Investors looking to understand a company's current financial position (i.e. the company's debt levels, its cash balance, what it owns and what it owes) will often flock to the financial statements contained in the company's most recent quarterly report. After all, quarterly financial statements are required to be fairly comprehensive, and therefore contain most of the information an investor needs in order to determine a company's current financial position. However, subsequent events that have occured since the cut-off date of the last financial statements can dramatically alter the value of the company in question. As such, it is important that investors not stop at the statements; subsequent disclosures need to be taken into account.

Consider Fortunet (FNET), creator of gaming platforms and networks for casinos and other customers. Fortunet trades for just $13 million, but is profitable, has no debt, and shows a cash balance of $25 million. This cash balance, however, is as of the latest financial statements. An investor buying in using this information would get a rude awakening in the company's future statements: since the cut-off date for the last financials, the company has issued a special dividend of $28 million!

Most investors view stocks as lottery tickets – they buy and hope for the greater fool theory to kick in order to sell at a profit. More often than not however these investors lose a lot of money in the stock market, as they never seem to learn that stocks represent small portions of a business, which sells products or services and hopefully earns a decent profit while building on to its asset base.

Many investors have taken a beating recently, especially as the recession and bear market kicked in earlier in 2008. Some are bailing out of stocks completely, while seeking the relative safety of Treasury Bonds or Certificates of Deposit. Some investors however have seen the current bear market as an opportunity to load up on cheap stocks, which are trading below the net levels of cash on their balance sheets. The net-net strategy was popularized by Ben Graham who bought stocks after the Great Depression at steep discounts to the net asset values per shares realizing huge profits in the process.

It is a powerful statement when others are hoarding cash that a company has the confidence to declare its first dividend to eliminate excess cash. Oracle (ORCL) did just that on Wednesday when it reported third-quarter EPS of $0.35/share, $0.03/share better than the analyst estimate of $0.32/share, and it declared its first ever dividend of $0.05/share. The dividend yield is 1.15%. ORCL is a leading supplier of enterprise database management systems and business applications.

The liquidation of Technology Solutions (TSCC) was a strong reminder of the profit potential for stocks trading for less than net cash (cash – total liabilities). TSCC was relatively illiquid and trading between a low of $1 and a high of $1.11 this year. Some days no shares were traded. But in my article on 02/09/09 "Exploiting Market Anomalies with Neglected Illiquid Stocks" I did speak on the topic of illiquid value stocks and believe it should not deter value investors.

On Tuesday, February 10, TSCC announced they would liquidate. TSCC closed at $2.18 this past Friday (02/13/09), up from the liquidation announcement date on Tuesday 02/11/09 at $1.06 for a +105% gain. This event got me thinking I should carefully search for other net cash bargains. I screened on many quantitative and qualitative factors coupled with net cash greater than current share price. These ideas were the most appealing net cash bargains.

With the proliferation of casinos all across the United States, especially on Native American reservations, there may be an opportunity in the manufacturers of the slot machines, video poker machines, and bingo machines. According to the U.S. Bureau of Labor Statistics, because of the growth of and increasing popularity of Indian casinos and racinos [a racetrack with a casino], employment in gaming services occupations is projected to grow by 23 percent between 2006 and 2016, which is much faster than the average for all occupations.

You will have to decide if any of the following stocks are worth betting on.

Bullish calls:

According to Tom's data, 14 "software" IPOs have occurred in the last 12 months (Note: All returns as of 9/15/2006):

1 - Chipotle (CMG) - 181%. This market has been so difficult that even the most successful offering of 2006 recently had a busted secondary. I was quite high on CMG pre-IPO, the valuation in the $60's though is awfully aggressive. 55 X's '07 estimates with 20% expected revenue growth.