These data were collected during the last phase of the recent bull market, and I was wondering what, if any, differences there would be between M&A data collected in bear markets. To that end, I looked at 36 takeovers collected between the end of June through the end of last December. (I tried to collect every takeover that I saw, but I'm sure my list is probably not complete.) The data is summarized in the table below. (Click to enlarge.)

Q3 2008 Earnings Call

November 10, 2008 10:00 am ET

One of the first stocks I recommended on my website was Silverleaf Resorts (SVLF). The stock was trading at low PE ratio and was also trading below book value. I recommended selling too early, but my recommendation still resulted in a gain of 18% in five months. I have continued to follow Silverleaf Resorts and I think the current stock price provides a better opportunity than when I recommended the company previously.

Silverleaf Resorts is a perfect example of what value investors look for. According to Yahoo Finance, Silverleaf has a book value of $4.98; however, the current stock price is only $1.88 at yesterday’s close. That means Silverleaf Resorts is trading at only 38% of its actual value.

Dealreporter is out with an interesting piece on Bluegreen (NYSE:BXG) saying Diamond Resorts may find financing an acquisition of Bluegreen, the Florida timeshare company, challenging, according to bankers following the situation. “This is a tough thing to finance,” said an industry banker, adding that his bank would not lend towards a possible deal between the two parties. It is the wrong time to finance a timeshare transaction, commented a second banker who was familiar with the companies involved and had previously been involved in lending for transactions in the industry.

On 21 July, Diamond Resorts signed a non-binding letter of intent [LOI] relating to the acquisition of Bluegreen for USD 15 a share, or approximately USD 500m. The agreement allows for Diamond Resorts to conduct “extensive” diligence until 15 September. In its 18 July letter to Bluegreen, Diamond Resorts said it was “confident that it will be able to raise the financing necessary to consummate the proposed transaction.”

Q1 2008 Earnings Call

May 9, 2008 8:30 am ET

Bluegreen Corp. (BXG)

Q4 2007 Earnings Call

February 29, 2008 11:00 am ET

I have addressed previously the potential for bargains in the Consumer Discretionary sector, focusing on extreme negative price momentum. After reviewing Shoe Carnival (SCVL) yesterday, I decided to go about it slightly differently. Using StockVal, I sorted for stocks in the sector with market capitalization in excess of $100mm that were trading at or below book value with nominal intangibles. Further, I restricted the list to companies that had reported positive net income over the past year with maximum debt to capital ratios of 65%. Finally, I eliminated any company with insider selling over the past three months (using Insider Scoop).

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Levitt Corpration (LEV) is a Fort Lauderdale, FL based homebuilder and real estate company that operates in the Southeast (Florida, North Carolina, South Carolina, Georgia). As of 12/31/06, the company had an inventory of 11,700 acres, 6900 of which were considered saleable (4100 in Florida, 2800 in South Carolina). The company's market cap is just north of $50 million, but a rather heavy debt load brings the enterprise value to about $650 million.

Like most homebuilders, Levitt has been crushed lately; from a 52 week high of $15.44, down to its current price $2.72. This company has truly taken a drubbing, as housing sector woes have worsened. Levitt reported a second quarter loss of $58.1 million, including a $63 million homebuilding inventory impairment charge.

The company had accounted for “borrowings collateralized by notes receivable as operating activities in the Consolidated Statements of Cash Flows because the majority of Bluegreen Resorts’ sales result in the origination of notes receivable from its customers and accelerating the conversion of such notes receivable into cash on a regular basis, either through the pledge or sale of our notes receivable, is an integral function of our operations.” That sounds like a pretty good rationale - especially because the activity is “an integral function of our operations.”

The company notes, however, that such treatment is not provided for in either Statement 95 or Statement 140. So, they’re taking those activities and putting them into the financing section of the cash flow statements. While it doesn’t change cash in total, cash from operating activities will be 75% higher for 2004; 72% higher for 2005; turn positive for 2006; and the negative cash flow in the first three months of 2007 will be 10% lower. The offset, of course, is higher amounts reported for cash used by financing activities.

COVER STORY: Big Ripple by Andrew Bary