Just two months ago, Sierra Wireless (NASDAQ:SWIR), a provider of wireless solutions, was trading at a large discount to its net current asset value (NAV). With cash of $270 million, A/R of $67 million, and inventory of $33 million, the company's current assets covered its total liabilities and still leftover some $280 million. Meanwhile the company's market value was only around $90 million. Unfortunately, this enticing investment opportunity was still not enticing enough, considering the company's economics.
Furthermore, while the company listed a cash balance of $270 million, $190 million of it is restricted. The company was in the process of acquiring Wavecom with that money. Again, only an investor who can make sense of this industry can determine whether this is a good use of cash. Investors who didn't read the fine print would have been surprised to notice most of the cash balance disappear in return for equity in a company they know nothing about!