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I would like to thank the market for being stupid again. 

Barely six months ago Mr. Market, you were telling me that agriculture stocks should be rising 2%-3% a day. Now, those stocks are down 60%-80% in half a year.

click to enlarge

Mos 08 11 12

And what about coal? On June 19, Patriot Coal (PCX) was $82. Today, PCX is $9.

 Pcx 08 11 12

Mr. Market, sometimes you are an idiot.  Perhaps you should trot on down to the pharmacist and pick up a prescription for lithium.

Now there are stocks selling below their net cash value. I have been buying a basket of these stocks as of late. These include:

Avanex (AVNX)

Share price – $1.61

2007 share price high – $35.70

Decline – 95%

Shares outstanding – 15.5 million

Market cap – $25 million

Cash and marketable securities – $45.8 million

Debt – $0

Net cash – $45.8 million

Cash / market cap – 182%

Issues – Lousy quarter.  Cash burn of $9 million last quarter.

Avnx 08 11 12

O2Micro (NASDAQ:OIIM)

Share price – $2.18

2007 share price high – $18.00

Decline – 88%

Shares outstanding – 37.5 million

Market cap – $83 million

Cash and marketable securities – $107.1 million

Debt – $0

Net cash – $107.1 million

Cash / market cap – 128%

Issues – Leveraged to consumer spending.  Based in Taiwan and everyone hates China right now.  (See opening comments.)

Oiim 08 11 12

SiRF Technologies (SIRF)

Share price – $1.25

2007 share price high – $34.15

Decline – 96%

Shares outstanding – 62.5 million

Market cap – $76 million

Cash and marketable securities – $100 million

Debt – $2 million

Net cash – $98 million

Cash / market cap – 132%

Issues – In a legal battle with Broadcom over patents.  Exposed to the consumer and the automobile industry. 

Sirf 08 11 12

Tundra Semiconductor (OTC:TRSCF)

Share price – C$3.15

2006 share price high – C$18.80

Decline – 83%

Shares outstanding – 19.6 million

Market cap – C$62 million

Cash and marketable securities – C$58.5 million

Debt – C$0

Net cash – C$58.5 million

Cash / market cap – 94%

Issues – Based in Canada.  Is that an issue?

Tun 08 11 12

None of these companies are exciting companies and all have a few have serious issues. I would not be surprised if at least one was no longer in business when we come out of this cycle.

However, during the 2000-02 bear market, buying a basket of stocks trading at or below net cash proved to be enormously profitable. A few did not survive but those that did went up 5x-6x or more when the economy recovered.

Source: Trying to Outsmart This Foolish Market