Globescape (GSCP.OB) announced yesterday that it would repurchase $3 million in stock, or just over 6% of the total shares outstanding.
Essentially, management just said, “We are going to take the stock to $3 and get an AMEX listing.” Anyone who listened to the conference call understands that management is really targeting an AMEX listing and that they are going to do what it takes to get there.
This was one of my recent additions when the stock price dipped to $2.25, and the stock has already had a nice 17% bounce since then. Yesterday’s news comes as a bit of a surprise, given that microcap companies seldom buy back their own stock, but those who listened to the GSCP conference call for the first quarter probably picked up on the fact that management was looking to enhance the share price in order to achieve an AMEX listing. It was obvious to everyone that management was frustrated by what they perceived to be an excessively low multiple for a company growing 30%+ per year, and yesterday’s action indicates that they are going to take matters into their own hands and move the stock up above the $3 level for an AMEX listing.
The buyback is certainly a step in this direction, and I still believe GSCP has significant further upside here as a result. Although I’m sitting on a very nice short term gain, I still believe there is more upside left here, and I’m not selling because I believe that I would be leaving a lot on the table. This is a nice vote of confidence in GSCP shares, and it should put a nice bottom under the stock over the next few months. I still believe this company has big upside if they can procure another big contract with the DoD, and the business seems to be gaining momentum in the last few quarters.
GSCP 1-yr chart