• Current price: $30.09
• Market cap: $383M
• P/E: 9.43 with losses from discontinued operations; 8.95 from continuing operations
• P/B: 2.12
• P/FCF: 15.46
• EV/FCF: 13.47

Hi-Tech Pharmacal (HITK) is a manufacturer of generic, branded over-the-counter, and prescription medicines. The company concentrates its efforts on liquid and spray products. The company experienced two years of stagnating sales and losses in 2007 and 2008 before returning to profitability in 2009 and seeing sales surge in 2010/2011 on the strength of its generic Flonase/Flovent product.

The relative valuation seems extremely appealing, perhaps due muted analyst projections for the coming year. According to data available on Reuters, even the most optimistic of the three analysts covering HITK expects FY2012 sales and earnings to be below 2011 levels. Analysts are probably concerned because the FDA has stopped the sale of Lodrane, a cold/flu medicine that is the primary product of HITK’s branded prescription medicine division. I think

Current Price: $11.16

Imanation (IMN) is a distressed manufacturer of storage media that sells at a sufficiently depressed value to provide investors with an option-like payoff. The core business is low-margin and slowly contracting, which has contributed to the company’s financial woes and a 75% collapse in its stock price since 2007. This price decline, combined with its immense financial stability, creates the option-like effect. It is unlikely to trade below liquidation value but possesses the financial tools to effect a modest turnaround.

Financial Integrity and a Margin of Safety

Imation offers investors acceptable protection on the downside, especially given the company’s current distress. Downside can be examined from two perspectives: financial integrity and a margin of safety. The first - crucial for examining a distressed business - determines whether the company possesses the financial resources to continue as a going concern and the second determines whether investors are buying

Creating Value Through Corporate Restructuring by Stuart Gilson is a collection of case studies by the author and his colleagues involving the three major forms of corporate restructuring: restructuring liabilities, restructuring equity, and restructuring employee claims. The book is a doorstop - the 2nd Edition reviewed here clocks in at 802 pages counting all appendices - but it is well worth your time. Debt restructuring occupies the majority of the book (a bit less than 500 pages) but given the interests of its likely readers that seems like a plus. It provides 22 case studies (12 debt, 6 equity, and 4 employee claims) that span a broad spectrum of industries and also venture outside the U.S. to examine the reorganization process in other countries.

The only real problem with the book isn’t its content, but rather the expectations that its title will generate. Although the book discusses the situations

Speedway Motorsports (NYSE: TRK) is the owner/operator of nine race tracks used primarily for NASCAR events. TRK and International Speedway Corporation (NYSE: ISCA), the other major player in its business, together own the majority of the tracks used for major racing events in the U.S. The recession and a decline in NASCAR’s fanbase have eaten into both companies’ profits, but they have no realistic challengers within their industry and would benefit greatly from any expansion of consumer spending. TRK is by far the more attractively priced of the two, selling at a substantial discount to both its present net asset value and its historical P/B valuation.

Industry and Company Background
Between them, TRK and ISCA own 21 of the 29 tracks used by NASCAR (nine belong to TRK, twelve to ISCA). Most of the other tracks are individually owned by separate companies or by the smaller competitor Dover Speedway (NYSE:

Cagle’s (CGL.A) is a small poultry provider with a lot of appealing valuation numbers and positive trends. Credit issues remove it from consideration as a value investment, but after one or two more quarters it could re-emerge as an appealing play for value investors.

The company has not been valued highly or particularly profitable for some time. The company turned a small profit in FY2010 but hasn’t seen a strongly profitable year since 2005, which probably kept investor sentiment toward Cagle pretty negative. Turning that trend around, though, seems to get investors quite excited: the price nearly doubled in November (peaking at $11.64) when the company announced a second straight quarter of solid profits. It promptly started dropping and fell to its present price.

The company’s overall financial position has been improving over the past year. Long term debt has declined by almost 30% in the past two quarters and

Boise, Inc (BZ) is a manufacturer of paper and packaging products. The stock was tremendously beaten down in 2008/2009, dropping all the way to $.25 per share and despite its subsequent recovery, the company still appears to be an attractive value opportunity. It first caught my eye on a Piotroski screen, where it scored a perfect 9 with a P/B of 1.07.

With that in mind the question is: why is it cheap? Are there any ticking time-bombs in the balance sheet or is the industry in an overwhelming secular decline? If not, it makes for an appealing value investment quantitatively.

Financially, the company looks stable (which makes sense ... that’s what the F-score is for). D/E is 1.14, down from 1.26 in 2009. Long term debt has been declining every quarter for over a year. Current ratio is likewise solid at 2.11. Recent refinancings have pushed the maturity

L & L Energy (LLEN) is a multi-segment coal producer and refiner that operates and sells within China. The company has four divisions: mining, wholesale, coking, and washing. The primary source of revenue at present is coal mining, with coal washing growing rapidly as the second largest contributor. The company grows primarily by acquiring smaller, less efficient competitors and modernizing their facilities. It currently sells for 6.42x earnings and looks like a good value based on both its current earnings and future potential.

I’ve been reading The Art of Short Selling and I was inspired to put it into practice a bit by this post.

The author’s review and arguments in both articles seem poorly backed and thought out (are cell phone games really comparable to the console market?), but the author did reveal something interesting: the enormous short interest on Gamestop (GME). There’s short interest of 35M on a float of 145M, which comes out to 24%. On the surface, it looks like a straightforward value investment and I’ve seen it pop up on other sites, like on Barel Karsan and the “magic formula” screen. I’ll be working backwards here to try to dig up the red flags that brought in so much short interest and see if they’re worthwhile.

From what I can gather, these are the possible red flags that shorts might be seeing: (a) the move to digital delivery,