Medical Action Industries (NASDAQ:MDCI) is an underfollowed micro cap ($100 million market capitalization) in the midst of an operational turnaround which I believe offers investors a highly asymmetric investment opportunity. A perfect storm of events from 2010-2012 (discussed below) coupled with an income statement marred by goodwill write-downs, non-cash amortization charges, and consulting fees has kept the underlying operational improvement hidden from investors. However, management has taken several necessary steps to repair the business over the past 18 months (evidenced by a convincing set of results last week) and we have already seen a meaningful turn in the business as both gross and operating margins have shown strong improvement. The investment community has not yet recognized the...
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