Tim Eriksen

Peerless Systems Gets Ready to Rumble with Highbury Financial

This should be an interesting story to watch unfold. IMO, both stocks are attractively priced. Peerless has no debt, and ended the April quarter with $2.57 per share in cash/investments. They received additional funds that were held in escrow this quarter. So cash/investments should be around $2.90 per share, yet the stock trades at $2.22. They have been buying back their own shares.

Highbury, an asset manger with around $5 billion of AUM, is also debt free. Has cash of around $1.55 per share, book value is $4.50, and has current annualized cash earnings of 40 to 45 cents per share. At $4.22, it trades at 10 times cash earnings, and just 6 times cash earnings if you adjust for the cash on the books.