I fully agree with you in the fact that they now have a great balance sheet and that is exactly why I feel extremely comfortable holding shares that cost me $1.55 (of course I gotta sell them at $2)...there is no way, in my mind, that this stock goes lower than its most recent low of $1.60.
I've heard you guys refer over and over again to hedge funds. Not sure what you mean by that but I believe that the latest dowdraft was provoked by the bondholders (maybe they are hedge funds, who knows) shorted 390 shares for every note they held. It makes perfect sense, they knew full well they were going to get the shares needed to cover their short and their first concern is to recoup their principal on the notes....maybe we're all saying the same thing....
If the stock survived that massive short, I am very confident that we've seen its low.
Having said all this, valuations are always a function of sales, ebitda, net income, etc...in other words, income statement items and not balace sheet items.
Granted that a flexible balance sheet provides great opportunities for future growth (thru the income statement) and thus a better valuation. I just find it hard to speculate on numbers that not even NCS's management believes in.
I realize that they had a tremendous 2008, but not even they believe that to be in the cards for their future.