18.54M , Float:  12.97M
% Held by Insiders:32.95% , % Held by Institutions: 58.10%
Short % of Float (as of Nov 28, 2014): 4.00%

Trailing Annual Dividend Yield:      2.50%


Ambassadors Group Inc. (EPAX)

"Ambassadors Group Inc is a socially conscious educational company mainly engaged in organizing and promoting differentiated travel programs for students and professionals." Morningstar


















Market Cap: 43.46M , Enterprise Value:   -9.81M
Price/Sales (ttm):    0.99 , Price/Book (mrq):    0.90
Qtrly Revenue Growth (yoy):     -21.80%
Gross Profit (ttm): 43.64M ,  EBITDA (ttm):  1.17M
Total Cash (mrq):47.14M , Total Cash Per Share (mrq):   2.77
Total Debt (mrq):0.00 , Current Ratio (mrq):    3.54
Book Value Per Share (mrq): 2.79
Operating Cash Flow (ttm):3.79M , Free Cash Flow (ttm):   -3.46M
52-Week Change:-46.65%
52-Week High:  5.27 , 52-Week Low:2.14
Shares Outstanding: 17.04M , Float:  11.17M
% Held by Insiders:22.04% , % Held by Institutions:   47.30%
5 Year Average Dividend Yield: 4.00%




Nam Tai Property Inc. (NTP)

"Nam Tai Property Inc, along with its subsidiaries is an electronics manufacturing and design services provider to OEMs of telecommunication and consumer electronic products. The Company manufactures electronic components and subassemblies." Morningstar



















Coach, Inc. (COH)

"Coach has developed a narrow economic moat through a brand that enables pricing, sourcing and distribution advantages, and capital efficiency. Despite the company's recent struggles," Morningstar


























Market Cap: 10.28B , Enterprise Value:   8.76B
Price/Sales (ttm): 2.21 , Price/Book (mrq): 4.24
Enterprise Value/Revenue (ttm):  1.87
Enterprise Value/EBITDA (ttm): 6.73
Profit Margin (ttm): 14.54% , Operating Margin (ttm): 23.73%
Return on Assets (ttm): 19.45% , Return on Equity (ttm): 28.33%
Revenue (ttm):  4.69B , Revenue Per Share (ttm):    17.00
Qtrly Revenue Growth (yoy): -9.70% ,
Gross Profit (ttm):  3.30B , EBITDA (ttm):  1.30B
Total Cash (mrq):  907.50M , Total Cash Per Share (mrq): 3.29
Total Debt (mrq):170.00M , Total Debt/Equity (mrq): 6.97
Current Ratio (mrq):2.37, Book Value Per Share (mrq):8.85
Operating Cash Flow (ttm):960.21M ,Free Cash Flow (ttm): 705.62M
52-Week Change:-33.21%
52-Week High: 56.64 , 52-Week Low: 32.72
% Held by Insiders:0.91% , % Held by Institutions: 89.30%
Short % of Float :9.70%

Trailing Annual Dividend Yield:3.60% ,5 Year Average Dividend Yield: 2.30%

Friday, December 26

Stock Trades at 19% of BV and 46% Net Cash




The stock mentioned before but continues to be ignored; Karnalyte Resources (KRLTF or KRN.TO).



KRN.TO = .77 CAD on 12/26/14  (note exchange rate if you buy KRLTF and not KRN.TO) 

KRLTF = .66 USD on 12/26/14 (note Canadian to USD exchange rate .862 see latest rate) 12/31/14 KRN.TO last traded at .82 therefore the fair price of KRLTF based on .862 exchange rate would be .706. Dont pay more than the more liquid KRN.TO price converted to USD using current exchange rates. 


Company Description;
Karnalyte intends to explore and develop high quality agricultural and industrial potash and magnesium products.  Once financing is obtained for potash plant construction, Karnalyte plans to operate a solution mining facility that will initially produce 625,000 tonnes of potash per year, increasing to 2.125 million tonnes of potash per year. Karnalyte owns a 100% interest in Subsurface Permit KP 360A and Subsurface Mineral Lease KLSA-010 located near Wynyard, Saskatchewan , comprising a total of 85,126 acres.


