Weekend Values – August 29, 2010

Posted August 29th, 2010. Filed under Investing Links

Here are a few interesting value investment ideas from the past two weeks:


Investment Analysis: KHD Humboldt Wedag International Ltd. (KHDHF.PK) – Purchase A Pile of Cash And Get A Competitively Entrenched, High Quality Cash Cow With Good Growth Prospects For Free

This is a thoroughly research post from AboveAverageOdds regarding a spin-off business, one of the special situations investment scenarios that has historically provided outstanding returns.

KHDFHF is an industrial business specializing in proprietary technologies for cement and mineral processing.

The company is obscure, and other factors (including only reporting financial results twice a year, located in Germany, etc) might serve to deter investors.  Despite the obscurity, the company appears to have a strong competitive position and a solid cash position to take advantage of future growth opportunities.


Furiex Pharma: Spinoff Trading at Net Cash – Continuing the spin-off theme with an analysis of Furiex Pharmaceuticals (FURX) over at OozingAlpha. FURX is a company in the drug discovery business and was recently spun-off from PPDI back in June.

Within weeks of the spin-off, the stock dropped from $18 to below $10, and has traded around there since.  Although the stock is currently trading around net cash, the business requires a high rate of cash burn while researching new drugs.

Several promising drugs in the pipeline could lead to future gains.


When All Problems Are Short-Term – Barel Karsan has a post on small-cap infrastructure company called Sterling Construction (STRL).  The company is in a very cyclical business, and appears it depends on budgets of state governments (many are struggling with tax & budget issues), resulting in margin pressure and revenue swings.

STRL doesn’t have the typical ‘value-oriented’ balance sheet, but has earnings potential for investors unconcerned with short-term results.

Net/Net List

Top Net/Net’s By Market Cap – In the spirit of Graham and other deep value investors, net/net investing has proven profitable over many years. Several recent investments here at Value Uncovered, including CHBU & ELST, were based on this methodology.

Cheap Stocks has a nice list of stocks trading at less then NCAV.  Several names on the list, such as VOXX, have been on these lists for awhile, so it is important to find those with some sort of catalyst.



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2 Responses so far

  1. Emiliano says:

    CHBU, for the third time, below net cash (20% disc)

  2. asues says:

    Agreed on CHBU – just posted up my Q2 analysis with the exact same point. Stock turns in record numbers, crazy growth potential, and yet trades for less than net cash.

    Here is the link: China Agri-Business (CHBU) – Q2 Earnings Analysis

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