Think You've Seen Cheap In This Market? Think Again. I'm going to look briefly at a micro-cap stock today and another later in the week that could be worth way more than what the market is pricing them for. Famous value investor Benjamin Graham held a portfolio of cigar butt stocks selling for less than 2/3rds of their net current assets after the 1929 market crash and beat the major stock market indices. They are called cigar butts because usually they are only good for one last run or puff.

G. Willi Food-International with a market cap of only 38 million is a Kosher food distributor in Israel. In the first quarter of 2008 they grew revenue 49% from Q1 of 2007. Net income increased 52% year over year. These gains were a byproduct of their purchase of Shamir Salads, an Israeli manufacturer of Mediterranean style salads and a Denmark dairy company. Overall, I like their business but I don't like the impact higher food costs can have on their margins. No doubt the market is likely worried about this as well. But is the company going to hemorrhage cash and be worth less than its cash in the bank?

Lets take a tour of WILC's recent financial statements.

March 31st 2008 in dollars
Cash and cash equivalents 7,371

Marketable securities 8,552

Total Current Assets 61,025

Total Current Liabilities 23,474

Total LT Liabilities 607

So, WILC has a net curent asset value(quick liquidation value) of $36.9 million and a $38 million market cap. The stock is selling for right around its net current asset value. WILC is profitable and based on estimated 2008 earnings of $.75 has a PE ratio of only 4.

G. Willi-Food also said it postponed talks to acquire 51% of a Russian dairy distributor "until global dairy prices stabilize."
Russian dairy distributor .

One big shareholder..

"As of the date of this Annual Report, Willi-Food Investments Ltd., which we refer to as WILLI-FOOD owned approximately 66.17% of our ordinary shares.As a result, Willi-Food and its controlling shareholder, Mr. Arieh Bar Lev (Arcadi Gaydamak), have the ability to control our activities, management and policies, including matters requiring shareholder approval, such as the election of directors.















full disclosure: no position in WILC
Stock Pursuit Home

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I'm on a roll with the low PEG - high ROE - low market cap - EPS surprise screen. Overhill Farms OFI turned up(bottom scroll down) and stuck out in late February of this year and had a 76% run since I mentioned the stock.

I mentioned Heelys (HLYS) about a month ago as a good company to be looking at as a turnaround. Altucher likes Heelys and some others to. I'm not desperate to back up the truck just yet...though it keeps finding a bottom at $4 around their cash per share which is $3.70. The long-term success of the company is still to be seen.

Think or Swim (SWIM) looks tempting below $7 a share but I think the better contrarian play would be even cheaper with a margin of safety.


full disclosure: no position in SWIM, OFI, HIMX


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Some very interesting facts and data articulated by Paul van Eeden on oil and monetary policy in this video.




Paul Van Eeden about monetary policy of the FED






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China North East Petroleum Holdings Ltd. (CNEH.OB)
The fundamentals look good. First quarter net income was up 1,052%, sales up 476% YOY. They have a bunch of cash on their balance sheet and a current ratio of 1.27.

Hansen Natural HANS might bottom out at $27,$28.


full disclosure: no position in HANS,CNEH


TradeKing.com. $4.95 trades + 65 cent option contracts. No minimums. No catches. No, seriously.
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Keeping An Eye On Global Payment Technologies Inc. (GPTX.OB) I'm not saying this a good buy here. It may never be but it is worth waiting to see what happens because they may have the potential to turn profitable consistently. I'm just assuming this possibility based on what the new CEO has done so far and what they have to work with. Brief Thesis

"The new product (which is yet unnamed) will expand our gaming family of GPT bill acceptors. At the same time we continue to increase our base of Intellectual Property (I/P). We have already registered two new patents pending and intend to release several others in the next few months. In addition, our engineers continue to work on the development of our new breakthrough product."
New Vision

Tim Sykes has been on fire lately with his trades. He has been picking great breakouts lately but his shorting strategy is what he does best in my opinion. I like his shorting strategy because it essentially exploits market inefficiencies and takes advantage of greed and fear in small caps which is one of the best areas of the market to do so.

Jae Jun has a neat site Old School Value . We both got interested in investing the same way. Upset about what we got from financial advisors. One little story. I was put in the Alliance Technology Fund in the mid 90s. It was Oracle, Microsoft, Amazon etc. That was great but nobody told me to sell in the internet tech bubble of 1999,2000!
Old School Value

Great resource of pending mergers and acquisitions. Post any good ones you find in the comments.


full disclosure: no position in GPTX


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