Dr. Kellegro’s filter for potential long opportunities within the portfolio is so rigid that most opportunities fall between the cracks and are left for the vast number of investors who prefer to be net long rather than net short.
One such opportunity that came up during my weekend marathon of research is MRVC. One of my primary drivers behind consideration of a long position within the portfolio is whether or not shareholder activism, at any level, is taking place within the company. MRVC passes this primary test with flying colors, as there are a few respected and notable value investors that are buying up the stock at its current discount prices.
Two investors of note that have been participating in buying up shares and are also members of the board are Senor Charles Gillman and Dr. Kenneth Stein. Senor Gillman is with Boston Capital Group and Dr. Stein is with Spencer Capital. Both of these are deep value driven funds.
The company has appreciated substantially from its lows below .50 cents in 2009 and is now sitting close to $1.50. During the heyday of the technology revolution in 2000, MRVC was a darling amongst traders…myself included. It continued to be a darling all the way through 2007 or so, despite having destroyed the wealth of many an investor. I, personally, knew of many dedicated groups of investors who were clinging onto the stock thinking that it would have them retiring in style…alleviating all worries for the second half of their lives.
Alas, it was not so…and the last remaining retail worms were rinsed away as a result of the high pressure blast that was the crisis of 2008. They are now gone for good and as such, the stock is now free to rise and achieve its true value.
The fundamentals of the sector are very promising as bandwidth and the rapid transfer of vast amounts of information is a staple of today’s information driven society. FNSR, for example, has seen an appreciation of 1000% in the less than two years. Same industry…different stock. Want further proof? Check out the charts of JDSU, OCLR, AMCC. Again same industry, all close to 1000% gainers over the past couple of years. MRVC is setting up to do something similar.
The fundamentals of the company are much less important, as a thorough fundamental analysis of a company that has depreciated greater than 90% over the last decade will rarely point to anything positive. However, from an industry, activist and psychological standpoint…all signs point to higher prices over the next 12-24 months.
Again, for those so inclined…a potential gem. As Dr. Kellegro will not participating here, I only ask that you donate a portion of your profits from this investment to your favorite pub after a long night of debaucherous behavior.
Signed: the always philanthropic Dr. Kellegro