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Market Leader, Inc. (LEDR)

|Includes: Market Leader, Inc (LEDR)

 Market Leader, Inc. (NASDAQ:LEDR) provides realtors with digital services for managing their businesses.  The Company’s traditional HouseValues and JustListed lead generation products deliver home seller or buyer leads to realtors. It trades in the $1.90 range with a market cap of $47.23 million, despite having NCAV of $48.4 million or $1.96 per share. The company has almost no liabilities and the bulk of its current assets is cash, rather than difficult to value inventory.

The company is trading below its NCAV because it is losing money each quarter. But, given the nature of the housing market in the United States over the last three years, wouldn’t it be safe to assume that as the market continues to recover, the company’s earnings should as well? If so, now would be an opportune time to purchase, since it is unlikely the company will be selling for so little once its fortunes turn. Value investors are often purchasing unloved companies like this, right? to answer these questions, it is important to look at how the company performed before the recession hit and the housing market collapsed.

In the company’s strongest year by revenue, 2006, it sold approximately $98m worth of product (as compared to just $24m last year – quite a decline!). At the pinnacle of sales, it managed to lose $3.14m (vs. a loss of 7.37m last year). In its defense, in 2005 the company sold $87m worth of product and made a profit of $15m, but when the company’s track record in the absolute best of times is hit and miss, it is difficult for a value investor to make an assessment of the company’s future prospects without making a number of unwarranted assumptions.

Author Disclosure: At publication, the author DOES NOT have any position in the securities of this company.

Read more: Market Leader, Inc. (NASDAQ:LEDR) | Frankly Speaking 
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