Catalysts Summary:

1)Margin of safety, Net Cash of 1.54CND versus a market price of KRN.TO at .77CND or KRLTF =  .66USD.
2)Activist campaign started December 2014 by founder, former CEO (retired May 2014), and largest shareholder.
3)Gujarat StateFertilizers invested 44.74M for a 19.8% stake in Karnalyte. This private placement occurred January 2013 for a per share price of 8.15 Canadian Dollars.Note difference in current price versus price invested by Gujarat State Fertilizer at 8.15.
4)Book value per share of 3.41USD versus price of .66 (KRLTF).
5)Karnalyte trades at 5 years low, mean reversion candidate.
6) Karnalyte owns a 100% interest in Subsurface Permit KP 360A and Subsurface Mineral Lease KLSA-010 located near Wynyard, Saskatchewan , comprising a total of 85,126 acres.

Catalysts; 
Activist campaign started with a letter dated 12/23/14 by the largest shareholder and former CEO. Robin Pinny, founder of Karnalyte and former CEO and Director, retired May 2014.Shares owned 4,012,409.



The Concerned Shareholder Group is dismayed and concerned about the following...Lack of leadership, Lack of strategic oversight and direction, Lack of alignment in interests between the board and shareholders.




"Since announcing the formation and aggregate shareholdings of the Concerned Shareholder Group on December 10, 2014, I have reached out to the incumbent board with a view to working together to effect the requested changes to get our Company back on track to building long term shareholder value as quickly as possible.  In response, the incumbent board requested a member of the Concerned Shareholder Group to execute a confidentiality agreement so that the parties can discuss 'important developments at Karnalyte that have not been publicly disclosed'.  As the second largest shareholder in Karnalyte, I was disturbed by this request as Karnalyte is required under securities law and the rules of the Toronto Stock Exchange to publicly disclose material changes and information.  Moreover, as shareholders, we should all be entitled to be informed in a timely manner about important developments at our Company.”


Gujarat StateFertilizers &; Chemicals(GSFC india) invested a 19.8% stake in Karnalytefor 44.7M or 8.15 per share in a private placement, January 2013.


KRLTF (KRN.TO) trades at 5 year low. 
Market Cap: 18.14M ,Enterprise Value: -16.86M

Price/Book (mrq):0.19
Total Cash (mrq):37.47M,Cash Per Share: 1.36
Total Debt (mrq): 0.00 , Current Ratio (mrq):105.08
Book Value Per Share (mrq):3.41
52-Week Change:  -58.49%
52-Week High:1.72 , 52-Week Low: 0.66
Shares Outstanding: 27.48M , Float:  17.38M


Cash per share = 1.36
Equity Per share  = 3.41
Properpty Plant and Equipment Per share = 1.94
Total Assets Per share = 3.45



Long KRLTF


News update 01/02/15: "Karnalyte Resources Inc. Announces Update on Project Financing and Details of Annual General and Special Meeting of Shareholders and Provides Initial Response to the Dissident Shareholders to Set the Record Straight"

"Announced today that (01/02/15) it is in discussions in connection with obtaining financing in a targeted amount of approximately USD $700,000,000 for the development of the Wynyard Carnallite-Sylvite Project. An engagement letter was signed with an Indian financial institution in October, 2014 - well in advance of the recent dissident shareholder requisition - and due diligence and structuring discussions are now under way. The investment capital is expected to come from a syndicate of financial institutions." Continue reading the news release.

Wednesday, December 17

Contrarian, Value, Nano Cap, with December 2014 Insider Buys


Ballantyne Strong, Inc (BTN):“designs, integrates & installs technology solutions for applications; develops & delivers out-of-home messaging, advertising & communications; manufactures projection screens & lighting products; and provides managed services.” Morningstar

Market Cap = 59.59M, Enterprise Value = 34.03M
Current price $4.23, 52 Wk Low = 3.65, 52 High = 5.15
Qtrly Revenue Growth YOY +20.20%
Insider own 10.79%, Book Value = 4.64 per share,
Cash Per Share = 1.71 ,EV/Revenue = .34

BTN has attracted value investors Chuck Royce and John Rogers  

read the following for more analysis on BTN Valuation Ignored by Mr Market posted April 2014
                        
















News;12/26/14: Ballantyne Is a Top Stock Under $10 for 2015: David Peltier  12/26/14 - 11:57 AM EST (TheStreet.com) 


Trans World EntertainmentCorporation (TWMC):Trans World Entertainment Corp is a specialty retailer of entertainment software, including music, video, video games and related products in the United States. Morningstar




Insider purchaser Miller Lloyd has an outstanding track record investing in nano cap value stocks. 

