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There has been a lot of talk regarding American Software (NASDAQ:AMSWA) on the Yahoo Message boards and in the MF Caps; everyone seems to think it's undervalued and a great "asset play." From further analysis, it is far from it. Here is the math:

AMSWA owns 88% of Logility (LGTY) = $165.8 mln
Cash on the books is $75.6 mln, but $30 mln is from LGTY, so net of $45.6 mln gives a value of $211.4 mln for AMSWA so far.

The last portion of the calculation would be AMSWA the company, separate from LGTY. In the last three years for AMSWA, performance has been dismal separate from LGTY, its net income has roughly been $3.16 mln, -$2.03 mln, and $3.82 mln. It has roughly 26.8 mln shares outstanding which leads to roughly $0.06 per share on average over the past three years. Maybe a P/E of 10 in the best case scenario gives a valuation of $0.60 for AMSWA solo. Here are the revenue calculations:

$7.89 valuation of cash on the books plus LGTY stake. Plus a valuation of $0.60 for the company itself suggests roughly a $8.50 valuation for each AMSWA share. With a P/E of 20 that yields roughly a $9.10. Regardless of how an investor values AMSWA by itself, the stock is fairly valued. The only reason AMSWA stock has been moving has been because of LGTY.

Disclosure: I don't have a position in AMSWA.

AMSWA vs. LGTY 1-yr chart:

Source: American Software Is Indeed Fairly Valued