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William Garrison

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  • Let's Go To The Videotape: Costar May Have Hit A Homerun [View article]
    Diebold released second quarter results earlier this week. Management was upbeat about the electronic security results (where Costar is a supplier of video cameras). Revenue was up 15% during the quarter and is up 17% YTD. Additionally, DBD has hired an additional 35 new sales executives for the Electronic Security business, where bank branch remodels are a focus.

    I expect CSTI will release second quarter results in the next week or so. I continue to be very excited about the risk/reward for this microcap idea.
    Aug 7 01:06 PM | Likes Like |Link to Comment
  • Costar Technologies Continues To Offer Significant Upside [View article]
    The recently closed acquisition of Cohu Inc.'s (COHU) video camera business should provide a nice boost to Costar's results in the coming quarters. COHU had video camera revenue of $15.7 million in 2013 and segment profit of $1.3 million, (less a modest amount of unallocated corporate expense). Costar has a 4% line of credit with the Bank of Texas, so investors can expect to see annual interest expense of $400,000 on the roughly $10 million cash purchase price. COHU's video camera business has not been consistently profitable in past years, but I see the potential for this acquisition to be nicely accretive to earnings, augmented further by the possibility of additional manufacturing cost savings and new revenue opportunities.
    Jun 23 02:31 PM | 1 Like Like |Link to Comment
  • G. Willi-Food International, Ltd. News Creates A Buying Opportunity [View article]
    It's been two weeks since the Emblaze investment closed. No words from Emblaze yet, and I haven't heard anything about when Q1 results will be released. I think the ownership structure has WILC investors modestly concerned about the eventual relationship between Willi Food Holdings (WFLD) and WILC. I am hoping to hear from management in the near future.
    May 21 01:40 PM | Likes Like |Link to Comment
  • Springtime In Florida: Things Are Heating Up For RELM Wireless Corp. [View article]
    Privet Fund Management LLC bought 63% of the 200,000 shares that traded over the past three days, increasing its stake in RWC to 16.6% from 15.7%.
    May 20 11:00 PM | Likes Like |Link to Comment
  • Costar Technologies Continues To Offer Significant Upside [View article]
    Yes, that is true, but there is an ongoing product upgrade cycle, emphasizing digital, networked security systems. In his 2013 letter to shareholders, the CEO cited an industry report that suggested the network video market could see annual growth rates in excess of 20% for the next few years.

    With only $26 million in annual sales, CSTI continues to outgrow the industry just by virtue of its relationships with WMT and DBD. DBD sold $170 million of security products in 2013. There's always risk with customer concentration, but there's also plenty of room for continued growth with DBD as a partner.

    I have run through a variety of scenarios to value CSTI. Even if WMT and DBD ceased to be customers in five years, I can still derive a price target which is only modestly lower than the current price. I like the risk/reward at today's price.
    Apr 18 11:08 PM | 1 Like Like |Link to Comment
  • Costar Technologies Continues To Offer Significant Upside [View article]
    The CFO didn't go into specifics, other than to say they took a conservative approach with the write-down. There's always a chance they will recover some of the loss, but I don't think they are counting on it. They remedied the situation with an alternative supplier in Q1 and delivered the product to the customer as well. I'm willing to look at this as a one-time event and remain optimistic that management's long history in the business will help them avoid another situation like this.
    Apr 18 05:59 PM | Likes Like |Link to Comment
  • Costar Technologies Provides Security Against Theft, Yet Its Stock Is A Steal [View article]
    Q4 results were reported tonight after the close. Revenue came in at $4.3 million vs. my $5.1 million estimate, as business with Wal-Mart and Diebold slowed to a 15% y/y growth rate vs. the 90% rate seen in Q1-Q3. EPS came in at a loss of $0.13 but would have been an estimated positive $0.25 if it weren't for a $551,000 write-down on a financially troubled supplier. I'm disappointed with the loss but remain optimistic that CSTI could have a strong 2014. The company has a trailing free cash yield of around 10% vs. its enterprise value, and continued double-digit growth prospects in 2014. I hope to speak with management in the next couple of days.
    Mar 31 11:49 PM | Likes Like |Link to Comment
  • G. Willi-Food International, Ltd. News Creates A Buying Opportunity [View article]
    The loan has already been repaid, per the press release on January 13, 2014. WILC will collect about $120,000 in interest. I think higher food prices have reduced their expectations for growth a bit in 2014. Zwi talked about double digit revenue growth in 2014, with gross margins in excess of 25% on today's call.

