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Special Diversified Opportunities: Buying Upside For Free
- Following the sale of its previous business lines, SDOI is a shell company trading below net cash value, offering little to no downside for investors.
- The company is currently on the hunt for a company to acquire, which depending on the leverage applied, could easily double the company's value.
- SDOI is in a very similar situation to one-time shell company, ALJ Regional, which has increased its intrinsic value by more than 400% after two strategic acquisitions.
- Activist Steven Becker owns a third of the company and put one of his fellow co-workers, Philip Blazek, in charge as CEO to find an acquisition target.
- A recent sale of the company's stock by another hedge fund should provide the appropriate level of control for Mr. Becker, and increase the chance of an acquisition this year.
SIGA Technologies: Uncovering Hidden Value In Bankruptcy
- After an $195 million unfavorable court ruling against SIGA, the company's stock has been slammed and SIGA has filed for relief under the Chapter 11 bankruptcy code.
- Investors are most likely selling on panic and ignoring that SIGA's bankruptcy is non-insolvency driven, and primarily filed to allow an orderly appeal against PharmAthene.
- With only $2.5 million of outstanding debt, $110 million of cash on the balance sheet, and another $165 million expected, SIGA's equity should remain unscathed in a worst-case scenario.
- As the government's primary supplier of the Smallpox antiviral, SIGA has tremendous upside as it looks to renew its contract sometime over the next year or two.
Knight Therapeutics: Minimal Downside For This Misunderstood Company
- Knight Therapeutics is a spin-off run by former Paladin Labs CEO, Jonathan Goodman, who grew Paladin's share price 100x over approximately 20 years.
- With Mr. Goodman's excellent track record, Knight has the potential to increase market value by many multiples over the next few years as it acquires and licenses various pharma products.
- Downside risk is minimal, with Knight trading at only a 5% premium to its downside valuation.
- Due to the large volume of transactions completed after the third quarter, many screeners do not accurately reflect Knight's current value.
PDF Solutions: More Room To Run Following Recent Stock Appreciation
- As predicted it my previous article, PDF Solutions was able to re-sign its two problematic contracts relatively quickly, resulting in a 30% jump in the stock in one day.
- The stock still has more then 65% upside as its financials should begin to re-calibrate starting with its next earnings report on Feb 5th.
- Investor pessimism should begin to disappear as the company continues to exceed expectations.
PDF Solutions: Potential For A Quick Double Following Market Overreaction
- Down 50% over the past year, PDF Solutions has the capability to double in the next 12 to 18 months.
- The company is well positioned to take advantage of the growing gap between fabless providers and foundries.
- PDFS presents a very asymmetric investment opportunity with only 4% downside in a worst case scenario.
Ascent Capital: Industry Consolidation, Low Valuation, And Potential Acquisition Candidate Warrant 65%+ Upside
- Down 30% from its 52-week high, investors are underestimating the earnings power of this free cash flow machine whose financials are obscured by accounting.
- Industry consolidation and the growth of the smart home provide numerous growth opportunities for this asset-light company.
- Management could be setting the company up for a sale to a large cable company looking to expand its offerings into security and home automation.
- Trading at a 32% discount to ADT, and only 10.7x of my 2015 steady-state free cash flow estimate, shares could hit over $100.
- Wabtec Corporation: Growing Faster Than The Market Rally
- Don't Buy Sony Over The PS4 Hype
- Lockheed Martin: An Excellent Long-Term Dividend Play
- Why Western Union Will Destroy Its Competition
- Pitney Bowes Is A Ticking Time Bomb
- EZCorp Filled With Value
- Coach: Undervalued And Growing Rapidly
- Google's 1 Serious Problem
- Gentex Corp: Undervalued With Huge Potential
- Berkshire Hathaway: Undervalued And Ready To Jump