Market Cap: 101.46M , Enterprise Value: 22.13M
Price/Sales0.27 , EV/Revenue: 0.06
Price/Book (mrq): 0.59 , Enterprise Value/EBITDA (ttm): 2.50
Qtrly Revenue Growth (yoy): -9.20%
Cash Per Share: 2.61 , Book Value Per Share: 5.33
52-Week Change:-23.93%
Shares Outstanding: 31.61M , Float:  9.44M
% Held by Insider:64.58% , % Held by Institutions:24.30%
Trailing Annual Dividend Yield: 15.80%
52-Week High: 4.60, 52-Week Low:3.10




Datawatch Corporation (DWCH)Datawatch Corp provides visual data discovery software that optimizes multiple sources and a variety of data that delivers next generation analytics to reveal insights for improving business.Moringstar














17,500 shares were purchased MTD December 17, 2014 at an average price of 8.62 or a total of $150,849.The most recent 2 quarterly results warranted a large drop in price. It sits at 8.36 (12/17/14)off the 52 high of 36 per share. The company missed on internal growth targets of 30% pushing the stock down to its current price of 8.36.Managment is committed to top line 30% internal growth targets. 2015 stock options awards are based on achieving this growth number. Operational changes and personnel additions were made to help achieve these internal targets after its first year in the data discovery software industry. The stock is down -75.37% over the past 52 week.


Market Cap: 92.68M , Enterprise Value: 47.89M
Price/Book:1.02 , Enterprise Value/Revenue:   1.37
Revenue (ttm):35.09M  Revenue Per Share (ttm):  3.51
Qtrly Revenue Growth (yoy): 2.60% , Gross Profit (ttm):27.72M
Total Cash (mrq):47.67M  Total Cash Per Share (mrq): 4.31
Total Debt (mrq):0.00  Current Ratio(mrq):4.92
Book Value Per Share(mrq): 8.22
52-Week Change: -75.37%
52-Week High(Jan 3,2014):36.13,52-Week Low(Dec 17,2014):8.34
Shares Outstanding: 11.06M , Float:7.68M
% Held by Insiders: 31.29% , % Held by Institutions:48.90%
Short % of Float (as of Nov 28, 2014): 13.40% 



Two other stocks that met the criteria for December insider buying, nano cap and contrarian were 

Pershing Gold Corporation (PGLC)

Ecology & Environment, Inc. (EEI)




















Tuesday, December 9

Self Service Insider Activity


Size of each block is determined by shares purchased to shares in float. Larger blocks indicates a larger commitment based on shares purchased to shares in float.Each unique color indicates industry.If your only concerned with officers insider activity you can select or deselect on right side.For example when I choose only officers for December HGG (HGG hhgregg, Inc)displays the largest insider purchases to float. For the last 6 months using only officers HGG is still the largest. IBAL is second.  

October to 12/09/14 insider purchases was preselected but can be changed. 



Click to view or interact with Treemap



The size of each block is determined by shares purchased to shares in float. Larger blocks indicates a larger commitment based on shares purchased to shares in float.Each unique color indicates a sector.Filtering options include 3 year stock return, month and year of insider activity,insider transaction type,Z score.Further, each "box" displays shares outstanding MRQ, SO 2012 to 2013, F score,Z score, cash as a percentage of price, industry, sector, earnings yield, company size based on shares in float multiplied by share price on 12/10/14.If its not visible you can hover over the box to see attributes. 


Click to interact with insider data with metrics 




Users have the options of updating based on year, month, title, transaction type. Initial preset(can be changed) for December 2014, sorted in descending order based on share activity/ shares in float for December MTD purchases only, 2014.Stocks were filtered to include only stock with a current Z score > 2.99 to avoid near term default risk.

Click to view and use interactive Table


contact: shadowstock@outlook.com

Thursday, December 4

LTD and Share Count Reduction for the Period 2012 to MRQ with November 2014 Insider Buys



Insignia Systems Inc. (ISIG)

"Insignia Systems Inc markets in-store advertising products, programs and services to retailers and consumer packaged goods manufacturers."Morningstar














Market Cap: 40.70M , Enterprise Value:  24.57M
Price/Sales:  1.55 , Price/Book:   1.66
Enterprise Value/Revenue: 0.90 , Enterprise Value/EBITDA: 8.47
Revenue:  27.17M , Revenue Per Share:  2.13
Qtrly Revenue Growth (yoy):  2.70% , Gross Profit (ttm):  12.75M
EBITDA (ttm):  2.90M ,
Total Cash (mrq):  17.48M , Total Cash Per Share (mrq):   1.42
Current Ratio (mrq): 5.15 , Book Value Per Share (mrq):   2.06
52-Week Change:   21.25%
52-Week High: 3.55 , 52-Week Low: 2.61
Shares Outstanding: 12.30M , Float:  8.66M
% Held by Insiders: 18.22% , % Held by Institutions:    21.90%


Global Cash Access Holdings, Inc. (GCA)

"Global Cash Access Holdings Inc provides cash access services and related equipment and services to the gaming industry." Morningstar

note the GCA moved +10% over the last 2 days. 





















