As usual, here are a few value investing ideas from the past few weeks:

Mass Financial Corp (MFCAF.PK)

MFCAF is backed up the reclusive and somewhat oddball investor, Michael Smith, who has a record of growing shareholder value with obscure companies (Smith is also in charge of another recent value idea, KHDHF.PK, featured back in August).

MFCAF has grown book value at an incredible rate since its spin-off from KHD in 2006 – going from zero to $2.43 by the end of 2006, then to $4.39 in 2007 and $5.71 in 2008. As of December 2009, book value was at $9.72.

The company recent announced a one-for-one stock merger with TTT, another company chaired by Michael Smith. It is a complicated investment that deserves additional due diligence.

Reading International (RDI)

A good interview over at SeekingAlpha with Andrew Shapiro, founder of Lawndale Capital Management, on Reading International (RDI).

Reading International is an underfollowed company that owns movie theaters throughout Australia, New Zealand, and the US.

Unlike other theater operators, Reading usually owns the majority of its real estate properties. Reading has 16.5MM sq ft of real estate and only 1.2MM is currently developed, leaving 15.3MM sq ft available.

A big potential catalyst is Reading’s huge undeveloped parcel outside of Melbourne, Australia. At 51-acres, it is one of the last undeveloped parcels near the central business district and a potential sale should bring immediate windfalls to common shareholders.

A contrarian play with significant undervalued real estate holdings offers great potential for value investors (see my post on JCTCF for another example).

Premier Exhibitions (PRXI)

A stock that has been discussed frequently on twitter and beyond (as well as other value investors here and here), a judge recently ruled that PRXI legally owned the $110m in artifacts it recovered from the wreck of the Titanic.

With a market-cap of only $85m, the stock trades at a discount to the value of its assets. However, despite the possible value in liquidation, it looks like the company intends to display the artifacts (a money-losing business over the past several years).

In addition, some turmoil in the management ranks makes for some concern over the future of the company, but regardless, it is a play to certainly keep an eye on.

Sun Healthcare Group (SUNH)

Continuing the theme of potential value unlocked in real estate, ValueHuntr has another well put together presentation from a guest poster on Sun Healthcare Group (SUNH).

Sun Healthcare is a leading skilled-nursing services provider that is currently splitting into two business segments: the operating company and a REIT.

The industry looks attractive, as the elderly population continues to increase while the number of care facilities continues to decline.

In addition, SUNH benefits from substantial tax loss carryforwards, an experienced management team, and appears undervalued on a comparable and sum-of-parts basis.

Disclosure

No positions.

I spent time this week updating and filling out the Resources page with helpful links from a value investing standpoint.

These are the items I use on an everyday basis to screen for undervalued stocks, analyze financial statements, determine appropriate valuations, and find new opportunities.

The links can be loosely broken out into several categories:

Stock Screeners

Graham Net / Net Screener has the widest collection of securities trading at a discount to their net asset value.

For more complicated screens, Stockscreen123.com provides the ability to create custom screening criteria, a major advantage over the other screeners which limit the investor to pre-set criteria.

The tool can handle extremely complicated scenarios for almost any line of a company’s financial statements, and is the best resource for identifying potential investments using new and original ideas.

Valuation

The SMF Add-In is a free function in Excel that allows limitless information to be pulled into a spreadsheet automatically from a single ticker symbol. By itself, the add-in is incredibly powerful, but Jae Jun and his OSV Valuation Spreadsheets are the best stock valuation tool on the web.

The spreadsheet crunches numbers for several different valuation methods automatically including DCF, EPV, NCAV/NNWC, Piotorski score, and Z-score, along with giving historical financial statements.

They are constantly being improved, and Jae even gives away several outstanding free spreadsheets on the website as well. A must have for any investor, even a recreational one.

However, even with the best number crunching in the world, nothing beats reading through a company’s annual reports at the SEC EDGAR Database.

Special Situations

Special situations investments, or workouts, encompass a broad range of alternative investments including going private transactions, merger arbitrage, tender offers, distressed securities and spinoffs.

Each of these areas has been proven to beat the market over the long run, and make a great supplement to a traditional value investing portfolio.

SINLetter Merger Mondays (merger arbitrage), Fat Pitch Financials Contributor Corner (going private transactions), Bankrupt and Distressed (BAD) Research & Due Diligence (distressed securities) are great resources for learning about new opportunities.

The contributors at each site share a great deal of helpful info and sample analysis for those new to special situations.

Suggestions & Recommendations

What other resources do you frequently use for finding new investing opportunities?

Please reach me on twitter with suggestions for other valuable links or sites. If I find them helpful, I’ll make sure to add them to the Resources page as well.

A collection of value investing ideas, stocks, and analysis from the past two weeks:

Hawaiian Airlines (NYSE:HA)

Valuehuntr has put together a great presentation recommending to buy Hawaiian Airlines (HA) while shorting American Airlines (AMR).  The presentation makes a very convincing case that HA is one of the best run carriers in the world, while AMR is struggling with a legacy fleet and underfunded pension obligations.

I’m really impressed with how the information is presented in a very professional, organized, and logical manner.

The airline business is notoriously difficult (even Warren Buffett had a well publicized mistake with US Airways), but Valuehuntr certainly makes an impressive argument for HA.

Investment Analysis: The Visteon Corporation (VSTNQ)

Another great summary from Above Average Odds Investing on the post-bankruptcy valuation of Visteon Corporation.  VSTNQ was a high-profile parts company spun-off from Ford, which is close to emerging from Chapter 11 bankruptcy.

The stock is currently trading on a ‘when-issued’ basis and should see a large price boost once it resumes trading.  It also appears undervalued using very conservative multiples, along with a ‘sum of parts’ breakdown as well.

Bankruptcy investing is an area that I’ve started to explore, as it offers mispriced and ignored securities that are often event-driven as opposed to market-driven opportunities – the logic lines up very well for a value investor looking to profit from special situations.

Buyout Targets

Greenbackd featured a post (originally on TheStreet.com) from Mark Travis, CEO of Intrepid Capital Funds. The post features three undervalued stocks, including Tekelec (TKLC), Aaron’s (AAN), and Tidewater (TDW).

Travis argues that these stocks are potential buyout targets, and appear undervalued based on the price an acquirer would pay in cash to buy the company outright.

As a value investor, acquisitions can provide tremendous gains, acting as the catalyst that finally drives the stock’s price to reach its intrinsic value ( check out the recent acquisition news with NUHC, a prototypical undervalued stock).

Mid-Continental Tab Card Co.

This is an older post from almost two years ago, but I just came across it and thought it would be worth sharing.  It describes the logic behind Buffett’s investment in Mid-Continent Tab Card Company back in 1959.

“When presented to Buffett in 1959, the company had $1 million in sales, was growing at 70%+ per year and earning 36% profit margins.”

It is a great real-world example of Buffett’s thinking about investments in the early days.

A Thousand-bagger – McDonald’s in the Sixties

A fascinating research report from an analyst in the 1960s covering McDonalds (MCD).  Originally posted at Bigger Capital, it is an amazing look back at one of the most successful companies of all time.

The analyst managed to pick up shares of MCD at only $0.06 and still holds most of the original stake, an investment that has returned over 1000 times!

It is not often that an investor comes across such an incredible homerun and definitely says something for holding a concentrated portfolio full of only your best ideas.

Disclosure

No positions