Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
A sure thing
Old 05-02-2013, 06:29 PM   #1
Thinks s/he gets paid by the post
 
Join Date: Sep 2012
Location: Seattle
Posts: 2,906
A sure thing

I think I may have stumbled across a sure thing. Those are quite rare...some even say they are extinct.

Here goes. The company/stock I have in mind is a small cap player in the asphalt industry called Gencor (stock symbol GENC).

This is a strange company. The owners control the company through class B shares and are quite stingy with their money, even though they have a lot of it.

I mean A LOT of it. The current market cap of GENC is $66.62M and in feb 2013 they had $83M in cash and investments with zero debt. Talk about net-net.

They will report quarterly in May, and because of the big runnup in the market we have had since their previous report, the investments are going to rock. I think there is a good chance they have grown to 88M or so. There were also some late bookings of their normal business that should be in this quarter.

My sure thing bet is that the stock is going to have a small spike, probably to $7.50 in less than 2 weeks. The stock has not dipped below $6.75 in over 5 years...probably because that is the limit investors are willing to discount the cash.

With $6.75 as the bottom and $7.50 as my estimate of a near term pop, I bought 2000 shares at $6.91

Check back in 2 or 3 weeks...I won't hold this past May though.
__________________

__________________
Fermion is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-02-2013, 07:04 PM   #2
Recycles dryer sheets
TOOLMAN's Avatar
 
Join Date: Jan 2013
Posts: 220
Quote:
Originally Posted by Fermion View Post
I think I may have stumbled across a sure thing. Those are quite rare...some even say they are extinct.

Here goes. The company/stock I have in mind is a small cap player in the asphalt industry called Gencor (stock symbol GENC).

This is a strange company. The owners control the company through class B shares and are quite stingy with their money, even though they have a lot of it.

I mean A LOT of it. The current market cap of GENC is $66.62M and in feb 2013 they had $83M in cash and investments with zero debt. Talk about net-net.

They will report quarterly in May, and because of the big runnup in the market we have had since their previous report, the investments are going to rock. I think there is a good chance they have grown to 88M or so. There were also some late bookings of their normal business that should be in this quarter.

My sure thing bet is that the stock is going to have a small spike, probably to $7.50 in less than 2 weeks. The stock has not dipped below $6.75 in over 5 years...probably because that is the limit investors are willing to discount the cash.

With $6.75 as the bottom and $7.50 as my estimate of a near term pop, I bought 2000 shares at $6.91

Check back in 2 or 3 weeks...I won't hold this past May though.
Good luck with your buy. Here is my personal view on the stock. I don't know their market position.
YMMV :-)

The negatives
After looking at their numbers, their problem is earning.
The chart pattern looks like a pump and dump stock.
The cash on the books story has been in the news for more than a year.
They made almost no profit last year, and lost money the three prior years.

The positives
Have cash for stock price support as you say
May be well positioned for upturn in product demand??
Attached Images
File Type: jpg image-4040521967.jpg (225.5 KB, 9 views)
File Type: jpg image-3267083162.jpg (177.4 KB, 6 views)
__________________

__________________
TOOLMAN is offline   Reply With Quote
Old 05-02-2013, 07:18 PM   #3
Thinks s/he gets paid by the post
 
Join Date: Sep 2012
Location: Seattle
Posts: 2,906
You are spot on with the negatives. That is the reason the stock has traded at $7 +0.50/-0.25 for the past year and more.

Some seeking alpha writer will pick up the news again soon and that coupled with any type of gain on the investments where Gencor has parked its cash will cause a pop to the $7.50 area.

There is some teeny tiny chance that one day the company will do-the-right thing and issue a one time dividend of around $5 a share, which would still leave over $3.50 a share in cash...plenty for operations for years to come. The stock is not worth holding past a short term trade though waiting for that day when they decide to cash out the shares.

