Wednesday, August 10, 2011

Color That Tongue Blond!

The Q&A sessions during company conference calls are usually filled with the questions of analysts with very short-term mindsets. This is illustrated by the nature of their questions, which can range from "Is your gross margin next quarter likely to be 23.3% or 23.4%?" to "Were sales in the 3rd week of July higher or lower than they were in the 2nd week in July?". But on the most recent conference call for Blonder Tongue (BDR), a shareholder with a different agenda appeared. The price has fallen so low, that the caller wanted to talk liquidation value!

First, the caller brought up the company's long-term inventory, trying to assess its value. Then the caller asked about the company's real estate, making it clear where he was headed: he wanted to know what the company's assets could be sold for. The caller asked if the company's real estate could be sold for $3-$4 million, to which management replied, "easily".

So here we've got a company trading for $8 million, with current assets of $14 million against liabilities of $5.5 million. In addition, the company owns valuable real estate, is profitable, and expects to remain so for each of the next two quarters.

Blonder Tongue already sits on this site's Value In Action page, as it climbed from a rather low price in 2010 to a level much more commensurate with its intrinsic value. But now the stock is down almost 50% from its 2010 highs, and once again appears to trade at a deep discount to its underlying worth. As such, value investors may be interested in this stock once again.

Disclosure: Author has a long position in shares of BDR

This article was written by Saj Karsan of Barel Karsan. If you enjoyed this article, please consider subscribing to the feed.

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