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Entertainment Gaming Asia Inc. Message Board

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  • pjv2xyw9dww4b5 pjv2xyw9dww4b5 Sep 16, 2006 6:47 PM Flag

    time to short vnx again?

    trade460,
    Share price is not the number I like to use when considering selling short the stock of a company.

    Instead, the first thing I do is pull up the most recent 10-Q/10-K, find the most recent number of shares outstanding, and multiply that by the current share price to get a market capitalization number to keep in mind as I look at the financial statements.

    With VNX, for example, I go to http://www.sec.gov/Archives/edgar/data/1004673/000114420406033086/v050075_10qsb.htm and find "27,015,627 shares of common stock, $.001 par value, as of July 31, 2006." Multiplying 27,015,627 by $2.33 gives $62,946,410.91. The market thinks VNX, the company, is worth over 62 million dollars.

    I think the company's value is less than $62 million.

    Total assets (06/30/06) are only $16,355,778. The market thinks the company is worth nearly four times its total assets! That might be reasonable if the assets were owned free and clear, but the company is "upside-down" since shareholder's equity is $(2,530,003).

    Shareholders' deficit is $(76,867,855). Not only has VNX been losing money recently, but overall, it has lost over $70 million, some of it since the recent management change.

    Being short 69k VNX could be an error, but I'll take my chances, as I think the company's current market capitalization wildly overestimates its value.

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