STR Holdings

Buy Price
Holding Type
Investment Theme
Trade Date
August 4, 2016

This is yet another negative enterprise value company. I purchased shares at $0.23 for a market cap of $4.25m. Cash is $6.8m with no debt outstanding meaning a negative EV of $2.6m. The company announced it received an $8.3m tax refund from the IRS in June which will show up on the next 10-Q. This puts cash at $15m or $0.82/share. Additionally, there is a note receivable for $2m and assets held for sale of $7.9m (manufacturing facility in Malaysia) which could add another $9.9m or $0.54/share to cash reserves.

The downside is that the company is burning roughly $2m per quarter. Assuming June 30 cash holdings of $15m less quarterly cash burn of $2m puts net cash at $13m or $0.705/share. A 50% discount to net cash per share would mean a stock price of $0.35/sh for 50%+ upside.

There is no plan at this company so this holding is a trade… I am waiting for $0.35-0.40/share to sell.

Update: This did not pan out quite like I assumed it would. I was able to unload this stock on October 5-10, 2016 at prices ranging from $0.245-0.265 which was still an all-in 20%+ return. The significant Chinese shareholder made this somewhat of a nervous trade.