April 2015 Issue of Ultimate Value Finder is Released

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Investment Opportunity 1 – Liquidation Value Six Times the Market Cap

Sometimes when you buy an asset, whether it be a car or a piece of equipment, the value of it is what you could liquidate it for. The asset does not necessarily need to create cash flow. For example, if you go to Home Depot to buy an electrical saw, you don’t look at how much cash flow it can generate for you before you buy it.

Many times, on Wall Street, an asset needs to generate a certain amount of cash flow in order to support its valuation, unless of course, we are talking about Facebook, Twitter, or GoPro. These can trade at whatever valuations someone can dream of.

Company 1 owns an equipment fleet that it rents out to contractors during various construction projects. Because the company is incapable of satisfying investors with enough cash flow, the company’s market cap is way below its liquidation value. In other words, if the actual equipment were to be liquidated today, the shareholders would receive about 6 times more money than what the company is trading for.

Investment Opportunity 2 – Now It Looks Really Interesting

This is a new idea for Ultimate Value Finder. However, I looked at this company sometime in 2013. I studied it but decided to pass because things were just so awful that I could not make myself write about it. Fast forward to today and the company finally looks interesting.

First, the price is 70 percent cheaper which is always a good start. Second, certain segments of the company are growing while the legacy segment is declining. And third, a brand new business was launched under the company’s umbrella, and this business could become big.

Investment Opportunity 3 – Transitioning from Development to Growth

Everything in life goes through different stages: development, growth, maturity, and decline. This also applies to companies. However, investors are not interested in all the stages because they are all about making quick money. Development is not something that they want to be a part of because it requires patience, hard work, and capital. Maturity is boring, unless, of course, they are private investors getting all the cash flow. Decline is not even in their vocabulary, so let me skip that.

They want growth because growth is the heroin that keeps them up all night. Company 3 is leaving the development stage and entering the growth stage. This means that you have an opportunity to acquire shares when revenues are tiny and hold them until they grow, generating the excitement. Also, you have a lot of exhausted investors willing to sell shares after years and years of disappointment, dilution, and lack of payday.

If you are a subscriber, you already received an email with the full April issue.

Economic Data Getting Better and Better

It is very interesting to watch various economic data reports and how they are getting worse and worse. I mean this is on a daily basis. Today, we got durable-goods orders fall 1.4 percent.

To some people, this is no surprise because they understand that the whole economic recovery is fake. It was created by several rounds of QE which caused tremendous disallocations of capital. Now that the QE was taken away, the fake recovery is falling apart.

Others who believe that central bankers saved the economy in 2008/2009 are confused. Well, they will get more confused as the economic data continues to worsen. Then, they will be shocked when the Fed announces another round of QE which will not work either.

New Policy

After running this blog for several years I decided to make a big change. I will no longer allow ANY comments. I will also not write about individual companies. If you want to ask me about any company, you can simply to email me. If you want investment ideas, you subscribe to my newsletter.

The reason why I am doing this is because I am tired of constantly being required to explain myself why I am buying this or that and getting opinions from other people about why I should not be doing something. I really do not care what other people think. I just want to buy the stocks that I want without cheerleaders telling me whether it is a good move or that I lost my mind for buying stocks for less than cash or any other thing.

When They Want Out They Want Out

So this is the time of year again. Goldgroup is approaching the price that I paid for it in 2013. As I am writing this, the stock just traded for $0.09 on the Canadian exchange. In US dollars, this translates into $0.07 which is just two pennies away from the price that I paid for it.

I am now preparing for $0.05 or $0.03 price and will buy more shares. So it looks like I will get my wish of 1 million shares.

You might say, “It will never get there because the company has more cash than the market cap.” So what? If the net cash is at X level, who said that the sellers cannot sell for 10 percent, 20 percent, or whatever percent of cash. At $0.03, the market cap will be $4.5 million. At that price, each $1,000 will get you 33,333 shares. Each $10,000 will get you 333,333 shares.

Also, today the Fed will open its mouth again. Of course, they will say the usual – we are data dependent. Yes, they will probably drop the “patient” word. Gold market will say, “Oh my God, they are impatient and data dependent, dump gold.”

Disclosure: Long GGA

Mitcham Industries is Worth Watching

With the collapse in the price of oil, Mitcham Industries has been hit pretty hard. However, the price of oil can continue to collapse. During the dark days of 2009, Mitcham’s stock reached as low as $2.43 per share. I would not be surprised if the stock traded at these prices again. Maybe, it could even trade at $1 per share. Today, Mitcham is trading for a little over $5 per share. I don’t own it.

