Buying Today

Non-fundamental sellers from getting kicked out of the S&P 600 SmallCap Index. $50 million enterprise value with land and buildings worth $100 million.

I love buying stocks when there are non-fundamental sellers. That is the best time to be a value investor. The market pukes up an equity as I continue to load up based on valuation and valuation alone. Anytime the price of an equity decreases for non-fundamental reasons I get interested. If I know the company well I am usually a buyer.

That is the case for this company I am writing about this morning. The company is getting kicked out of the S&P SmallCap 600. Pre-market trading the stock is down 7.34%. I expect the stock to fall at least 10% today as the stock is a microcap that is pretty illiquid. With a share price under $10 per share, the stock has a market cap of $195 million, zero debt, $145 million of cash and an enterprise value of only $50 million.

In the past the company has generated $30-40 million of EBITDA and has owned land and buildings worth $100 million. The equity is cheap. The market is selling based on non-fundamental reasons. I will be a buyer today.

Let’s dig in.