I just want to grab an 8% to 10% return in a two week period..nothing greedy
__________________
Fermion is offline   Reply With Quote
Old 05-02-2013, 07:22 PM   #4
Thinks s/he gets paid by the post
heeyy_joe's Avatar
 
Join Date: Nov 2012
Location: Madeira Beach Fl
Posts: 1,403
I am very bearish on this stock.
__________________
_______________________________________________
"A man is a success if he gets up in the morning and goes to bed at night and in between does what he wants to do" --Bob Dylan.
heeyy_joe is offline   Reply With Quote
Old 05-02-2013, 08:24 PM   #5
Thinks s/he gets paid by the post
 
Join Date: Nov 2011
Posts: 2,370
For foward earnings purposes, it's not how much cash you have, it's what you do with it.
__________________
GrayHare is offline   Reply With Quote
Old 05-02-2013, 08:54 PM   #6
Recycles dryer sheets
TOOLMAN's Avatar
 
Join Date: Jan 2013
Posts: 220
Quote:
Originally Posted by GrayHare View Post
For foward earnings purposes, it's not how much cash you have, it's what you do with it.
Astec Industries, Inc. is in the same market but has 10x sales. They might think about spending some of that cash in the sales dept. as there is room to expand market share.
__________________
TOOLMAN is offline   Reply With Quote
Old 05-02-2013, 09:03 PM   #7
Thinks s/he gets paid by the post
steelyman's Avatar
 
Join Date: Feb 2011
Location: Triangle
Posts: 3,218
Going to the beach is always nice.
__________________

steelyman is offline   Reply With Quote
Old 05-02-2013, 09:24 PM   #8
Thinks s/he gets paid by the post
Helen's Avatar
 
Join Date: Oct 2004
Location: Portland
Posts: 1,354
The last time I thought I had found a sure thing was during the high tech boom. I lost a lot of money (~$50k), but I chalked it up to my tuition and moved on. I have only bought mutual funds since then.
__________________
Helen is offline   Reply With Quote
Old 05-02-2013, 10:15 PM   #9
Thinks s/he gets paid by the post
RockyMtn's Avatar
 
Join Date: Jul 2009
Location: North Scottsdale
Posts: 1,233
I hear sure thing I walk...no run the other way.
__________________
FIRE'D in July 2009 at 51...Never look back!
RockyMtn is offline   Reply With Quote
Old 05-02-2013, 11:22 PM   #10
Thinks s/he gets paid by the post
 
Join Date: Sep 2009
Location: Hong Kong
Posts: 1,576
Quote:
Originally Posted by GrayHare View Post
For foward earnings purposes, it's not how much cash you have, it's what you do with it.
Occasionally you will find a company selling at less than its cash backing. Unfortunately, that does not make it a sure thing.

A long time ago, I came accross a small Australian gold mining company which (slightly simplified) had two assets - cash in the bank and a 30% interest in a productive and profitable gold mine. The company had no debt. The shares were selling for less than the cash backing, which basically meant that investors were getting the 30% interest in the gold mine (and a small amount of cash) for free.

A sure thing if ever I saw one.

No. Some of the directors basically stole the cash by lending all of it to an affiliated company (unsecured). Needless to say the affiliated company was unable to repay the loan, both companies were placed in liquidation amid a storm of legal actions and shareholders were wiped out. I count myself lucky that I got anything back from that investment.

As an aside, I have some shares in a small cap company listed out here in HK which is selling at less than its cash backing and which also has other assets (property in the PRC). I purchased last year and it is more or less exactly where it was when I purchased so sometimes you have to be very patient with these situations. If something is cheap, there is usually a good reason.
__________________
Budgeting is a skill practised by people who are bad at politics.
traineeinvestor is offline   Reply With Quote
Old 05-02-2013, 11:27 PM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,288
I remember someone talking me into investing in some internet cable company that had cash at about the same as their price....


Problem was, they burned through that cash rather quickly.... before going BK.....

