One reason I bought it was that a very smart guy who’d done lots of research told me it had $8.50 in cash, so you got the shares for less than their cash value — and the company (well run, he said) for free.
I certainly don’t expect a quintuple from SPRT, but it’s a (vaguely) similar situation. When first suggested a year or so ago, it was selling for less than its $2.85 in cash and short-term securities. Two months later, at $2.16, it was even cheaper. Closing at $2.93 yesterday, it may now be trading a bit above cash — but the smart young friend who brought it to my attention, and who has much of his own money in it, thinks a fair value now might be the cash plus “one times revenue” for the business itself (which is no longer losing money) — so, he calculates, about $5.40. And what if the business, under new management for the last year and a half, actually begins to take off? All of which is to say: if you bought shares with money you could truly afford to lose, don’t sell this one for a while.
Wildly more speculative — a total crapshoot, really — are shares of PRKR I bought yesterday at $1.10. Supposedly, the company has a huge patent-infringement lawsuit finally coming to a head, possibly in the next few weeks. If their claim is denied, as the market clearly seems to expect, the stock drops even closer to zero. If approved, it could be ten. “My guy,” “who knows a guy,” thinks there’s a better than 50% chance the market gets a surprise.
This has all the hallmarks of failure — but I couldn’t resist.
Quote of the Day
My problem lies in reconciling my gross habits with my net income.~Errol Flynn
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