Here is a new article on the company.

http://seekingalpha.com/article/2995646-plenty-of-downside-for-mitcham-industries

Alan Greenspan Interview

Wait a minute, I thought the economy was great. This is what the stock market keeps telling us.

Regal Partners with MovieTickets.com

MovieTickets.com is now the Largest Advance Movie Ticketing Platform in the World with 28,000 Screens

(Boca Raton, FL – March 4, 2015) – MovieTickets.com, a leading destination for the purchase of advance movie tickets, has entered into an agreement with Regal Entertainment Group (NYSE: RGC), the motion picture exhibitor operating the largest and most geographically diverse theatre circuit in the United States. Through the deal, MovieTickets.com will offer its ticketing solutions across all 572 Regal Cinemas theaters with 7,356 screens, including its three main brands: Regal Cinemas, Edwards Theatres, and United Artists Theatres.

“Our new relationship with Regal, the largest theatre circuit in the United States, establishes MovieTickets.com as the leader in the advance movie ticketing category, based on both screen count and number of movie theater chains served,” said Joel Cohen, CEO of MovieTickets.com. “The addition of over 7,300 screens significantly boosts our footprint in the domestic marketplace and magnifies the opportunities for us on a much broader scale.”

“Regal is excited about our relationship with MovieTickets.com,” said Dave Doyle, CIO at Regal Entertainment Group. “Our partnership with MovieTickets.com means greater access to the magic of movie-going at Regal and added convenience for our customers.”

In a joint statement, MovieTickets.com Co-Founders and Co-Chairmen Shari Redstone and Mitchell Rubenstein, said, “We could not be prouder to join forces with a leading exhibitor of Regal’s caliber and offer moviegoers around the nation unparalleled ticketing choices and services. As the founders of MovieTickets.com, it’s especially meaningful to see us take a leadership position with such a significant addition.”

MovieTickets.com will begin deployment of its service across Regal Cinemas, Edwards Theatres and United Artists Theatres today, with the roll-out continuing through the end of this month. With the addition of these theaters, MovieTickets.com will be providing advance movie ticketing to over 28,000 screens worldwide, becoming the largest online advance movie ticketing platform in the world.

http://www.movietickets.com/press.asp?year=2015&pr_id=145#.VPe_yeGM5qE

March Issue of Ultimate Value Finder is Released

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Investment Opportunity 1 – Please Keep on Selling It

Because the markets are at all-time high, there are only specific industries that offer value. One of these industries is the oil and gas sector, which has been decimated over the last several months due to the decline in the price of oil.

If you went shopping for oil and gas companies just a few months ago, you would have been extremely frustrated. Now that the price of oil has collapsed, you can buy wonderful companies with excellent product lines and pristine balance sheets. Company 1 is such a company.

Investment Opportunity 2 – Value Investors Are Buying It Up

When you go to EDGAR to view Company 2 SEC filings, this is what you see.

Edgar1

As you can see, there is one 13G after another which means that hedge funds are loading up on this company. Another interesting thing is that when you start investigating who these hedge funds are, you realize that there is one common denominator. They are all value investors.

Investment Opportunity 3 – Trading at Cash

It has been a while since I updated you on Company 3. I was not going to write about it in the March issue of Ultimate Value Finder, but while I was writing the other two reports, I was noticing a great deal of drama. It got to a point where I thought enough is enough.

The company is already trading at cash in the bank. Are they going to make it trade for 50 percent of cash or 20 percent of cash? In the mining business, anything is possible. Remember, their cash is not real. Their properties are worthless. The managers are clueless. And, of course, let’s not forget that the price of gold is going to zero.

If you are a subscriber, you already received an email with the full March issue.

Dear Members of Congress

http://nypost.com/2015/02/26/heres-what-janet-yellen-should-have-told-congress/

This is what Janet Yellen should have told congress

Dear Members of Congress:

Thanks for inviting me here today. Let me get right to the point so we can all get outta here.

I need to raise interest rates. Why? For one thing, the US dollar is becoming too strong against foreign currencies and that’s making American-made goods too expensive in overseas markets.

So it’s hurting the profits of our companies that sell overseas, while the profits of companies with businesses overseas are getting clobbered.

But on the other hand, I can’t raise rates. Why? Because we aren’t really sure just how strong the US economy is right now. We’ve been fooled a number of times over the past seven years. In fact, being fooled has become an annual event.

