No one invests in a company simply because it has cash on hand, although that might be comforting. Investors buy shares to participate in the future earnings of a company. NTE said in it's last quarterly results release that the road ahead will be a rough one and that is my concern.
"no one invests in a company just because it has cash on hand"
OK, but we're not talking about some kind of money-losing pharma startup here. Namtai has one of the highest operating margins in the EMS industry. ROE on the noncash assets is over 50%. And it's selling for basically the cash in the bank. And they have a history of paying out cash.
Unless the business permanently falls apart, the stock is worth 10 or 15.
Your right --but the combination of cash and earnings / earnings potential makes this company attractive. - In this down environment cash is king. - Now trading close to the cash on hand - You could sell the whole company in a rummage sale / fire sale and still come out ahead. - Or the cash could be used to make "fire sale purchases" of other beaten down undervalued companies that would better psoition NTE for strong earnings once things turnaround __AND THEY WILL turnaround.
That is the whole point of value investing! You don't know what will happen to make things go higher, but something will. This means they get bought out, buy another firm with their cash to increase future earnings, spend the cash to improve their processes and margins, pay out a special dividend without changing the earnings power of the firm, etc.
I could care less if they go bankrupt...it is trading in negative valuations right now. It has 271M in cash, 10M in debt...and a market cap that went into the 237M range on Friday. That is insane. Taking its cash (271M) that is probably yielding about 5% or more due to the t-bill yield that the jump in the value of bonds (13.6M), NTE can stop operations and pay about 0.33/share in dividend (just from the interest on its cash/bond holdings)! That is a 5.6% yield for doing NOTHING! You can't get that return in the treasurys by buying today! Plus, it is in cash at NTE and was already in bonds (thus, they got a massive return when bond prices skyrocketed and the dollar has now strengthened). NTE could be sitting on more than 300M in cash right now because of all this...