Reasons for Recent Extreme Weakness May Be Primarily Technical in Nature
At the end of June. TINY was booted out of the Russell 2000. On that day, over 4,000,000 shares traded and ended at 3.05. Moreover, the stock sold off ahead of that expiration date, as everyone knew in advance that they'd be kicked out of the R2000. The few institutions who held the stock were forced to dump in compliance with their fund charters. All of that stock has to be absorbed by the arb buyer before the stock can recover. Today is the last day of the month and portfolio managers don't want to show TINY on their books. The same could hold through September's end of Quarter portfolio dressing/paring. As a result of the XRadia sale, TINY has more cash in their coffers. Expenses are too high for this type of stock and many investors have lost confidence in management. However, the stock is selling at a 25% discount to NAV. It's like buying a box of money for 75 cents on the dollar. I do believe that the Board is very conservative in their valuation metrics. That's why, TINY may be a buy today or through the end of September. There may be more tax loss selling, so the timing is tricky and patience through January 2014 is warranted.
I think they have real issues with their business model and the stock has obviously performed poorly. However, I think the NAV valuation is pretty accurate. The full Board of Directors is on the Valuation Committee and they use objective parameters in setting the valuation of each investment. Perhaps a lack of confidence in management has led to the implosion of the share price to NAV ratio. This stock used to trade at a hefty premium to NAV, but for the past few years we've seen a discount to NAV. It's possible that the negative valuation ties directly to their burn rate.