Net-Net PRLS Update and Metals Setup

I've been writing on Peerless PRLS here on the blog for years and in the last post on it I called it one of the most compelling net current asset stocks out there. They recently made an acquisition and now have a cash buyout offer for $7.00 a share. I talked on the phone with Peerless PRLS Chairman and CEO Timothy Brog five years ago. He's been very committed and patient in adding shareholder value with this company.

Metals are on trend support. I have a buy stop order in too long JNUG at 21.80.  Crude oil has a setup as well. There is a triangular consolidation on this flag/pennant over the last few days. If crude continues to crash I have a buy stop order at 74 in to short oil with the ultrashort ETF SCO.

 

Peerless Systems PRLS

I posted on Peerless Systems PRLS really quickly on Thursday after glancing over a couple things. I just wanted to get it out there quickly for whoever might have been interested. Looking more closely there are some more good things here along with the stability in cash. Activist investor Timothy Brog who I had the pleasure of speaking with briefly has gotten on the board of directors as chairman. No doubt, the company is now moving in a better direction. In 2008 they sold about all of their intellectual property to Kyocera-Mita Corporation for a pre-tax gain of $32.9 million along with 38 employees. They have a lot of cash to work with to get value out of the company be it an acquisition or some other means. There definitely looks like there is upside to the stock.

Background from 10Q
"The technology we license has addressed the worldwide market for printers (21-69 pages per minute) and multifunction printers (“MFP”) (21-110 pages per minute). This market has been consolidating, and the demand for the technology offered by us declined throughout fiscal years 2009 and 2008.

The document imaging industry has changed. Lower cost of development and production overseas increasing complexity of imaging requirements has resulted in us not being able to effectively compete in this environment. As a result, we sold our intellectual property and transferred 38 of our engineers and support personnel to KMC. Although as a part of the transaction we have retained the right, subject to certain restrictions, to continue licensing and supporting the imaging technology that we had previously developed and to continue to license third party imaging technologies. We are currently pursuing other potential investment opportunities. The strategy calls for aligning our cost structure with our current and projected revenue streams, maximizing the value of our licensed back technologies and expanding our business through investment opportunities.

Our contract with Adobe expires on March 31, 2010. We have had discussions with them to either extend the contract or enter into a different agreement with them. Our discussions have not resulted in an agreement. In order to maximize the value of our Intellectual Property and relationships with our clients, we are exploring how to transition our customer base that currently utilizes Adobe technology to another technology provider."

Deep Value Stock PRLS

I find Peerless Systems (PRLS) to be one the more compelling net current asset stocks I currently know of. The company has a market cap of $10.1 million. There is $4.58 per share in net current asset value and $1.77 in net cash per share. The stock last traded at $3.35 per share. They've repurchased a lot stock over the past couple years. The company has bought in aggregate 482,111 shares of stock or $1.8 million in fiscal 2013. Additionally, from February 1st of this year to April 23, 2013 they repurchased $230,652 of stock.

YOU On Demand Holdings (YOD) Trade Setup

YOU On Demand (YOD) has had a big sell-off and is down to $1.57 here. I like this stock a lot technically here. This is a very clean and tight symmetrical triangle bull flag. Looking at some fundamentals the market cap is $18 million. There is nothing stellar in the financial statements that I saw. Revenue growth is flat. No net income. I like the balance sheet however. I looked at quarter end Sept 2012 and the past couple years. The balance sheet is healthy. There is about $10 million in tangible assets, $22 million in total assets and total liabilities of just $13 million with just 17K in long term debt. I like what I read on the founding partners bio. This is more of a technical play and I am going to put a buy stop order in for 1.71 a share. If it breaks out above the flag I want to be long. I'm watching the consolidation on BLDP to. Something worthwhile technically may develop or it may not. That's how it goes. I'm also watching PRLS as a pure fundamentals play which has net cash per share of $2.62.