Prudentbear

Estimating KSW at 40% Below Fair Valuation

For all the author defended his pick - a bit too much if you ask me, biased?- I have just one question... How much money have you lost on this so far?... Going for about $2 these days... wow, what a buy... want to lose more money?...

KSW: In the Bargain Bin

Agree completely with Suh551. Just a a quick glance at the company's current projects via their website shows project after project in... condominiums. It is a near certainty, as Grantham might say, that condo construction in NYC now and for the forseeable future is a very, very scary place to be. Developers are trying to get out of deals desperately and selling unfinished units (pre-construction sales) at plummeting prices just to cover their construction loan obligations. Developers that have strong balance sheets are conserving cash and only just recently have they even begun to talk about looking for land deals to set up future projects. It's really just an ugly place to be.

Does the company have cash? yes. Will they survive? most likely. But don't underestimate how long the economy -especially construction in NYC, which is arguably at the heart of the pain- can just drag along the bottom. All the while, a few million here... and then a few million there... out of 20 million isn't that much. And thus we may have one very pretty by-the-numbers value trap. And I mean one heck of a VALUE TRAP. Look at this way - bring their cash level down a notch and their share price down a little, and wow, you get the same beautiful looking discount to book value that you get now. Keep doing that exercise, and you'll lose virtually every penny... with a stock that looks beautiful on paper. But if that isn't enough to make you hesitate, just consider....

This is one lightly traded stock. And for novice investors, take note: "lightly traded" may sound grand when you think you're the first person to uncover this "undiscovered" stock, but you learn real quick that when you want to sell... hey that's funny... there's no one paying attention to your stock, which means no one to buy it. Don't think that carries water? Just imagine the folks that bought into KSW recently at around $2. For the past week, all they've heard about is the great rally (bear or real, whichever) going on. And KSW hasn't done squat. So... you have your answer right there. The market has already spoken. The entire globe is rallying right now. Except KSW.

Nice little company. CEO does some great charity work. I wish them the best. But considering everything... do you really think that KSW -a construction related concern in condos in NYC- is really the place to be going long?...

One more thing: High P/E stocks have been holding up better than low P/E stocks, which is pretty much in line with past recessions and whatnot. Not surprising, high P/E means the market thinks you have "good assets", while low P/E means they value your assets, well, lower. It's not rocket science. So... the market seems to have a pretty low opinion of KSW's assets. Again, I like the company as a company and all, but with all the bargains that abound out there, why should I risk my money with this venture?

Ok, this really is the last thing: If the article's author's screen name is WideMoatInvestor... why write about this company? Please... show me a moat. I dare you to make me laugh.

Good hunting to us all. Stay smart. It's ugly out there.