View as an RSS Feed
PRO Top Ideas
Top Ideas are high-conviction long or short ideas focused on market mispricings with asymmetric risk/reward profiles.
Invacare Dramatically Undervalued Due To Temporary FDA Issue
- IVC is global leader in mobility and seating products, but it has been dramatically under-earning for the past two years due to an FDA consent decree.
- Once FDA consent decree is lifted, combination of $130m high-margin revenue coupled with $10m less of compliance expenses will have an explosive impact on FCF and EPS.
- FDA action pertains to quality control systems NOT safety of product or quality of product.
- We believe this saga with the FDA is entering the 9th inning and expect the consent decree to be lifted within the next 12 months.
- We see the stock offering a compelling 7.4x risk/reward opportunity and see intrinsic value being $26 per share (+73% upside).
Iteris: Accounting Delay Offers Compelling Entry Point
- 10-k was delayed due to a mix of bad luck and poor execution; however, we do not see this delay impacting the intrinsic value or being a harbinger of further bad news.
- Our research indicates the revenue recognition question only impacts the timing of revenue and pertains to less than 2% of total revenue.
- Our research also indicates the financial data on the cash flow statements and balance sheets is correct and will not be restated.
- The underlying business is experiencing fundamental strength. With stock trading below book value and pristine balance sheet ($20m in cash and zero debt), we see an attractive risk/reward profile.
- We estimate the intrinsic value for ITI is $2.40 per share or +55% upside.
PCTEL: Index Fund Selling Creates Opportunity
- PCTI offers an extremely favorable risk/reward opportunity following massive selling by index funds after the stock was removed from the S&P 600 Index.
- We strongly urge the Board to conduct a tender offer for 20% of the shares outstanding at $8 per share.
- Severe winter weather negatively impacted Q1 results; however, our primary research indicates that business has rebounded in Q2.
- We expect Q2 results will serve as a catalyst to revalue the stock as investors become more comfortable that FY 2014 guidance is attainable.
- PCTI pays a dividend of 2.2% which compensates investors while they wait for investor sentiment to improve.
VASCO Data Security To Benefit From Heartbleed Bug, Opportunity To Unlock Value Via Tender Offer/Special Dividend
- VDSI positioned to benefit from Heartbleed bug raising awareness of fixed password vulnerability.
- Wall Street expectations for FY 2014 look too low, Q1 earnings should be catalyst.
- VDSI should conduct tender offer for 10% of the shares outstanding at $8 per share and pay a one-time dividend of $1 per share.
- The economic situation in Europe is on the mend, will benefit VDSI order intake.
Dynasil Turnaround Not Priced Into The Stock
- DYSL has a fundamentally attractive business model with patents and IP value consistently accruing to the company.
- New management team has restored the company to profitability, divested unprofitable business lines, paid down a significant amount of debt, and regained compliance with its debt covenant ratios.
- We believe DYSL is actively in talks with new lenders to refinance out its senior debt, which should be a catalyst for the stock to rerate higher.
- Stock is currently trading at half of its intrinsic value. Fair value at $3.00 per share equates to over +100% appreciation from here.
- Ruby Tuesday: A Ruby In The Rough
- Emulex: Market Is Missing The Activism Impact
- Strategic Review Should Unlock Sizeable Value For Cbeyond
- Gas Natural: Investigation And Insider-Selling Suggests Trouble Ahead
- Costa Buyout Price Is Too Low, Fair Value $24-28
- Performant: Short-Term Noise Presents Long-Term Opportunity
- Questionable Accounting Masks True Risk For Harvest Natural
- NTELOS Investors Are Leaping To The Wrong Conclusion
- Lone Pine Not Alone In Resolving Covenant Issues
- AdCare Tender Offer Looks Improbable
- Unlocking The 'Value' Of LifeLock