Improvement in the economy has often turned out to be nothing more than squiggles in economic data. The job gains over the past few months may be nothing more than “statistical noise,” as we smart people like to call it.

The raw data are not completely encouraging. The numbers only look good after they are adjusted for the seasons and for guesses as to new companies that are suddenly, quietly and magically being formed.

And what about the drop in the unemployment rate we hear about all the time? It’s mostly people leaving the workforce because they can’t find jobs. Sure, we at the Fed mention the drop in the jobless rate all the time. But we giggle when we do it.

A number we do look at is the Labor Force Participation Rate, and there are fewer people in the workforce now than there have been in decades. That’s bad stuff.

On top of all that, we are worried that the statistics we’ve been relying on are wrong. We are concerned that New York Post columnist John Crudele is right and that the jobs data are being manipulated or poorly collected. [Might as well plug myself, since I’m writing the speech.]

And then there’s the inflation rate. We say it’s too low and people assume we’d like prices to go higher. But that’s not what the Fed is talking about when we discuss the rate of inflation.

What the Fed is really saying is the low inflation rate isn’t confirming that the economy is picking up speed. If it were, inflation would be closer to the 2 percent a year that we target.

And besides, we at the Fed don’t trust the government’s inflation statistics either. Never have.

The core Consumer Price Index leaves out too many things. It excludes increases in food, energy and housing as if they weren’t part of the family budget.

So, I admit that we need to raise interest rates, but we can’t.

If we raise rates at the wrong time, higher borrowing costs might stunt any economic rebirth. Remember the “green shoots” from a couple of years ago? No matter how much
fertilizer we threw on them, they never sprouted into much.

If the recovery is already slow — and made to look better only through statistical tricks — we’ll really be in a fix if we allow rates to rise.

It’s called a quandary. And I admit that things are screwed up.

Right now we’ve created a situation that gives people rich enough to invest in the stock market without worry a tremendous advantage. In fact, our policy of near-zero interest rates has probably created a stock market bubble we will live to regret.

And the price is being paid at the other end of the economic spectrum — by savers who can’t, or won’t, invest in stocks because they know what is coming.

The middle-class saver has, in effect, been secretly taxed through the loss of interest income to help the rich big shot on Wall Street.

I know it’s not fair. I’m trying to do something about it, but my hands are tied.

All you really want to know is, when will I raise interest rates? Maybe June. Maybe not if, as happened before, the economy takes another turn for the worse.

Or if Europe, Japan, China or some other place in this crazy, mixed-up world causes me agita.

Speaking of agita, I’m going to lunch. Any of you want to come along and pick up the tab?

February 2015 Issue of Ultimate Value Finder is Released

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Investment Opportunity 1 – Patient Money On Sale

Company 1 is a business development company that acts like a publicly traded fund. It is nothing more than an investment portfolio of companies that are traded on an exchange. The good thing about companies like this is that they are easy to value because the company is required to report to investors how much its portfolio is worth per share. As a result, you can quickly compare it to what the stock is trading for.

The insiders are buying. Why?

The stock is trading for $43.50 per share while the value as of September 30, 2014, was $48.79 per share.

Investment Opportunity 2 – Unhappy Investors Are Generous Investors

It is now 2015 so it has been slightly more than four full years since this company went public. During this time, there has never been a time when I was eager to buy shares in it. Yes, I wrote about it in the May 2014 issue of this newsletter, which I titled “I Still Don’t Know How to Value It,” but I was never excited. This is because investors were always too happy with the company, the country it is in, the directors, and the founder. I mean everything was hunky dory.

That’s the problem – happy investors cause high prices. I want investors to be angry. I want them to complain. I want them to hate. I want them to cry. This is the only time when they are generous and will give you a deal.

Investment Opportunity 3 – No, Thank You

When you must come up with investment ideas but you can’t find anything good, you look at places that you would never normally go like the semiconductor or technology space. After spending seven days studying this company thinking that maybe there is some value to exploit, I realized that it is simply better to avoid these kinds of companies.

The environment that they do business in is unpredictable. Things change so fast that unless you are a tech junkie, you are going to lose a lot of money. But if you get lucky, you can also make a lot of money. Case in point, this stock was a 26-bagger from its low in 2009 to the end of 2010. But then, change happened and the stock price declined 85 percent from its highs.

Because I have no other good ideas and I wasted seven days studying this company, I am still going to write about it. Hopefully, this analysis will still benefit you by convincing you to simply never bother with tech companies. Also, it should be beneficial to any of you who were considering investing in this company.

If you are a subscriber, you already received an email with the full February issue.