Market Cap: 503.43M , Enterprise Value:     488.09M
Price/Sales (ttm):0.86,  Price/Book (mrq): 2.11
EV/Revenue:0.84 , EV/EBITDA: 7.71
Revenue (ttm):581.46M , Revenue Per Share (ttm):   8.83
Qtrly Revenue Growth (yoy):  -0.40%
Gross Profit (ttm):142.65M , EBITDA (ttm):  63.32M
Total Cash (mrq):106.50M , Total Cash Per Share (mrq):   1.63
Total Debt (mrq):95.74M , Total Debt/Equity (mrq):   40.46
Current Ratio (mrq):   1.03 , Book Value Per Share:   3.61
Operating Cash Flow(ttm):8.01M ,Free Cash Flow(ttm):-13.67M
52-Week Change:    -18.73%
52-Week High:   10.42 , 52-Week Low:    6.37
Shares Outstanding:  65.55M , Float:  64.67M
% Held by Insiders:12.13% ,% Held by Institutions: 100.50%
Short % of Float: 2.60%

American Science & Engineering Inc. (ASEI)

"American Science & Engineering Inc develops, manufactures, markets, and sells X-ray inspection and other detection products for homeland security, force protection and other critical defense applications." Moringstar




















Market Cap: 391.13M , Enterprise Value:   266.54M
Price/Sales  2.35 ,  Price/Book :     2.01
Enterprise Value/Revenue:1.65 , Enterprise Value/EBITDA: 25.20
Revenue:  161.95M , Revenue Per Share:  20.55
Qtrly Revenue Growth (yoy):-47.40% 
Gross Profit(ttm):  76.65M , EBITDA (ttm): 10.58M
Total Cash: 116.19M , Total Cash Per Share:14.68
Total Debt (mrq):2.16M , Total Debt/Equity (mrq):1.14
Current Ratio (mrq): 4.31 , Book Value Per Share (mrq):   23.95
Operating Cash Flow:-22.04M ,Free Cash Flow:-23.37M
52-Week Change:-30.26%
52-Week High: 74.75 , 52-Week Low:  43.38
Shares Outstanding: 7.92M , Float:  7.79M
% Held by Insiders:1.25% , % Held by Institutions: 75.40%
Short % of Float: 5.10%
Trailing Annual Dividend Yield:    4.20% , 5 Year Average Dividend Yield: 2.40%

Calamos Asset Management Inc. (CLMS)

"Calamos Asset Management Inc is an asset management firm. The Company provides investment advisory services to individuals & institutional investors through open-end funds, closed-end funds, separate accounts, offshore funds and partnerships."Morningstar

















Market Cap: 276.74M , Enterprise Value:   -180.91M
Price/Sales:  1.06 , Price/Book: 1.17
Profit Margin:    7.62% , Operating Margin: 26.66%
Return on Assets: 6.97% , Return on Equity: 19.75%
Revenue:  256.99M , Revenue Per Share (ttm): 13.74
Qtrly Revenue Growth (yoy):   -2.20%
Gross Profit (ttm):  263.37M , EBITDA (ttm):  72.92M
Total Cash (mrq):  500.33M , Total Cash Per Share:  24.37
Total Debt (mrq):  45.96M
Total Debt/Equity (mrq):  9.23  Current Ratio (mrq):  14.40
Book Value Per Share (mrq):  11.34
Operating Cash Flow (ttm):   93.98M , Free Cash Flow (ttm):   50.64M
52-Week Change:   22.77%
52-Week High:  14.44 , 52-Week Low:  10.67
Shares Outstanding: 20.53M , Float:  16.88M
% Held by Insiders:    11.40% , % Held by Institutions:  66.30%
Short % of Float: 2.90%
Trailing Annual Dividend Yield:   4.10%


Invesco Mortgage Capital Inc. (IVR)


"Invesco Mortgage Capital Inc is a real estate investment trust. It acquires finances and manages residential and commercial mortgage-backed securities and mortgage loans." Morningstar


IVR did not meet the share count reduction or LTD reduction but did have positive November insider activity.




















Main Street Capital Corporation (MAIN)

Main Street Capital Corporation is an investment firm focused on providing customized debt and equity financing to lower middle market companies and debt capital to middle market companies.Morningstar


MAIN did not meet the share count reduction or LTD reduction but did have positive November insider activity.