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Guggenheim S&P Global Water ETF Message Board

  • dopey12310002 dopey12310002 Nov 16, 2004 9:23 AM Flag

    TO: What is the case?

    A well-known value investor has a significant position in TO, a micro-cap manufacturer of electronic controls and capacitors. (It is easy enough to check who I mean, but don't; that's cheating.) I have been through the K and Q's and don't see the investment case. It is not particularly cheap on an asset basis and looks worse on an income basis. It appears to be in a downturn, probably cyclical, but even assuming a pickup in earnings the stock doesn't appear cheap. Also, the pension is underfunded. The balance sheet is strong, and lately, it has been dividending out nearly all of its earnings - for a big, fat, juicy yield of 2%+. I assume I am missing something, but what? Anyone out there see the wisdom in this stock?

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    • A cursaray look at a few 10K's leaves me with the following comments. "normalized" earnings by a true value investor's definiton would be 10-20 times ttm earnings.
      Not just recently but regularly they have been dividing out a very large share of their earnings relative to most companies.
      Cash flow appears to be much much higher than earnings.
      Mining and the airline industry are probably going to start returning to more normal levels of capital investment IMHO.
      The company doesn't appear to be afraid of dramatic changes in the divi (either up or down) Divi could reasonably increase 5 fold in the near term if earnings return to normalized.
      Pension assumptions are conservative which means they could have had better "earnings" recently if the were just a little more optimistic:)

      That is the bull case I would make if I were going to make one but that is with little understanding of the industry or the company only a skimming of a few 10 K's. So the opinion is probably worth what you paid for it. (which is a much better value than your brokers :_)

    • dopey....seen this one around for years...
      kindof a "trader" from time to time....
      looks to be setting up for the "Year End
      Bouncers List"....(Y.E.B.s')
      have you dug up any E's Guesstimates....
      Yahoo hasn't seen fit to include these.....

      • 1 Reply to bdparts
      • Estimates would be useless. No analyst coverage and no guidance. In fact, no news at all other than after the fact earnings releases. I certainly have no insight into why this quarter would be better, worse or the same as last quarter. I would have to KNOW it would be MUCH better for this to be a buy on other than speculative grounds.

        I do like management's reporting style and it seems like a well run company on things I can see and evaluate (meaning other than how good they are at making and selling electronic switches and capacitors).

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