    The other activities comment caught my attention as well, but I think the company will continue to focus on food acquisitions, either new products and categories, or perhaps they will buy some distribution as well.

    I spoke to the company after the January 13 press release in an effort to get some insight about the fourth quarter weakness. It is my understanding that November was particularly soft. The full year numbers were strong, but I have learned that month to month trends for WILC can be volatile, both in Israel and abroad.

    Lastly, it should be clear that Emblaze hopes to help this company grow internationally. if the company can land a big deal in the U.S. in 2014, I am confident WILC will be a great investment at current levels.
    Mar 18 11:57 AM | Likes Like |Link to Comment
  • G. Willi-Food International, Ltd. News Creates A Buying Opportunity [View article]
    I spoke to the company, and here's the update: Emblaze is offering to buy 58% of Willi-Food Investments (WFI) for $76.6 million, which is the parent company of the NASDAQ-traded G. Willi-Food International. Ltd. (WILC). Gsterling is correct that this values all of WFI at $132 million. However, one needs to subtract $17 million in cash that WFI holds, which yields $115 million. You can compare this to WILC current enterprise value of around $35 million. ((13 mil shs. o/s x $7.35), less the $60+ million in cash and equivalents.)

    Secondly, management noted their optimism towards Alexander Granovsky's involvement with the company, as well as the Willigers' desire to make WILC a success. Hopefully, management can share more detail on the call in a little over a week when fourth quarter results are released.
    Mar 10 02:10 PM | Likes Like |Link to Comment
  • G. Willi-Food International, Ltd. News Creates A Buying Opportunity [View article]
    I called the company and was told that they would get back to me soon. I'll post the details after I speak with them. Thanks.
    Mar 6 12:50 PM | 1 Like Like |Link to Comment
  • Investor Appetite For This Food Stock Should Grow From Here [View article]
    I published a new article today regarding the transaction. Thank you for the continued interest.
    Mar 5 03:24 PM | Likes Like |Link to Comment
  • Magic's Stock Offering Well-Timed Given The Recent Run [View article]
    I agree that MGIC could undergo a significant improvement in investor psychology, particularly as they are able to align themselves with some big technology trends (enterprise mobility, cloud, and big data). I'm holding onto my position for this reason, but I think we'll also need to see some solid acquisitions before the shares make any significant break to the upside.
    Mar 5 01:32 PM | Likes Like |Link to Comment
  • Investor Appetite For This Food Stock Should Grow From Here [View article]
    I prefer to look at other ratios such as operating and net profit margins, as well as free cash flow. Almost all financial ratios suggest WILC remains an inexpensive stock. WILC had $4.75 per share in cash and investments at the end of September, 2013. My 2014 EPS estimate has come down a bit to $0.84, but WILC is still quite inexpensive.

    On the last conference call, management talked about having meetings in the U.S. in January and February regarding private label opportunities. To the extent we haven't seen any press releases on this subject, I wonder if some investors have decided to sell their stock.

    Food prices also continue to move higher in many categories. Historically, Israeli consumers have been fairly price sensitive to big swings in food prices, suggesting some potential revenue headwinds as we move through 2014.

    However, I think these concerns are more than discounted in the stock price at today's levels and continue to recommend the stock.
    Feb 25 07:26 PM | Likes Like |Link to Comment
  • RELM Wireless Corp. Continues To Battle Against The Competition [View article]
    The Privet Fund LP purchased just under 1% of RWC's shares in the past few days at an average price of $2.85 on the open market. This is the firm's first purchase since August 1, 2013, and it raises their stake in the company to just over 13.5%.
    Nov 20 01:54 PM | Likes Like |Link to Comment
  • Magic Software: Has Anyone Looked At The 2014 Revenue Potential? [View article]
    Revenue Update:
    I spoke to the CFO of Magic today. The Allstates acquisition has closed, but I was wrong to assume they acquired close to $90 million in annual revenue. Allstates does an undisclosed amount of work for KBR internally, and that revenue was not part of the transaction. This doesn't materially change my positive view on the stock.

    Secondly, I also have clarified the contribution from Ericsson Inc, MGIC's largest customer. Ericsson accounted for $24 million (19% of total revenue) in revenue during 2012. Through the first half of 2013, Ericsson accounted for $9.5 million of revenue (14% of total), down from $12.8 million (22% of total) in 2012. I'll continue to watch this trend.
    Nov 14 03:24 PM | Likes Like |Link to Comment