As I mentioned in Friday's column, deep value investors are finding the pickings slim among net/nets (companies trading below net current asset value). Voxx Int'l (VOXX) , which is springing to life following its latest earnings release, was up another 5% that day, and here's the rundown on a handful of other net/nets.
Richardson Electronics (RELL) , which was enjoying a nice run after putting up several consecutive profitable quarters, and flirted with $10 last July, a level it had not seen since 2015, has fallen back to earth after two consecutive quarterly losses and now trades in the $5.50 range. The stock currently trades at just .59x net current asset value (or NCAV), .6x tangible book value, and ended its latest quarter with nearly $50 million, or $3.79 per share in cash and no debt. This seemingly perennial net/net also yields 4.35%, which is uncommon for net/nets which typically do not pay dividends.
Acacia Research (ACTG) , which is in an odd business that invests in intellectual property and assists and protects patent owners, is short on sales these days, but long on liquid assets. The company generated just $3.4 million in revenue last quarter, but more than $49 million the previous quarter, and that seems to be the pattern historically: lumpy revenue. Currently trading at .88x NCAV, the company ended its latest quarter with $181.5 million, or $3.65 per share in cash and securities, and no debt. Shares closed at $2.82 on Friday, but the company has not had a profitable quarter since 2017. It's the perfect company to end up in net/net land, relatively unknown by investors and not followed by any analysts. The stock traded in the high $40's back in 2011.
Iowa-based furniture name Flexsteel Industries (FLXS) , founded in 1893, generated nearly $500 million in revenue last year, and has historically been profitable, but cratered over the past year, down nearly 60%. Third quarter revenue, reported in early May, was down 12%, and reflected a degradation in revenue and margins that the company is addressing via restructuring. Shares have also been hurt by the threat of tariffs, as it sources more than 40% of its sales from China. Currently trading at .94x NCAV, the company ended its latest quarter with about $29 million, or $3.62 per share in cash and no debt. Another rare dividend paying net/net, it currently yields 5.15%. FLXS also owns considerable real estate assets, including 10 manufacturing, distribution, and corporate office properties. By way of reminder, such long-term assets are excluded from the net/net calculation.
Perhaps not surprisingly, FLXS also garners no analyst coverage.
