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Okay squid, it's quid quo pro time

  1. #1
    Everybody to the limit!
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    Okay squid, it's quid quo pro time


    You've gotten lots of answers from the geeks on geek affairs, now it's your turn, I have a financial analysis question:

    In my nightly bottom-feeding perusal of the stocks that have hit 52 week lows, I come across a puzzler by the name of WNMLA (http://www.winmillco.com). These guys are a financial holding company, with investments in a few AMEX concerns as well as a handful of closed end mutual funds. Voluntarily delisted in july and now trading around 2.1 in the pink sheets.

    Here's the thing, their book value is completely bass-ackwards when you compare it to their market cap. I've been perusing their latest financial reports (a bit screwy since they're no longer bound by SEC regs for listed stocks) and the short of it is they've got 1.5 million shares outstanding, plus another few thousand in stock options, for a total market cap of just over 3 mill. They've also authorized another million shares of preferred stock but none of that has been authorized as of yet (so I'm not sure exactly how that figures).

    Here's the screwy part. In addition to about a million in cash, they've got somewhere between 6 and 10 million in marketable securities boosting up their book value to WAY above their market cap. I mean hell they've got 220k shares of BXL (trading at 17) and 200k shares of TUX (trading at 7.28) which right there is worth 5 million, and that's not even getting into the private investments and mutual funds.

    So my question is, how the hell can a company be trading at 1/2 to 1/3 of their book value? Hell, I would think their investors would demand that the company sell off their assets and disburse the profits to them, especially considering the stock has been trading in the low twos for 6 months now. Furthermore, other than a 50% loss in the value of their held securities, what would be my risk in buying shares of this company? I'm a bit wary of buying into the pink sheets as I realize that they're volatile and the lack of SEC regulations on reporting is a bit disconcerting, but on the whole this stock just seems too good to be true. Which, honestly, is probably a big red flag to stay away, since assuming a reasonably efficient market there's got to be some MAJOR issue I'm missing which makes me pretty unqualied to speculate on this issue...but you know me, I love to know everything, so explain to this mere mortal if you can put it in laymen's terms exactly what the hell is going on here

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    Last edited by Honclfibr; 11-22-04 at 10:29 PM.

  2. #2
    Everybody to the limit!
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    Okay squid, it's quid quo pro time

    Oh yeah, I checked the usual financial message boards, but this stock's been dead since it got delisted, nobody's talking, so I figured what better place than a sportbike website to seek sound financial advice

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  3. #3
    Everybody to the limit!
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    Okay squid, it's quid quo pro time

    thanks for the reply, looks like some good stuff. I'll check it out when I get the chance

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