Just can't remember the name....
__________________
Texas Proud is offline   Reply With Quote
Old 05-03-2013, 10:44 AM   #12
Thinks s/he gets paid by the post
heeyy_joe's Avatar
 
Join Date: Nov 2012
Location: Madeira Beach Fl
Posts: 1,403
Quote:
Originally Posted by Texas Proud View Post
I remember someone talking me into investing in some internet cable company that had cash at about the same as their price....


Problem was, they burned through that cash rather quickly.... before going BK.....

Just can't remember the name....

Global Crossing?
__________________
_______________________________________________
"A man is a success if he gets up in the morning and goes to bed at night and in between does what he wants to do" --Bob Dylan.
heeyy_joe is offline   Reply With Quote
Old 05-03-2013, 10:48 AM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,288
Quote:
Originally Posted by heeyy_joe View Post
Global Crossing?

Yep, that's the one....
__________________
Texas Proud is offline   Reply With Quote
Old 05-14-2013, 01:58 PM   #14
Thinks s/he gets paid by the post
 
Join Date: Sep 2012
Location: Seattle
Posts: 2,906
Well there was some little bump up today..not quite as much as I expected. Sold half at $7.35.

They now have near 88 million in cash and securities, still no debt.

Strange company.
__________________
Fermion is offline   Reply With Quote
Old 05-14-2013, 02:55 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Chuckanut's Avatar
 
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 6,337
Is it my imagination or are we seeing an increase in this forum in the number of 'sure things', one-stock-wonders, and special knowledge schemes that supposedly let people make a killing in the market without having to diversify and be patient?
__________________
The worst decisions are usually made in times of anger and impatience.
Chuckanut is offline   Reply With Quote
Old 05-14-2013, 03:05 PM   #16
Thinks s/he gets paid by the post
 
Join Date: Sep 2012
Location: Seattle
Posts: 2,906
Quote:
Originally Posted by Chuckanut View Post
Is it my imagination or are we seeing an increase in this forum in the number of 'sure things', one-stock-wonders, and special knowledge schemes that supposedly let people make a killing in the market without having to diversify and be patient?
It is your imagination. Move along.
__________________
Fermion is offline   Reply With Quote
Old 05-14-2013, 03:14 PM   #17
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,134
Quote:
Originally Posted by Chuckanut View Post
Is it my imagination or are we seeing an increase in this forum in the number of 'sure things', one-stock-wonders, and special knowledge schemes that supposedly let people make a killing in the market without having to diversify and be patient?
I hear Enron is about to make a big comeback...
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 05-14-2013, 03:14 PM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Quote:
Originally Posted by Chuckanut View Post
Is it my imagination or are we seeing an increase in this forum in the number of 'sure things', one-stock-wonders, and special knowledge schemes that supposedly let people make a killing in the market without having to diversify and be patient?

Go look at the bug-eyed optimism and "I am superman" attitudes widely espoused on the Mr. Money Mustache forums. Who says the yunguns are permanently scarred by the downturn?
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 05-14-2013, 04:05 PM   #19
Thinks s/he gets paid by the post
 
Join Date: Sep 2012
Location: Seattle
Posts: 2,906
This subforum is called stock picking.

I picked a stock with a very low risk. Since we knew the market had done well this year, we also knew Gencor would have decent returns on the huge cash pile, since some of it is invested in bonds and some in the general market. There was also an indication from the previous quarter that some orders had moved into this quarter. They did come through with $0.31 earnings in this quarter, which isn't bad for a $7 stock that also has over 25% more cash on hand than its market cap. Usually you only see that type of imbalance with a biotech that has no earnings.

So the "sure thing" was a bit tongue in cheek, but this was not a stock that had high risk of going to zero absent absolute fraud.

The return was $0.44/$6.91 = 6.3% for a holding period of less than a month. Compounded that would be a annual return of 108%.
__________________
Fermion is offline   Reply With Quote
Old 05-14-2013, 10:15 PM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
Quote:
Originally Posted by Fermion View Post
The return was $0.44/$6.91 = 6.3% for a holding period of less than a month. Compounded that would be a annual return of 108%.
Clearly, you should have sold.

Ha
__________________

__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 02:37 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.