You might think that $1.70 is worth about $1.70, or that a rose by any other name smells as sweet — but already I am confused. As sweet as what? (Why did that man never just come out and say what he meant?)

So let us review:

1. When tiny little Calton Homes (CN) had what appeared to be about $1.70 in cash and no liabilities or expenses or operations, no one wanted it at $1. Who wants to pay a buck a share for $1.70 in cash, the market’s reasoning seemed to go, when at the very same time you could buy some dot-com with no appreciable cash for 2000 times earnings?

Well, I wanted it — for two reasons. First, I liked the odds. Sure, the owner could screw it up and lose that $1.70 in cash, but he had more than 11 million reasons not to. His own shares. Second, I liked the simplicity. In a complicated world I surely do not pretend to understand very well, a company with essentially no expenses or operations or liabilities and just a big pot of cash is the kind of company I feel marginally able to form an opinion about.

And what could account for a thing that appeared too good to be true? Three things. First, CN, despite its American Stock Exchange listing, is just so small and trivial that no self-respecting player, let alone institution, could possibly be interested. Second, the frenzy for New Economy stocks may have made an asset play like this even less interesting than usual. Third, everyone knows that if it seems too good to be true, it probably is — presumably, there was a catch.

And there still may be — cockiness is rarely a winning analytical tool — but let’s continue with the review.

2. Calton put a few hundred thousand dollars of its cash horde into an e-business that it renamed eCalton. Well, now, that’s different! eCaltion! eXcitement! eGads! And the $1.70 in cash that most people wouldn’t pay $1 for was fairly quickly bid up to a high of $6 and change. The message boards had discovered this hot new eCommerce stock — a smart 62-year-old home builder from New Jersey who had entered the dot-com fray — and, well, what dot-com incubator wasn’t worth a billion or two?

By the time CN did reach $6 and change, I had sold most of mine and had recommended you do likewise. My February 11 column was titled, “The Lunatics Take Over – Yippee!”

3. Not long afterward, the stock collapsed, along with the other wing-and-a-prayer eStocks. Today, we’re back to its selling for about 85 cents (well, actually $4.25 after a one-for-five reverse split, but let’s stick with the old numbers for now), and, after a variety of transactions, it still has something like $1.50 a share in cash. Except now it also has stakes in a few Internet businesses as well. And still the homebuilder guy from New Jersey has 11+ million reasons not to screw it up. (Well, 2+ million post-split).

So I’ve been buying again. How bad can it be to buy $1.50 in cash for 85 cents?

Now let’s switch to the post-split numbers. Because of the 1-for-5 reverse split, the price is now $4.25, not 85 cents. And the $33 million or so in cash (based on the last public report I saw) is divided over about 4.3 million shares, not 20+ million, which works out to about $7 each.

And maybe the owner will still find a way to fritter away all that cash and, ultimately, make his, and our, shares worthless. Believe me — it’s been done before.

Having said all this, “if it seems to good to be true, it probably IS,” so please do not invest in this even a nickel that you could not be philosophical about losing. I live in dread of ever hurting you financially.

And please don’t “bid up for it.” As tax-selling season approaches in earnest, I like to think that many of the folks who paid $25 and $30 a share — and that one guy, at the top, whoever he is, who paid $33.75 — will be selling their shares in disgust, for the tax loss, driving the price down even further. That would be good news for us buyers. Yes, CN may be “worth” about $7, because of its cash. But please don’t pay anywhere near that much. What’s the incentive to pay $7 in liquid cash for $7 of cash you can’t actually get your hands on? Especially when, run wrong, CN could blow through that cash in no time?

But who knows: with enormous good luck, maybe one of the little dot-com investments CN’s been making could be a winner. It’s a long shot. That’s what makes it fun.


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